We’ve long known that the key to unlocking sustainable performance is not just to focus on results. Rather, lasting impact occurs when companies apply equal rigor and resources both to how they make money and how they run the place – something we refer to as performance and health. Companies with this dual focus outperform their peers on almost every financial indicator we’ve seen.
However, given the challenges posed by today’s environment, we’re finding that value creation and value capture are happening disproportionately at the edges of an organization. Take, for example, a biopharma company whose primary competitive advantage lies within its R&D team’s ability to innovate faster than others, or an insurance company whose salespeople have built a loyal and robust client base. In these cases, it is the people on the frontlines who are creating significant value.
While performance and health at the organization level continues to remain core to creating lasting results, building a true competitive advantage requires applying that same lens at the individual level to better inspire and enable people on the ground. For leaders, this means doubling down on four areas:
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How we make money: Focusing on organizational performance involves getting clear on the long-term strategy, and where and how value will be created in the near-term, whether it be with cost reductions, acquisitions or other strategic initiatives.
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How we run the place: An organization’s health is determined by how well they are able to align on the path forward, execute on their goals with minimal friction, and continuously reinvent themselves in service of their broader strategy. Focusing on how you run the place means rigorously assessing the current state, selecting a winning recipe to follow and integrating prioritized health behaviors into the day-to-day.
Companies that put an equal emphasis on how they make money and how they run the place deliver a total return to shareholders (TRS) that is 3x greater than their peers.
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How I create value: For individuals to understand how they create value, they first need to understand the big picture, which requires being transparent about and sharing the strategy and value agenda. From there, it involves disaggregating that big picture view into more tangible jobs-to-be-done, showing people where and how they fit in and empowering them to set personal, measurable performance objectives. This can be done in a prescribed manner, as an individual exercise or with the help of their respective managers and teams.
Companies that show individuals how they create value are able to capture an additional 63% increase on their TRS, above and beyond what was captured at the organization-level.
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How I behave: For individuals to understand how they behave in relation to the culture; it involves helping people first identify the behaviors they’ll need to regularly engage into both support the organization’s strategy and to achieve their own performance objectives they set in the last step. To empower people to achieve these goals, provide just-in-time tailored coaching that takes into account people’s unique roles/tenure, personalities and performance roadblocks.
Companies that zero in on how individuals behave capture an additional 18% increase on their TRS, above and beyond what was captured in the other quadrants.
When you put the four pieces together, what you see is an organization that has a clear path forward; one that offers a broader work environment that supports and enables the operational aspirations, where every person comes into work each day knowing the impact and value they bring to the table and with clear goals to work toward and tailored coaching to ensure their success.
Imagine the value you could create and the impact you could have on your company’s greatest asset – your people – if you were to manage performance and health with the same rigor for both the organization and the individuals.