1 Focus on long-term performance improvementThe added value of the HPO diagnosis for your organisation!

2 Copyright © Center for Organisational Performance 2010Foreword Pressure from fierce competition, increasing demands from stakeholders, and difficult economic circumstances push organisations to perform faster and better. Continuously aiming to achieve lower prices, higher quality, faster delivery times and better customer service is essential. Customers are becoming increasingly more aware of what they really want and their opinions are becoming more imperative to the success of an organisation. This trend appears to affect every type of organisation. As a result, organisations have to focus on continuous improvement - and it does not look as if this will change any time soon. But how can an organisation improve? And not only for a short while, but in the long term? After all, the goal is continuous performance improvement, not a one-time fix. In other words, how can an organisation truly become an excellent organisation, a High Performance Organisation (HPO)? Awareness is growing that the way in which an organisation is managed mainly determines whether or not that organisation will succeed in the long term. Managers, therefore, wish to know which factors are decisive in their efforts to achieve high performance in order to create superior organisations themselves. For five years the HPO Center, under the direction of André de Waal, MSc MBA PhD, studied the characteristics of high performance organisations across the globe, in order to offer managers concrete tools to help their organisations achieve higher performance levels. How can you ensure that your organisation performs better than comparable organisations in the long term on both a financial and non-financial level? Read more about this topic in this document and get acquainted with the HPO diagnostic tool that was developed on the basis of the research results. Copyright © Center for Organisational Performance 2010

3 Copyright © Center for Organisational Performance 2010Reading Guide What is your most valuable resource at work? ……… on the decisions you must make daily Why you should embark on a quest for excellence ……… on the five-year study into characteristics of HPOs The five building blocks of an HPO ……… on those factors that genuinely improve your organisation in the long term What’s in it for you? ……… on the hard facts, both financial and strategic Open doors … for you to pass through ……… on why HPO increases your chance of success considerably Steps of the HPO diagnosis process ……… on the results of an HPO diagnosis within your organisation References ……… on the results of recent clients Copyright © Center for Organisational Performance 2010

4 Copyright © Center for Organisational Performance 20101. What is your most valuable resource at work? Employees? Products? Customers? Knowledge? Stakeholders? If you could spend your time on only one thing, what would be your focus in terms of improvement? Improve working conditions? Better organise processes using ICT? Improve trust in management? Choose a different organisational structure? Implement competency management? Act more quickly? Supply better information? Show less favouritism? Merger or takeover? Communicate more with employees? Fire people who perform poorly? Develop a clearer strategy? Work in a more customer-oriented manner? Give more recognition to employees? Listen better? Implement a new bonus structure? … All of these are important, it’s true, but time can only be spent once. That is why it must be handled carefully and why it is necessary to focus deliberately on only those matters that will improve the performance of your organisation in the long term. Limited time requires a strong focus on what really matters and spending less time on issues that do not help your organisation grow stronger. The High Performance organisation study and corresponding HPO diagnosis give you the right focus. Copyright © Center for Organisational Performance 2010

5 Copyright © Center for Organisational Performance 20102. Why you should embark on a quest for excellence In every sector you will find organisations that perform better than others, that you would not hesitate to join yourself, and that are trendsetters in innovation. But these organisations do not perform better because they pay more money than their sector colleagues or because they have implemented a new software system. Nor do they owe their success to reorganisations or a fancy strategy. To determine what makes an organisation a High Performance Organisation (HPO), more than 290 international studies written over the past 30 years about high-performing organisations were studied by the Center for organisational Performance. The most common characteristics were then tested in a global study among over 3,000 profit, non-profit and government organisations in order to determine the most important characteristics. The result? There are five decisive factors (broken down into 35 characteristics) that are directly linked to the success rate of an organisation. Those five HPO factors give organisations a focus for improving performance. About the Center for organisational Performance (HPO Center) The HPO Center originated in the Netherlands in 2004 as a result of a number of round-table talks with the business community and non-profit organisations, such as Unilever, ABN AMRO, Ikea, Shell, ABP, Philips, Dactylo, Wageningen University and Canisius Hospital, during which performance management and a scientific study into High Performance Organisations (HPO) by dr. André de Waal were discussed. The results of these discussions enabled the HPO Center to build a bridge between this study and its application in practice. During the spring of 2007, the HPO Center identified those factors with a direct correlation to competitive performance and that ensure that an organisation is – and remains! – an HPO. These characteristics were then used to develop the HPO diagnosis, which helps organisations evaluate their current HPO status and indicates what they need to do in order to become an excellent organisation. The HPO Center provides knowledge in the form of diagnoses, interviews, books, coaches, articles, lectures, methodologies, networks and workshops with ‘best ideas’. This knowledge supports organisations in implementing the desired improvements. The work we do for our clients is also used to enable new research and publications, including research into High Performance Individuals and High Performance Partnerships. For detailed information, white papers, articles and sector information, visit our website at ‘Peer’ group HPO Copyright © Center for Organisational Performance 2010

6 3. The five building blocks of an HPOQuality of management The management of an HPO is of high quality, builds relationships based on trust by combining integrity and coaching leadership with highly exemplary behaviour, is quick to make decisions (also regarding non-performers), is result-oriented and committed to a long-term vision. Quality of employees The employees of an HPO are diverse, complementary and well able to work together. They are flexible and resilient when it comes to achieving results. This are busy every day answering the question: “How can I make our organisation more successful?”. Openness and action orientation The culture of an HPO is an open one in which everyone is involved in important processes through shared dialogue, continuous knowledge sharing and learning from mistakes, where change is encouraged and actions are taken to improve performance. Continuous improvement and innovation An HPO is aware of its distinctive (strategic) characteristics and has all employees continuously contributing to improving, simplifying, aligning and renewing processes, services and products. Long-term orientation To an HPO, continuity in the long term always takes precedence over profit in the short term. The long-term orientation of an HPO applies to clients, collaboration partners, as well as relationships with employees. Management positions are filled by employees rising from the ranks. Our research has shown that these five HPO building blocks apply to all countries (over 60 countries were included in the study), sectors and types of organisations. “A High Performance organisation (HPO) is an organisation that achieves better results than comparable organisations and/or competitors over a period of at least 5 to 10 years.” HIGH QUALITY OF MANAGEMENT HIGH QUALITY OF EMPLOYEES LONG TERM ORIENTATION OPEN & ACTION ORIENTED CONTINUOUS IMPROVEMENT High Performance Organisation Copyright © Center for Organisational Performance 2010

7 Copyright © Center for Organisational Performance 20104. What’s in it for you? The HPO research shows that there is a direct and positive correlation between the five HPO factors and organisational results. Organisations that devote more attention to the five HPO factors logically not only score better in those five areas, but also achieve better results than peer organisations, regardless of the sector, industry or country in which they operate. Characteristics of HPOs (profit organisations): Profitability that is 14 to 44 percent higher than that of non-HPOs Profit increase that takes place 4 to 16 percent (depending on industry and size of organisation) faster than at non-HPOs ROI (Return on Investment) that is 15 to 26 percent higher than at non-HPOs TSR (Total Shareholder Return) that is 4 to 42 percent higher than at non-HPOs In addition to improved financial performance, the HPO research also showed that the strategic performance of an HPO is significantly more focussed and effective than that of a non-HPO. HPO organisations also score higher in terms of: Customer satisfaction Customer loyalty Employee satisfaction Quality & innovation of services/products Complaint handling Reputation HPOs are dynamic, challenging and fun places to work. These organisations attract the most talented employees as a result. It is not a utopia; we have encountered HPOs in every type of sector. But … it is not easy to become or to remain an HPO. It takes hard work and commitment. Copyright © Center for Organisational Performance 2010

8 Copyright © Center for Organisational Performance 20105. Open doors…for you to pass through Are the HPO factors in fact nothing more than open doors? Chances are you have implemented various improvement methods in recent years, most of which have probably had no scientific basis and therefore only a limited chance of success. In his study, dr. André de Waal identified 189 possible doors that could lead to improved performance. Unfortunately, many passages can misguide your organisation towards the wrong track and your vigorous efforts end up having few demonstrably lasting results. So the question for dr. De Waal to answer was: which doors are most important? The HPO study indicates which doors are better kept shut and which ones can open to success. The path to becoming a truly high-performing organisation is limited to only five doors (factors). The greatest advantage is that, thanks to the five HPO factors, you can be sure you are at least entering the right room. Once inside, the exact direction taken depends on the specific circumstances that you (and your organisation) face. Copyright © Center for Organisational Performance 2010

9 with conclusions and recommendations6. Steps of the HPO diagnosis process Introduction Proposal Online HPO-scan Interviews Analysis Management workshop Final report with conclusions and recommendations The first step in the HPO diagnosis is an introduction of the organisation to the HPO framework, HPO factors and HPO diagnosis. We then develop a plan of approach in consultation with you, in order to ensure that our activities are in line with the questions that you want to be answered. An online HPO scan is then performed among a number of managers and employees to create a “photograph” of the organisation. This is followed by several interviews in order to understand the story behind the photo. We then analyse the data and organise a workshop to provide feedback on our findings to the most important parties involved (usually starting with the Board of Management). The recommendations for improving the HPO status of the organisation are also discussed during this interactive workshop. Finally, we submit to you a concise report containing the results of the HPO diagnosis. Throughout this entire process, you can benefit from the HPO knowledge and ‘best ideas’ already developed and take advantage of our library of publications (articles and books). The result The result is a good understanding of the strengths and improvement potential of your organisation and a focus on those aspects requiring attention in order to perform better in the long term. The results of your organisation are also compared to your sector colleagues. The HPO final report provides you with a document and checklist to initiate a process of improvement with the right focus. It also makes clear which paths and projects you should consider terminating. You now have a common language and direction to improve the performance of the organisation on a permanent basis. All activities are finally in sync! After the HPO diagnosis has been completed, we can support you in developing and carrying out improvement efforts by offering an HPO transition programme. Copyright © Center for Organisational Performance 2010

10 Copyright © Center for Organisational Performance 20107. References “The HPO diagnosis turned out to be an excellent incentive to launch the change process that was already on INHolland’s Strategic Agenda. All recommendations from the HPO final report have been fully implemented and the Board of Directors have committed themselves to carrying out expressly those recommendations. Talks with those lower down in the organisation have only confirmed to me that the HPO diagnosis was the right move to make.” Geert Dales, Chairman of Board of Directors at INHolland University “Culture is very important at HPOs and the HPO Diagnosis provides us with a tool for thinking in terms of the long run.” Carel Maasland, former HR Strategist at IKEA International “The HPO workshop gave us a valuable reflection on the goal to become and remain a high-performing soccer organisation. The results provide us with a useful and effective tool that can be put into practice immediately in those areas that require better collaboration and giving and receiving feedback.” Jacco Swart, CEO of Football Club N.E.C. Nijmegen “André de Waal has succeeded in understanding the essence of excellent performance. Every organisation should consciously introduce these five building blocks.” Arend de Jong, VP of Air France KLM A selection of recent clients in the Netherlands: PON Power ING Bank Grohe Cofely GDF Suez ABN Amro Bank Dutch Central Bank (DNB) Bagels & Beans PricewaterhouseCoopers Advisory A selection of recent international projects: Pearle (global) ATLAS Consortium (UK) De Beers Marine (South Africa) Iringa University College (Tanzania) Plastigama de Amanco (Ecuador) Nabil Bank (Nepal) Kendrion (global) Tata Consultancy Services (Europe) Copyright © Center for Organisational Performance 2010

11 Copyright © Center for Organisational Performance 2010More information Publications Numerous articles and interviews have been published on HPO including: Automotive British Academy of Management Business Strategy Series (Emerald) International Journal of Productivity and Performance Management Management Online Review (MORE) The European Academy of Management (EURAM) These and more articles can be freely downloaded from Contact Center for Organisational Performance Chiel Vink, Client Director Havenstraat KG Hilversum The Netherlands Tel: (+31 ) (0) Fax: (+31) (0) UK: Manley Hopkinson FRGS Mobile:+44 (0) Supervisory board Drs. Cees van Rijn, CFO of Nutreco Dr. Bert de Groot, Professor by special appointment of Governance and Strategic Investment Policy at Erasmus School of Economics Dr. Tom Groot, Professor of Management Accounting at Free University of Amsterdam Copyright © Center for Organisational Performance 2010