What is a High Performance Organization (HPO)?
The High Performance Organization (HPO) Framework is a conceptual, scientifically validated structure that managers can use for deciding what to focus on in order to improve organizational performance and make it sustainable. The HPO Framework isn’t a set of instructions or a recipe that can be followed blindly. Rather it is a framework that has to be translated by managers to their specific organizational situation in their current time, by designing a specific variant of the framework fit for their organization. This is bad news for bad managers, as the HPO Framework doesn’t provide a blueprint. It is however good news for good managers, as they can input their own experience, expertise and creativity while transforming their organizations into a High Performance Organization. How?
Culture is very important at HPOs and the HPO research by André de Waal provides us with a tool for thinking in terms of the long run.
The research behind the HPO Framework
Over a period of five years 290 academic and management publications in the area of high performance and excellence were studied in order to be able to build the HPO Framework. From these literature’s sources characteristics of high performance were distilled and put in an HPO Questionnaire which was distributed worldwide. Thousands of respondents from hundreds organizations in 50 countries filled in this questionnaire in which they indicated how their organization scored on these characteristics and performed against their peer groups. Subsequent statistical analysis of the collected data showed that there are 35 characteristics that have a direct positive relation with competitive performance. These characteristics always appear in five groups, the so-called HPO Factors. When an organization scores higher on these five HPO Factors than its peer group, than it performs financially and non-financially also better than the peer group.
What do the executive teams of competing firms actually compete on? Not on their firm’s products and services, that is the company’s output. In fact, executive teams primarily compete on the quality of their insights about their own organization. The first basis of competition between executive teams is the understanding of what really happens in their organization.
Definition of a High Performance Organization
“A High Performance Organization is an organization that achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of time of five years or more, by focusing in a disciplined way on that which really matters to the organization.”
André de Waal – HPO Center
The 5 success factors of High Performance Organization
The HPO Framework consists of five factors of high performance, with each factor consisting of several underlying HPO characteristics, 35 in total. These are the five factors:
- Quality of Management
- Openness & Action Orientation
- Long-Term Orientation
- Continuous Improvement & Renewal
- Quality of Employees
The HPO research shows that there is a direct and positive correlation between the 5 HPO Factors and organisational results, regardless of sector, industry or country, as shown in the table below. Literature shows that organisations that are high performing outperform their peer groups by:
- Revenue growth + 4 to 16
- Profitability +1 4to 44
- Return On Assets (ROA) +1 to 12
- Return On Equity (ROE) + 9 to 25
- Return On Investment (ROI) + 15 to 26
- Return On Sales (ROS) + 2 to 18
- Total Shareholder Return + 4 to 42
In the area of non-financial performance HPOs repeat this feat, they achieve much higher customer satisfaction, customer loyalty, employee loyalty, and quality of products and services than their less able counterparts.
The HPO methodology provided a perfect means of bench-marking where we were, what we really needed to focus on, a target to aim for and the means to measure our progress.
- Higher level of customer satisfaction
- Increased customer loyalty
- More employee job satisfaction
- Better cooperation (open for positive feedback / feedforward)
- Better service and product quality and innovation
- Less complaints
It pays to be a High Performance Organization!
This approach is rigorous and is based on a close systematic examination of the facts across time, cultures and different industries. Giving definition to what is meant by ‘performance’.
For more information about the HPO Framework, HPO Experts, workshops and our do-it-yourself HPO Insight™ improvement tool, please contact us (firstname.lastname@example.org or T. +31 (0) 35 – 603 70 07).