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Have you developed your ”Roadmap To Excellence”?
A 3 part series for how to accelerate your “Performance Excellence Journey” by developing a customized “Roadmap To Excellence”
Article by: Donald Hoffert President RTE LLc (Includes adaptations from- Brian Lassiter-President, Minnesota Council for Quality President)
Donald is a Certified Performance Excellence Examiner-Mn Board of Examiners, CBMC CEO Forums Director-Certified Moderator, Certified Program Mgmt Professional and Certified Lean Administrative-Operational Excellence
Here’s the silver bullet you’ve all been waiting for. I’m going to give you the “secret sauce” for achieving and sustaining organizational excellence – the answers to all the questions that leaders might have for improving their results. These have been validated to drive high performance in today’s organizations – a list that can help you reflect on your own organization’s performance.
WHY is this important to you?
A recent study on organizational excellence by Dr. Vinod Singhal of the Georgia Institute of Technology and Dr. Kevin Hendricks of the College of William and Mary provides hard evidence that the effective implementation of excellence principles dramatically impacts results. The 5 year study of more than 600 quality award winners showed that, as a whole, they experienced significant improvement vs. their competitive environment..ie…a 44% higher stock price return, a 48% higher growth in operating income and 37% higher growth in sales compared to the control group. Award winners also outperformed the controls on return on sales, growth in employees, and growth in assets.
And, it’s especially important for SMALL COMPANIES….
There is a common perception among smaller firms that performance excellence principles are more applicable to larger firms. The findings indicate that this perception is simply not true. After adjusting for the performance of the controls, smaller award winners averaged a 63% increase in operating income, 39% increase in sales, 17% increase in return on sales, 21% increase in employment, and 42% increase in assets - all of which are well above the increases experienced by the larger award winners.
So then…you might ask…
- What is this "framework for excellence?
- How do you assess your maturity vs. validated "best practices"?
- How do you begin your own continuous journey on your "Roadmap To Excellence"?
There are six general things that leading organizations – organizations that are at the top in their industries or markets – do. I think you’ll agree that:
1) High performing, world class organizations focus on their customers
2) High performing, world class organizations have visionary leaders.
3) High performing, world class organizations plan for the future
4) High performing, world class organizations measure performance.
5) High performing, world class organizations focus on their processes.
6) High performing, world class organizations focus on their workforce.
Let’s cover the first 2 elements, of this three part series in detail…
1) High performing, world class organizations focus on their customers (or “stakeholders,” if you prefer). Why is that critical? Customers are the lifeblood of any organization. Consider these pain points:
- 90% of dissatisfied customers will not come back or buy again. (Research Institute of America)
- However, only 4% of dissatisfied customers will bother to complain (so for every one complaint you hear, 24 others go unheard).
- But dissatisfied customers tell an average of nine others about their dissatisfaction.
- 68% of dissatisfied customers who quit doing business with an organization do so because of company indifference. Essentially, the company didn’t take the time to listen and hear the customer’s need or complaint.
- Engaged customers are 68% more likely to increase purchases, than neutral or disengaged customers. (Forrester)
It should come as no surprise that satisfied, engaged customers positively impact the bottom line and promote organizational vitality and sustainability.
So what are some best practices to ensure a focus on customers? Consider these (and reflect on whether your organization is doing them):
- Listen to your customers! Build mechanisms that systematically capture the voice of your customers – methods like focus groups, surveys, one-on-one interviews, and complaint data. And then act upon that data to provide products/services that satisfy (or exceed) customer expectations.
- Design customer listening methods so that they vary for different segments of customers and/or across the various stages of their relationship with you. New customers have different needs than those that have been with your organization for awhile.
- Use methods like Quality Function Deployment, forced- or paired-choice analysis, the Kano model, and conjoint analysis to identify, prioritize, analyze, and ensure that customer requirements are incorporated into product/service design and features.
- Listen to former customers, potential customers, and customers of competitors. These represent potential “market” for your organization.
- Manage your complaints – ensure that they are resolved
completely and promptly (which requires customer access points, training, and empowerment), but also aggregate and analyze them to identify systemic issues in your operations.
- Measure customer satisfaction and engagement. Unfortunately, satisfied customers may still defect, so measure their satisfaction AND engagement levels – how committed they are to your organization and its offerings. Characteristics of engaged customers include loyalty, willingness to make an effort to use your services, and their willingness to actively advocate for and recommend your organization. There are many methods to do this (Gallup CE11, Net Promoter Score, and others); pick one, and use the data to make decisions.
- Anticipate key customers requirements and changing expectations – it’s not only about satisfying today’s requirements, but staying one step ahead of competitors in identifying and responding to emerging customer and market needs.
- Build an organizational culture that ensures a consistently positive customer experience. Think Ritz Carlton, Disney. Everything about their system (recruiting, training, employee rewards, etc.) centers on the customers’ experience.
Customer focus is critical to organizational excellence, but the leadership of the organization must set the target….
2) High performing, world class organizations have visionary leaders. Leaders’ actions should guide and sustain the organization – they should create an environment for performance improvement, accomplishment of mission and strategic objectives, innovation, high performance, organizational and workforce learning, and agility.
Why is leadership important? Simply: effective leadership is the single biggest predictor of organizational excellence. Period. Research shows a strong connection between leadership fostering employee engagement based on employee passions to strong customer devotion and organizational vitality leading to strong profit-revenue growth.
Here are some best practices in leadership:
- Be personally involved in setting vision and values and in deploying and reinforcing them throughout the organization. Be personally involved in creating a focus on action, on balancing value for customers and the organization, on rewarding/recognizing performance that supports high performance.
- Be personally involved – and create systematic processes – to ensure ethical behavior on all stakeholder transactions. Include ethics in training, communications, measurement, performance appraisals.
- Ensure effective, frank two-way communication with the workforce. Use various media/vehicles for different messages and for different workforce groups. Measure effectiveness of communication to see if messages are received (correctly).
- Ensure effective governance – accountability, transparency, and protection of stakeholder interests. Evaluate leadership (senior leaders and governance board) effectiveness.
- Systematically address impact on society of your services and operations, and anticipate public concerns with current and future services and operations.
- Support and strengthen key communities, focusing on areas related to your core competencies and strategic objectives. Consider societal well-being – environmental, social, and economic systems – as part of your strategy and daily operations.
Stay tuned, next time we will cover part 2 bullets 3 and 4, continuing to develop our roadmap to excellence!
Back to PWI Magazine - Summer 2011