• Friday, May 24, 2024
businessday logo


Performance-based or performance-obsessed organisations

Performance-based or performance-obsessed organisations

The concept of performance-based organisations (PBOs) has become widely known throughout the history of organisations and performance management. However, the concept has seen different interpretations and implementations among corporate leaders.

I have worked with many organisations and leaders in the last 25 years, witnessing different implementations of performance-based concepts. Whereas being a performance-based organisation is culture-based and entails focusing on things that aid the performance of individuals, teams, and the organisation, in execution, many organisations have focused on the outcome. Focusing on performance only without investing in things that aid performance has resulted in many undesirable outcomes and adverse effects on people, processes, brands, revenue, profitability, and the environment. With a shallow understanding of the concept, hasty use of the terminology, and lopsided implementation, many organisations have taken a reverse turn and transformed into performance-obsessed organisations rather than improving their performance.

Read also: Why PFAs are not to mark their own performance report card

Excellence is not achieved by focusing on excellence. Excellence is a mindset permeating every thought, behaviour, action, and environment that produces the outcome. A parameter among our corporate leaders is focusing on the outcome as a tool for industry competition without adequate oversight and alignment of the foundational blocks that mould the organisations to be performance-oriented. Therefore, the prerequisite for creating a highly performance-based organisation is focusing on the culture, workplace environment, people development, engagement, and fulfilment, which translates into a commitment to deliver excellence among internal stakeholders and the outside world.

A typical test my team has adopted to check if an organisation can be transformed into a performance-based organisation or be repaired from being a performance-obsessed organisation is the measurement of the Organisational Health Index. McKinsey’s

The Organisational Health Index identified 37 individual management practices and nine organisational outcomes. The outcomes are direction, innovation and learning, leadership, coordination and control, capability, motivation, work environment, accountability, and external orientation. In a truly performance-based organisation, the focus is on the thirty-seven individual practices by the leaders and managers that produce all but, more importantly, the external orientation that ultimately produces sustainable performance for the organisation. Thus, focusing on performance with inadequate attention to individual practices, internal correlation, and collaboration is like expecting a train without a rail track to get to the desired destinations.

The most crucial outcome is the external orientation, which involves capturing external ideas, customer focus, competitive insights, business partnerships, and community relations. An organisation’s sustainability and performance are based on its external orientation, which is impotent without internal correlation.

Some organisations that pride themselves on being performing or highly performing based on their executives’ attendance of overseas courses and have implemented the concept poorly have seen negative outcomes like employee disengagement and attrition in the last decade.

 “Therefore, the prerequisite for creating a highly performance-based organisation is focusing on the culture, workplace environment, people development, engagement, and fulfilment, which translates into a commitment to deliver excellence among internal stakeholders and the outside world.”

The significant attributable errors were the mistaken focus on performance, which had led to panic and lopsided policies and decisions like hiring staff from similar organisations for performance reasons without minding whether they were culture fit or not. Most staff hired for such purposes struggle to replicate their performance due to incoherent internal processes and policies. Some organisations, in chasing performance, deploy staff from their areas of core competence to sales, thus violating the initial contracts of employment, reducing staff remuneration and incentives to reduce costs and increase profitability, and implementing a guarantee and performance-based pay structure that reduces the existing pay agreements and ties payment of emoluments to performance. Other strategic errors in relation to performance are the copying of sales strategies or drives of perceived market leaders without a well-thought-out process to ensure internal capacity and capability.

Read also: FG launches app for citizens to assess ministers performance

Building internal correlations and efficiency with a committed team is the foundation of performance. With a team of fulfilled employees who are on the same mission as the leadership team, no organisation can pride itself on being a performance-based entity except in the short term. Long-term and sustainable performance in the marketplace is rooted in culture, employee engagement, and fulfilment, not in the hurried adoption of another fancy management terminology without deep conviction and practice by leaders.

Therefore, to avert developing performance-obsessed organisations, business leaders are enjoined to invest in their organisations’ fundamental frameworks, entailing building a culture that recognises the importance of people, developing policies that align with the strategic intents of the stakeholders, creating entrepreneurship environments, and rewarding outcomes fairly to promote inclusiveness and sustainability. Another critical focus of building a performance-based culture is to understand changes in the behaviours and attributes of the workforce. The new generation of staff—Gen Z and Millennials—has less respect for hierarchy and organisational bureaucracy but is more inclined towards collaboration and intrapreneurship.


Babs Olugbemi FCCA, the Chief Vision Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on [email protected] or 08025489396.