Numbers Talk: People Driving Performance

In October 2011 the Society for Knowledge Economics published a report titled “Leadership, Culture and Management Practices of High Performing Workplaces in Australia: The High Performing Workplaces Index”.   The results are compelling and provide valuable insight into how to leverage teams to drive the performance of organisations. Today’s Karen Gately blog unpacks the High Performing Workplaces Index, and highlights the key messages.

Conducted over 2½ years and funded by the Department of Education, Employment and Workplace Relations, this in-depth study aims to provide insight into the leadership, culture and management practices that influence the performance of organisations. A core motivation behind the decision to undertake this study is recognition that “people at work are the engine of Australia’s productivity performance”.  The report goes on to say that “…it is the performance of people at work that determines much of the economic performance and output rates of the Australian economy”.

What the numbers say:

Clear evidence of the link between leadership and business results is established. Some of the specific findings include:

  • For every $1 of investment made, high performing organisations generate 12 cents more in revenue.
  • Lower performing organisations have an average profit margin ratio of 5.44% compared to an average of 15.63%.  i.e. the profit margin of High Performing Workplaces (HPW) are nearly three times higher
  • HPW’s do far better at achieving their stated financial targets (34% higher)

The role leaders play:

While comprehensive in its analysis and findings, a useful summary of the role leaders play in influencing business results is provided.  The report states that leaders in HPWs:

  • Spend more time and effort managing their people (29.3% higher)
  • Have clear values and ‘practice what they preach’ (25.7% higher)
  • Give employees opportunities to lead work assignments and activities (22.9% higher)
  • Encourage employee development and learning (21.1% higher)
  • Welcome criticism and feedback as learning opportunities (20.4% higher)
  • Give increased recognition and acknowledgement to employees (19% higher)
  • Foster involvement and cooperation amongst employees (18% higher)
  • Have a clear vision and goals for the future (17.9% higher)
  • Are innovative and encourage employees to think about problems in new ways (16.5% higher)

Cultural Influence:

The study established a strong link between the culture of an organisation, the standard of performance and subsequent achievement of goals. In summarising the influence of organisational culture, the report suggests “… HPWs are characterised by a set of values and shared beliefs where people welcome and seek to introduce change and innovation, where leaders care for their employees and foster collaboration, and where there is an ambition to deliver results and a focus on achieving goals”.

To read the report in full, click here.

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