McKinsey research estimates that companies with high performance cultures can achieve up to three-times higher total returns to shareholders than those without^[1]. Grant Thornton estimate that companies with extremely healthy cultures are 1.5 times more likely to report average revenue growth of more than 15% for the past three years^[2].

With these types of outcomes, it is no surprise that a lot of attention is focused on driving high-performance culture, but how should you do this?  The first step in answering this question is to clearly define what a high-performance culture entails.

Patrick Lencioni outlines the five key components of a high-performance culture as trust, constructive conflict, commitment, accountability and focus on results.

Trust

High-performance teams are founded on trust. Having a high level of trust in your organisation involves team members being open, being comfortable giving and receiving feedback and encouraging each other to admit mistakes and weaknesses.

Constructive Conflict

For innovation and creativity to be alive and encouraged in your organisation, team members need to be comfortable to engage with constructive conflict and debate.

Commitment

To effectively execute a strategy or deliver on an objective together, each member of the organisation needs to be committed to the same team goals and outcome.

Accountability

A culture of accountability means that team members are comfortable in holding each other to account for the commitments they have made. A part of this is having clearly communicated consequences for non-achievement of agreed outcomes – an area where many managers struggle.

Focus on Results

Results are the collective results of the organisation and the culture drives to focus on these, rather than just individual outcomes. At the end of the day, a high performing culture aligns to hard and measurable outcomes – it is not ‘soft’.

So as a business owner or leader how can you ensure that these five elements of a high-performance culture are integrated into the fabric of your organisation?

If you are not intentional about embedding a high-performance culture in your organisation, then some other, accidental culture will always develop as organisations never operate in a cultural vacuum. And if you have an accidental culture at play, you risk inferior behaviours becoming the norm and unexpected values being tolerated. This is often exacerbated by leaders delegating culture to managers who may be focused on engagement of people, but in the absence of the ‘harder’ / performance elements of working as a team.

So, your culture can either be intentional or accidental. You need to be deliberate and planned. And it is an ongoing process, not an event (your culture doesn’t revolve around a social function, or a new office layout).

We most commonly see the five elements of a high-performance culture in organisations that:

1. Have the right strategy and business model in place, appropriately communicated and cascaded to the team;
2. Use a high-performance operating model to execute strategy with high frequency measurement and feedback around results and behaviours; and
3. Have well-trained leaders who are clear and consistent in their approach, behaviour and communication.

Nailing these elements creates a sustainable, winning culture and forms the key elements of a high-performance culture.

This (in and of itself) often leads to the culture being enjoyable. There are few successful sports teams for example, where the players don’t highlight the enjoyment and mateship that a high-performance culture creates.

If you want to reinforce an element of ‘fun’ (noting this means different things to different people) once you’ve embedded your high-performance framework , then an extra social event to celebrate team successes may help build deeper relationships. However, without bedding down the ‘harder’ elements first, you risk wasting time, effort and money. And at worst, you may be reinforcing an accidental culture that doesn’t get results and is difficult to unwind.

To learn more about creating a high-performance culture at your business, download our High-Performance Framework (using the button below) or call us to find out more…

download our High Performance Framework here  

Referenced articles:

^[1] McKinsey (2021). Organising for the future: Nine keys to becoming a future-ready company. https://www.mckinsey.com/business-functions/organization/our-insights/organizing-for-the-future-nine-keys-to-becoming-a-future-ready-company

^[2] Grant Thornton (2019). Return on Culture. https://www.grantthornton.com/Insights/culture/return-on-culture.aspx

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To quote Jim Collins of ‘Good to Great’ fame, “the single biggest constraint on the success of any organization is the ability to get and to hang on to enough of the right people.”

And too often for emerging businesses there comes a day when you wake up to find that the team that ‘got you here’ isn’t the one to ‘get you there’. It can be an uncomfortable realisation.

Employees who were once central to the team’s success are now out of their depth. A new strategic horizon beckons – one which is insurmountable without additional strategic insight, leadership capability, functional expertise, processes, discipline and structure.

And in our game, we’ve seen these transitions on multiple occasions. In fact, it’s often the reason we are called in to help companies in the first place, where the recognition of this situation occurs too late.

There’s a common misconception that it’s better to have someone doing an ok job (or even worse – a terrible job!) than to have no-one doing the job at all. In almost all cases this is simply not the case. An underperforming employee is a cancer in your company, at any level. You owe it to yourself, shareholders and the rest of the team to have high performers in all key roles.

Here are the warning signs that may suggest it is about time to replace a key executive:

1. Fires burning everywhere

When an executive is out of their depth, things catch fire. Reports are late, objectives are missed. Work hours might go up, but the important stuff doesn’t seem to get done. Excuses abound. Whilst the speed of change in most scale-ups can lead to the occasional spot-fire – it’s the fires that spark from an inability to take risks, roll with the punches and an unwillingness to be open to new ideas that can really hurt your business.

2. Chaos and conflict

Confidence and teamwork gives way to chaos and conflict. The more ‘drama’ an executive contributes to the workplace, the clearer the message that he or she may no longer be a fit.

In fact, if you find yourself talking or thinking about the poor performance of one of your team members for more than 10 minutes a day… it’s a sure sign it’s time for them to go.

3. Poor powers of prediction

Despite the fact that there are fires burning left, right and centre, your executive can’t put their finger on exactly why that might be, what they are going to do to fix it and when they anticipate a resolution. Many of the excuses they offer up point to the failings of others (but rarely back at themselves). Typically executives in this position have a hard time taking blame or ownership for the situation – and will rarely admit to having made a mistake.

4. Team engagement and turnover

Often direct reports or colleagues will see the signs before business owners or leaders. A lack of employee engagement and/or higher than usual team turnover may indicate you have a problem. A lack of capability – either leadership capability of relevant functional capability – will suck the life, energy and motivation straight out of team members… if not have them jumping the fence to join the competition.

5. From best self to shadow

The shift is noticeable: your star performer has gone from ‘in the zone’ – to reacting to triggers left, right and centre. The smallest perceived slight will set them off. They’re not their ‘usual selves’ and find it difficult to bounce back from setbacks. You get a sense that they would almost be ‘relieved’ if you were to relieve them of their post (if their ego would let them be).

So, what can you do?

Whilst in the steady-state organisations of old, these employees could be shuffled into a more suitable role in another department (read: moving the problem elsewhere), in a fast growing company you don’t have that luxury.

By the time you start to see the warning signs listed above, any chances at ‘developing them’ is likely to be ‘too little, too late’. You are experiencing the impact of underinvestment in years gone by to keep them ‘ahead of the curve’. It’s usually time for an honest conversation to discuss the changes that the company is going through in its journey as a scale-up, clearly articulating your company’s objectives and what you need from the role.

This is a conversation that Netflix is known for having with its team members (at all levels) on a regular basis. In the “Culture” section on its website, Netflix states that it keeps “only our highly effective people.” The site goes on to say: “succeeding on a dream team is about being effective, not about working hard. Sustained ‘B’ performance, despite an ‘A’ for effort, gets a respectful generous severance package.”

In the majority of situations that we have observed, executives who are genuinely out of their depth are actually relieved to have these conversations. The stress of not performing (especially for those who have been high performers in the past) can be quite significant.

And how do you proactively tackle these issues so that you don’t have to repeatedly deliver the ‘Netflix’ conversation every 3 years?

1. Get crystal-clear on your company’s strategic objectives for the next financial year and the coming quarter.
2. Build a workforce plan that contains key objectives for each function and conduct an honest assessment of what your company needs to do to achieve those key objectives. Take individual executives’ names out of the equation, so that you can create a plan of the necessary functions at your company, not the people filling those seats.
3. Conduct a gap analysis and develop a clear picture of the leadership team you need, versus the one you have — and then start filling those gaps.

Following this simple process on a regular basis will ensure that the team you’ve got is the one to ‘get you there’.

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Remuneration and incentives

Interestingly, there are some significant parallels in relation to remuneration and incentives that can be drawn between some of the CA review findings and the proposed fourth edition of the Principles and Recommendations put out by the ASX Corporate Governance Council earlier this year.  A couple of the more obvious include the following:

• Companies should remunerate fairly and responsibly, and more specifically should design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders (stakeholders) over the short, medium and longer term.
• A (listed) entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.

Executive remuneration should be aligned with values, culture & ethical behaviour

In relation to the first item, the draft Corporate Governance Principles point directly to the need for Boards to strike a balance on remuneration to ensure that incentives for executive directors and other senior executives encourage them to pursue the growth and success of the entity over the short, medium and longer term, without rewarding conduct that is contrary to the entity’s values or risk appetite. CA has not performed well here.

Recommendation 32 of the review findings states that CA’s performance reviews and bonus scheme(s) be harmonised so that all versions take into account ethical and behavioural considerations as the basis for potential reward.

Furthermore, recommendation 33 of the review findings states that executive remuneration should be linked to performance measures relating to the culture of CA and – to a lesser degree – to the culture of cricket-in-Australia.

Regular employee engagement and feedback is key to aligning behaviours with core values and culture

As good as these recommendations may sound on paper, these aspects of incentive measures can lead to ambiguity and subjective outcomes which prove challenging for Boards to measure – and measurable outcomes are critical to effective performance reviews.

Our view is that more regular engagement with employees to provide feedback loops to address and adjust behaviours in relation to core values and the desired culture of the business are often more impactful.  With the help of capable leaders, this regular engagement and feedback cadence helps to embed the core values.

On the second item above, listed entity disclosure around remuneration policies and practices provides transparency to stakeholders about measures the entity has put in place to drive behaviour and reward employees.  As a result, stakeholders get the opportunity to engage with companies at Annual General Meetings from an informed basis, which in turn helps to drive more accountable behaviour from Boards.

Perhaps CA could take a leaf of the listed company world on this – particularly given many of the players are highly remunerated with bonuses and incentive linked to performance?  Additional transparency around the performance drivers that are in place may provide stakeholders with welcome visibility and confidence that the Board has this under control.

Final thoughts

The CA findings reinforce the need for executive and employee’s remuneration and incentives to form part of a well-constructed remuneration policy and set of practices that is set by the Board.  If you are in a senior leadership position within, or on the Board of, an emerging growth business and would like to understand more about “remuneration and incentives” and how to strategically establish and embed these to help drive high performance, get in touch with us here at Checkside.

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Scott talks about how recruiting high performers and maintaining employee engagement are key determinants of business success. Read the full article here.

The post The foundations of a winning people strategy appeared first on Checkside.

There are three lots of stats that stand out when we look at the relationship between employee engagement and performance reviews:

• According to Gallup (and most other recognised engagement surveys), the number of ‘disengaged’ employees in Australia is around two-thirds.
• Two-thirds of employees say that they don’t get enough feedback from their manager.
• In a recent LinkedIn poll, two-thirds of employees had a negative view of their annual performance reviews.

It is not hard to draw the conclusion that there is a direct link between providing continuous feedback and increasing employee engagement, but often employers find it to difficult to establish a system that is effective, adds value and easy to implement.

Understandably most clients think it might be more time consuming and costly than an ‘annual’ review process, but that doesn’t have to be the case.

Companies like Small Improvements provide clever, inexpensive, cloud based systems to help eliminate the administration and time associated with managing a performance review and continuous feedback framework.

In a world where more than 80% of companies say their adoption of HR Technology is not strong, it is those that use these enabling tools to increase their efficiency and communication with employees that will really stand-out and close the two-thirds ‘gap’.

Of course, as with any technology, you only get out what you put in – but the software available now is very user friendly (for both you and your employees) and engaging in it’s own right.

In fact, we predict that within 3 years those companies that are not using these modern tools will be viewed by (potential) employees as ‘out of touch’ compared to other workplaces. It’s something to think seriously about.

The post How technology can help engage the remaining two-thirds of employees appeared first on Checkside.

As businesses evolve there are five areas of HR that employers need to get right to build a high performing team and become a well-regarded employer.

Stage 1: Administration

• Companies that have a handle on their basic administration ensure that tax, superannuation and workers compensation paperwork is completed and filed – and that their people are paid correctly and on time.
• If your payroll system gets out of hand you’re going to hear loud noises from two powerful places – your people and the tax man. So you’ll want to make sure you get this right.

Stage 2: Compliance

Simply staying in the tax man’s good book and paying your people on time is a good start, but there are a huge number of HR compliance risks that all companies face.

• Companies that have a handle on their compliance obligations have effective policies in place to prevent against vicarious liability. Think occupational health and safety, anti-discrimination, IT and internet use, social media and drug and alcohol policies.
• These companies have employment contracts that meet or exceed minimum standards.
• Key processes like recruitment, performance management or termination follow established procedures that are in line with relevant industrial laws.

Stage 3: Structure

Every company made up of more than one person will need some form of organisational structure.

• This provides the foundation on which standard operating procedures and routines rest.
• Clear organisational or functional charts, position descriptions and meeting calendars make the workplace transparent and unambiguous and allow people to work productively together.
• A well-defined structure determines which people get to participate in which decision-making processes, and to what extent their views shape the company’s actions.
• The structure of your company should be appropriate for and reflect your strategy, culture and size.

To this point in the model, if you’re paying you people correctly, keeping on the right side of the law and are structured in a way that allows for efficient communication and decision making, you’re covering all of the basics.

Now it’s time to step things up.

Stage 4: Performance

Companies that evolve to this stage are taking a strategic approach to HR.

• Performance is a proactive stage that links people management to business strategy.
• A strategic approach to HR will drive engagement and productivity – key components include leadership, communication, recognition and employee development, training, remuneration and recruitment.
• Companies employ software and technology to streamline key HR processes and connect with their people.

Companies who work hard to meet the needs of their employees and get this stage right can cultivate a work environment conducive to high levels of productivity and engagement. Ultimately this leads to high performance.

Stage 5: Brand

Companies that have evolved to this stage of the model have typically got administration, compliance, structure and performance systems in place. They’re generally great places to work.

• Brand is about letting everyone else know how great – and unique – they are.
• Employer brand management, done right, incorporates every aspect of the employment experience which shapes the perceptions of existing and prospective employees.
• It supports the attraction and recruitment of the right kind of people that will help the company achieve its strategy.
• It effectively engages with its’ own employees and will retain its people.

So there you have it. Where does your company sit? Where do you want to be?

The post Is your HR evolving with your business? appeared first on Checkside.

Hire happy personalities:  Interviewers shouldn’t focus solely on skills and experience.  Assess the candidate’s personality as well as their likely fit with other existing employees.  Do they seem warm, friendly and positive?  Find out from their referees how they interacted in their last workplace.

Build on workers strengths:  Get to know the strengths of your people and give them work commensurate with these.  Set high expectations and believe in their potential to grow and progress.  Understand that people experience maximum motivation when they tackle tasks that are challenging but not impossible.

Encourage learning:  Contented workers tend to have personal career goals they are working towards and are therefore less likely to get bogged down in office politics.  It is important to prioritise career goals and support them in whichever way you can.  People are generally happier when they are developing and learning.

Don’t neglect work life balance:  People whose day jobs take over their home lives are three times more likely to quit.  An employee who has time for family, friends and outside interests are more focused and dedicated when they are at work.  They are often happier and healthier too.

Find time for fun and friendship:   Humour is the best antidote to stress, so don’t lose your sense of humour even when the workplace is busy and stressful.   Create social time – celebrate birthdays, special occasions and plan activities outside the workplace.

Improve the office environment:  Is the office layout conducive to people interacting?  Get rid of barriers that prevent face-to-face communication.   Manage the noise levels with sound absorbing materials.  Provide ergonomic chairs and desks and encourage people to get up and walk around the office.

Be a better boss:  Say hello, be interested and encourage others to do likewise.  Listen and encourage people to express suggestions and opinions on goal setting and process improvement.  Communicate often and honestly about company direction, new ideas and any restructuring.   Compliment and give credit where it is due.

Creating a workplace where workers feel included, valued, cared for and competent will make your people value their workplace, and this will make your life happier too!

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In the first two weeks of this year, I have met an accountant, project manager, PR consultant and engineer – all highly qualified, experienced parents who are considering how they can return to the workforce, in what capacity and how it can fit in with their family commitments.  The provision of flexible working arrangements is a key factor in determining which organisations will attract these people.

The provision to allow employees to request flexible working arrangements form part of the National Employment Standards, and the Labour government announced earlier this month that they would extend this provision in new legislation.

Fortunately, the need for providing flexibility in the workplace is moving beyond the domain of policy makers and into the lexicon of employers.  Many businesses already provide flexibility to their employees, but it is often ad hoc and manager dependent.

Creating policy and practice around flexibility is a smart move for organisations on many levels.  For both existing and potential employees it demonstrates you care for the wellbeing of your people, that you understand how people’s circumstances can change, and that you value them enough to make change to retain them.

Benefits to the organisation include higher levels of employee engagement, increased trust and confidence, improved productivity, reduced absenteeism, and an increased ability to attract and retain talent.

Following these 5 steps will help you shape and implement a policy on flexibility.

Step 1 – Talk to your people

Communication is essential in developing flexible work practices that will meet the needs of your organisation and your employees. Talk to your employees individually, hold staff meetings or focus groups, use tools such as staff surveys and conduct exit interviews. Talking about flexible work practices with your employees will help develop and decide what practices are most suited to their needs and the needs of the business.

Step 2 – Consider which flexible work practices will work

• Flexible working hours, changing start and finish times, part-time work, job sharing.  Offering make-up time to allow employees to make up hours if they need to attend medical or other appointments
• Offer employees multi-skilling and job rotation, or training and transfer opportunities to meet workplace needs
• Offer employees flexibility with leave.  This could include taking leave in single days, taking leave without pay, and extended or special leave
• Offer flexible working arrangement where employees work away from the traditional office, such as at home or in a remote location.  Technology has enabled far greater flexibility in this area

Step 3 – Negotiation

Work with your employees to find flexible work practices that suit both of you. You should talk about:

• Key implementation issues, such as communication, attending staff meetings, working different hours in emergencies, and access to training
• Their views on perceived barriers and strategies to address them
• Specific performance measures so that you and your employee can assess if the arrangement is working
• Finalise the flexible work arrangement by preparing a written individual flexible work practices agreement with the employee
• Draft a workplace policy on flexible work practices. This will clearly communicate rights and responsibilities on flexible work arrangements and steps for putting them into place

Step 4 – Implementation

When implementing flexible work practices, commit to:

• A trial period to ‘test drive’ how the arrangement works in practice
• Regular discussion of issues with employees and other co-workers
• Review the arrangement to see if it has been successful.  This could be once in the first week, then once a month for three months, then at six months

Step 5 – Monitoring and evaluation

Monitoring and evaluating the effect of flexible work arrangements means you can track progress and make changes as needed. Plan to evaluate the flexible work practices on a regular basis:

• Set up a confidential feedback process for your employee and co-workers to evaluate the arrangements and their supervisor’s ability to manage flexibility
• Assess specific flexibility training needs for all employees
• Survey stakeholders to determine their perception of the impact flexible work practices are having
• Check that individual and team performance measures and objectives have been achieved.
• Use the information you received through the evaluation, look at the overall strengths and weaknesses of the flexibility practices and put in place strategies in response

Flexibility at Checkside has created a diverse team – we have an AFL player working one day a week, a parent who works full-time with the flexibility to leave early to pick up children, and a part-time parent working ‘school hours’. My personal experience is that a flexible employer engenders loyalty, commitment and a mutual respect between employee and employer with benefits flowing beyond the workplace into the community. As people transition back to work in a tight labour market, a flexible workplace will be a key factor in determining which employers attract and retain this talent.

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Maslow’s Hierarchy of Needs is one of the fundamental theories of motivation. The theory can help organisations design programs to motivate their people, promote loyalty, reduce turnover, recruit quality people and ultimately increase productivity and return on investment. Maslow theorised that people have five basic needs that could be ranked in hierarchical order: physiological needs, safety needs, belongingness needs, esteem needs and self-actualization needs.

According to Maslow, each need has to be satisfied before an individual can progress to the next level. Therefore, leaders and managers should motivate their employees by providing rewards or programs that help satisfy the need that is prevalent at that time. Once a need has been met, it ceases to be a motivator and employees move to the next level in the need hierarchy.

The most important aspect for just about every employee who starts a new job is pay. Once that need is satisfied, the employee then seeks a feeling of safety. The third level of needs focuses on developing a sense of belonging and connection to the workplace. Next, employees need to feel recognized and valued to satisfy their esteem needs. Once all these needs are met, managers need to add programs that lead to satisfaction of the highest level of need on Maslow’s hierarchy; the need for self-actualization.

Below is a list of various rewards, programs and practices that organisations can use to satisfy employee needs:

Start with Physiological (basic) needs:

• Provide comfortable working conditions and a pleasant working environment
• Provide a “comfortable” base salary
• Provide time for rest and meal breaks

Then, Security needs:

• Adhere to safety rules and regulations
• Provide well-defined job descriptions and expectations
• Minimize negative feedback and threatening behaviour
• Provide information about the firm’s financial status and future plans

Then, Social needs:

• Encourage teamwork in executing projects
• Employ and utilise employee satisfaction and culture surveys
• Encourage participation in professional sporting and community groups
• Reward on the basis of total team performance

Then, Self-esteem needs:

• Include employees in goal-setting and decision-making processes
• Provide opportunities for coaching, mentoring and development
• Recognise employee learning and growth

And finally, Self-actualisation needs:

• Provide opportunities and career development plans
• Provide job rotation and job enlargement to broaden experience and exposure
• Offer opportunities for innovation and risk taking
• Encourage direct communication with external stakeholders
• Provide supportive leadership that encourages a high degree of autonomy and self-control

Maslow’s hierarchy of needs can assist companies to offer benefits and programs that help satisfy needs at all five levels of the hierarchy. In terms of identifying where an employee sits, this can be done through one-on-one discussions, performance reviews or by using employee surveys for groups of employees.

By providing considered incentives that are applied in Maslow’s building-block type manner, companies can use their resources in the most effective way possible while attracting and retaining the highest quality employees. Ultimately, the result is a workforce of individuals who have reached the final tier of Maslow’s hierarchy and who are now looking to not only better themselves, but those around them, and the company as a whole.

References

SADRI, G, & BOWEN, R 2011, ‘Meeting EMPLOYEE requirements: Maslow’s hierarchy of needs is still a reliable guide to motivating staff’, Industrial Engineer: IE, 43, 10, pp. 44-48, Computers & Applied Sciences Complete, EBSCOhost, viewed 15 February 2013.

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Studies* have found that stress can affect you in the following ways:

Stress makes you stupid. Stress has been shown to shrink your brain and damage brain cells. Most interestingly, it is happening in the hippocampus, the part of the brain responsible for memory and learning.

Stress affects your ability to feel happy. The stress hormone causes dopamine receptors in the brain to be less active.

Stress adds fat to our bellies. There is a link between stress and how you put on weight. The distribution of that weight, around the middle of the torso, is an indicator of the stress one experiences.

Stress shuts down the immune system. It wipes out the ability of your body to repair itself. All systems except the necessary functions for survival shut down during times of stress.

Stress damages blood vessels. The increased flow of hormones increases plaque in the arteries, which in turn increases blood pressure and restricted blood flow.

Stress accelerates the ageing process. Stress hormones can accelerate the shortening telomeres, the things that keep our genes from fraying. In other words, someone who experiences a great deal of chronic stress in one year, ages six.

Psychologist, Dr Martin V Cohen, found the following helps reduce our stress:

Sleep at least seven hours. Deep sleep and dream states (even the disturbing ones) re-charge our systems and promote a sense of well-being and help us recover from stress.

Set a pattern of exercise so that when stress hits, you do it without thinking. Aerobic movements burn off harmful stress hormones, release muscle tension and allow endorphins (the brain’s natural pleasure chemicals) to flow into the body.

Choose good foods. Complex carbohydrates such as potatoes, pasta and whole grain breads have a calming effect on our bodies. Cut down on caffeine and its jagged mood producing effects. Substitute herbal teas; some of which are natural energizers like ginseng.

Slow your breathing. Stop what you’re doing and breathe slowly, consciously and deeply.

Find a way to express yourself. Keep a journal, paint a picture, or learn to play an instrument. Find projects that you are drawn to or something that you are passionate about doing even when the going gets rough – because that’s when we need expressive outlets the most.

Share your stress. There are few substitutes for talking about what you are experiencing. Talk to a friend, a family member, a support group, anyone who can share in your situation.

Find the ‘not so serious’ side of your situation. Laughing (not necessarily out loud) at our predicament can indeed be the best medicine and aid in creating a life-enhancing mood.

*Stress, Portrait of a Killer – Full Documentary (2008) 

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