September 2, 2020
September 2, 2020
Staying Healthy Matters
Think about the lengths to which we go to protect our health, and that of the people and pets we love. We get thorough annual physical exams. We get two dental exams a year. We get annual skin and eye exams. We take our pets to the vet for checkups and vaccinations. Consistently, we make conscious decisions and commitments to invest time and money in our health. We eat right, take vitamins, and go to the gym. We value physical health above all else. Why then, are most business leaders reticent to monitor and protect their most important business asset, their organizational health and culture?
Organizational Health Overlooked
Organizational health is often overlooked because of what Jim Collins calls quantitative bias. It’s easier to look for answers around things we’ve measured for decades, and what we’ve studied in business school. Most organizations are full of smart, well-educated, highly accomplished people who know how to do their jobs. Your biggest threat is not incompetence, rather an environment of insidious politics, divided leadership, ambiguity, inadequate measurement systems, and lack of clear purpose. The bad news is these conditions do not appear on any financial statement and can easily go undetected. The good news is that these conditions, if properly diagnosed, can be treated quickly and very effectively.
Our own examination of companies that perform at the very top of their sectors, often delivering shareholder returns near double their peers, reveals nine principles at work, which are the imperatives to building cultures of peak performance. The principles are listed below. The extent to which these principles are at work in your organization can be measured, much the same way we measure blood metrics, BMI, resting heart rate, circulation, sleep patterns, nutrition, exercise, and the like.
Principles for a Culture of Peak Performance
It’s important to note that some of the organizations we’ve studied have been on and off our list of peak performance companies. Regular checks on your organization’s cultural health are absolutely critical, both for organizations aspiring to peak performance and for peak performers who want to maintain. Organizational health complacency can be fatal. A peak performance culture, which constitutes the only sustainable competitive advantage of which we are aware, is incredibly perishable. Our study indicates there are nine principles at work in organizations that perform at the very top of their sectors.
I’ve been studying high-performance organizations for decades, but the elegant simplicity of our present day OHI came squarely in to focus during the summer of 2014, when we began working with the board of one of Houston’s largest and most successful engineering construction consulting firms. Our reputation for conducting successful C-Suite searches caused the acting CEO to want to retain us to conduct four C-Suite level searches concurrently. One was to be a CEO search in which he would be a candidate. The others were for a CFO, CIO and CHRO.
At the time, Allen Austin had no experience in civil engineering, but recognized that the firm, while having a record year in sales and profits, was not prepared for such an undertaking. We suggested instead that we administer an organizational review, which we now call Organizational Health Index. We suggested that if the board were satisfied with the results of the review, we would move forward with one search, that of the Chief Executive Officer.
At a fraction of the cost the firm was willing to pay, we conducted a six-week review that turned out to be invaluable. To be candid, when we proposed the original review, I knew we could do it, but I didn’t know exactly how. After a bit of reflection, we began with a needs analysis questionnaire which is the basis for our C-level searches. We dusted off an old cultural survey I’d used three decades ago when I was running a 500-store retail division, and we topped it off with one on one interviews from the top of the organization to the front lines. We even included three of the firm’s longest tenured customers.
The output from this first OHI delivered value far beyond our expectations, as this was an organization that had been described as “firing on all cylinders and raining money”.
The report gave us numerical scores for the firm’s cultural health and how effectively they were leveraging each of the nine principles. These scores provided a base line and a method to measure progress toward a culture of peak performance. We expected that. It gave us a very clear notion of the leadership necessary to take the firm to its highest level and we expected that. What we did not expect was the input from the one on one interviews.
Looking back, it appears the order in which we conducted the assessment was important. After the questionnaires and surveys, its seemed as though the stakeholders we interviewed were ready to tell us EVERYTHING about which we hadn’t asked! We discovered things that were previously unknown and likely would have remained so. Many of the impediments to progress were clearly identified as were many of the solutions.
From this report, a go-forward strategy was developed, and we then had the information necessary to conduct the CEO search, and to begin the journey toward a culture of peak performance. The search was extremely complex in that the firm had never hired an outside executive. The firm’s capital structure, which included 23 shareholders was a further complication in that the CEO reported to a board of directors who are also his direct reports.
The search itself took eleven weeks and on January 1, 2015, our new CEO was officially on board. 69 months in, this organization experienced a 78% increase in top line revenues and a 319% increase in EBITDA. These kinds of engagements are the ones of which we are most proud. It’s not about the transaction, it’s about the relationship. It’s not about filling a seat or delivering a leadership product in a vacuum, it’s about helping our clients achieve their boldest vision and most lofty objectives.
If you’re open to beginning a discussion around your organizational health and a culture of peak performance, give us a call.
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