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i4cp enables high performance in the world’s top companies.

i4cp is the world's largest vendor-free network of corporations focused on building and

sustaining a highly productive, high-performance organization. Through a combination of

peer networking, human capital research, tools and technology, we enable high

performance by:

Revealing what high-performance

organizations are doing differently

Identifying best and next practices

for all levels of management

Providing the resources to show how

workforce improvements have

bottom-line impact

Over the last 40 years, i4cp research has

revealed the five key human capital

domains that companies leverage to drive

performance. Our members - many of the

largest and most respected companies in

the world across a wide spectrum of

industries - use this research, i4cp's

expertise, tools, technology and vast

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and drive business results.

Visit i4cp.com to learn more.

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High-performance companies are the role models of the organizational world. They

represent real-world versions of a modern managerial ideal: the organization that is so

excellent in so many areas that it consistently outperforms most of its competitors for

extended periods of time, despite industry or economic conditions.

Along with an insatiable appetite to study successful leaders, we in the business world are

fascinated with high-performance organizations. What are they like? What do they do

differently? Is there a secret recipe that allows them to outperform their competition?

Of course, many books have been dedicated to this subject. From Tom Peters’ and Bob

Waterman’s early 80’s best seller In Search of Excellence to Jim Collins’ Built to Last and

Good to Great, there has been a succession of books that leaders and managers across the

globe have devoured. Programs such as GE’s Six Sigma have trained countless people in

how to achieve top performance, while consultants have built entire practices around the

elements of high-performing companies.

While business professionals want to learn more about high-performance organizations in

the hope that they can apply some of the secret sauce to their own firms, many of the

companies profiled within the pages of the aforementioned books were unable to sustain

high performance. In fact, the number that achieve this vaunted goal is about half. While

much has been written on the subject, the truth is that the ingredients to high performance

remain somewhat of a mystery.

Part of the reason for this is the definition – what do we mean exactly by high performance?

Is there a difference between “surviving” (which has been the criticism of companies

profiled in Built to Last, for example) and “performing?” Do we mean companies that

outperform others in their own industry or across industries? How long of a time period

constitutes “high performance?” And which measures, financial or otherwise, are the best

ones to use?

Over the last three decades, i4cp researchers have looked at various ways to both define

high performance and to identify the traits that separate consistent high performers from

the rest. Over time, we have come to recognize high-performing organizations as ones which

consistently outperform most of their competitors in four primary areas:

Revenue growth

Market share

Profitability

Customer satisfaction

The Five Domains of High Performance

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Our research team has examined well over 100 different core human capital management

issues to try and determine the differences between high-performing and low-performing

organizations. The research has quite clearly shown that no single ingredient guarantees

organizational success. Rather, high performance is like a delicate entrée that’s based on a

staple of core ingredients, any one of which, if left out or of inferior quality, will ruin the

entire item.

The Five Domains of High Performance Our research has shown that, no matter how many times we study top organizations, there

are five core ingredients that separate higher-performers from their lower-performing

counterparts:

1. Their strategies are more consistent,

clearly communicated and well thought

out. They are more likely than other

companies to say that their philosophies

are consistent with their strategies, and

their performance measurements mirror

their strategies.

2. Leadership is clear, fair and talent-

oriented. Those leaders are more likely

to promote the best people for the job,

make sure performance expectations

are well known and consistent with the

strategy, and are committed to

developing their people.

3. There is a commitment to the right talent within the organization. And while

employees are treated as unique individuals, the organization takes a holistic

approach to managing and making decisions based on data-driven information.

This begins with a strategic approach to workforce planning. It entails looking at the

organization from an outside-in perspective that identifies the business model

components and areas that drive value, and then determines what the organization

needs.

4. The culture is strong in all the right ways and employees are more likely to think the

organization is a good place to work. Employees not only adapt well to change, they

embrace it. High performers also emphasize a readiness to meet new challenges

and are committed to innovation.

5. They are more likely to have a strong market focus and to go above and beyond for

their customers. They are organized internally around what’s best for the customer,



they think hard about customers’ future and long-term needs, and their strategy is

based on customer data. They are also more likely to see customer information as

the most important factor for developing new products and services.

While these five domains – Strategy, Leadership, Talent, Culture and Market focus – may

seem a bit broad or even obvious, the degree of separation our research has shown

between high and low performers within these five elements is startling. The following graph

from a 2010 i4cp study on high performance depicts this separation:

It’s important to note that while these five core domains are critical, there are sub-categories

within each that are even more critical to explore. Let’s look at each domain individually.

3.94

4.62

3.78

3.84

4.01

5.41

5.70

5.00

4.91

5.17

Average Score of Low Performers

Average Score of High Performers



1. Strategy In the area of strategic approach, our research shows that consistency is quite important to

high performance. Executives in high-performing organization tend to establish consistency

by establishing clearly articulated philosophies that set standards for everyone’s behavior.

They also have leaders, managers, and employees who behave consistently with the

strategic plan and the company’s philosophy. The result is that, in high-performing

organizations, people understand and buy into the strategy, the importance of the strategy,

and what it means for their job.

Top 5 Strategy Items Average score

for High

Performers

Average score

for Low

Performers

Gap between

High and Low

Performers

Correlation

with Market

Performance

1

The behavior of our organization’s middle

managers is consistent with the behaviors

needed to execute the strategy 5.33 3.84 1.49 .38

2

The behavior of our organizations executives is

consistent with the behaviors needed to

successfully execute the strategy

5.57 4.00 1.57 .38

3 People in our organization understand how the

strategy affects their individual roles 5.14 3.66 1.48 .36

4 Our organization’s publicly stated philosophy is

consistent with its strategy 5.79 4.43 1.36 .36

5 Our organizational structure is aligned with our

strategic goals 5.33 3.81 1.52 .36

In our research, high-performance organizations scored higher than the lower performers in

all attributes that measure consistency of strategic approach. In fact, our research shows

that the two most widely cited characteristics among high-performance organizations was

that the behaviors of executives and managers were consistent with the behaviors needed

to successfully execute the strategy.

Not surprisingly, leadership behavior that is consistent with the strategy also had the highest

positive correlation with market performance. The common wisdom of “walk the talk” is an

indispensable ingredient in high-performance organizations. If an executive says one thing

and then does another, employees draw a variety of conclusions, most of them destructive

to an organization, such as:

• Do not believe what he or she says.



• We are allowed to behave the way the executive does (or we can pick and

choose which rules to follow).

• The rules do not apply to everyone (or anyone) and therefore we are allowed

to do whatever we wish.

It’s interesting to note that in i4cp’s recent study of Leadership Competencies, we found

that one of the few competencies that had both a positive correlation with leadership

success and market performance was “role model for organizational values.”

Additionally, our research shows that leaders whose behavior is consist with the

organization’s strategy and values create an environment that allows high-performance

organizations to outstrip low performers in another important area: “people understand how

the strategy affects their individual roles.” Over the years, our research has found that when

people within the organization understand how their day-to-day performance impacts the

organization’s strategy, the more capable they are of driving high performance and

executing the strategy faster than low performers.

However, high performance in this domain is not just related to consistency of leadership

behaviors. Our research shows that two other important variables also have an extremely

strong positive correlation with high performance: The “organization’s publicly stated

philosophy is consistent with its strategy” and the “organization’s structure is aligned with

the strategic goals.” Leaders come and go, but philosophy and structure tend to be more

stable. Strategy’s needs to be aligned with these philosophies and supported with a

structure that is aligned throughout.



2. Leadership

Leadership – especially at the CEO level –is frequently portrayed as the key ingredient in

creating a successful organization. However, recent research suggests this can be

overstated. Nitin Nohria and her colleagues at Harvard Business School found, for example,

that on average only 14% of a firm’s performance is dependent on its leaders. i4cp’s

research shows that Leadership is only one of five key components of organizational

systems that must operate in harmony to be effective. However, in today’s superstar-

focused culture, executives and leaders are what most business writers tend to focus on

first. People are acculturated to worship or blame the superstar for the successes and

failures of an entire organization.

Clearly leaders can’t do their jobs alone. They must be able to convince others to focus their

efforts on the success of the organization. Communication, and the idea that “leaders are

good at empowering employees,” are critical to the success of high-performance

organizations.

Top 5 Leadership Items Average score

for High

Performers

Average score

for Low

Performers

Gap between

High and Low

Performers

Correlation

with Market

Performance

1 Our leaders clearly communicate the

organization’s goals 5.32 3.83 1.49 .36

2 Our leaders are excellent decision makers 5.02 3.75 1.27 .34

3 Our leaders are good at empowering employees 4.81 3.50 1.31 .32

4 Our leaders make sure programs support the

desired culture 5.08 3.78 1.30 .32

5 Our leaders are continually adopting innovative

approaches to increase employee effectiveness 4.78 3.40 1.38 .32

In multiple studies conducted by i4cp on leadership, one of the most widely agreed-on

characteristics of high–performance organizations is that leaders “clearly communicate the

organizations goal.” When leaders do this well and often, it tends to create an environment

where everyone is clear about the organization’s performance expectations, and employees

understand how their behavior affects the organization.

Leadership behavior can also be analyzed from a broader perspective that is based on the

high-performance paradigm set out above, and can be grouped into two major categories:



Supervisory relationship: For over 50 years, organizational researchers have found

that the most important relationship within any organization is the one between the

employee and his or her immediate supervisor. A good relationship between

employee and supervisor is highly correlated with high performance. Not surprisingly,

the best-performing organizations in the survey scored higher in all of the questions

related to this area, including those related to employee comfort with being able to

express disagreement.

Clarity of goals and consistency of rewards: As noted above, high-performance

companies are clear and consistent in the area of performance expectations, and

they also tend to be more consistent in the ways they reward workers. They set clear

performance expectations, reward employees who have the most ability, and reward

those employees who strive to meet customer needs.

In short, clarity and consistency are important in terms of strategy and philosophy, customer

focus, and leadership behaviors. These components mutually reinforce each other, creating

a “culture of performance” by minimizing the destructive and nonproductive behaviors that

are the result of mixed messages.



3. Talent Effectively managing talent is critical to building a high-performing organization.

Organizations that excel at talent management usually move beyond a focus on HR

practices, processes and systems, to a strategic view that is linked to business outcomes.

This typically begins by stepping outside of HR and looking at the organization from an

“outside-in” perspective, which entails identifying the business model components and

areas that drive value and then determining what the organization needs from a human

capital perspective. This enables organizations to take a holistic approach to people; still

treating employees as individuals but managing and making workforce planning decisions

based on data-driven information.

The cost of ineffective talent management can be staggering. A few of the problems

companies face when they don’t manage their talent well are high turnover, a disengaged

workforce, poor workforce planning (which leads to reactive rather than proactive

management), compromised succession planning, and constantly having to hire from the

outside because talent has not been developed internally.

Top 5 Talent Items Average score

for High

Performers

Average score

for Low

Performers

Gap between

High and Low

Performers

Correlation

with Market

Performance

1 Our employees are highly engaged

5.09 3.77 1.32 .35

2 We are able to retain our most talented

employees 5.15 3.78 1.37 .35

3 We identify and track high-potential employees

well 4.54 3.38 1.16 .31

4 We hold manager accountable for effective talent

management 4.29 3.13 1.16 .31

5 Our executive team takes responsibility for

managing talent 4.55 3.35 1.20 .30

Much has been written about the importance of employee engagement, and our research

shows that high-performance organizations typically have highly engaged workforces.

However, most conversations about “engagement” can quickly turn into a debate about

what comes first, a highly engaged workforce or a successful organization. While the answer

to that question is elusive, our research into engagement finds that high-performing

organizations with highly engaged employees do several things differently from low-



performing organizations with low levels of employee engagement. These practices start

with the kind of talent they search for:

What Organization’s Look for as Predictors of Engaged Employees

Top Three Traits

High-Performing Organization with Highly

Engaged Employees

Low-Performing Organizations with

Disengaged Employees

1 Has a passion for work Intelligent

2 Has a positive attitude towards peers

and customers

Confident in work abilities

3 Has a desire to set and achieve goals Has excellent job skills

The philosophy of many high-performance organizations can be summed up as “hire for

attitude (vs. aptitude) and train for skills.” The hallmark of low-performing organizations is

hiring smart people vs. hiring individuals for their passion, positive outlook and work ethic.

Our research into engagement also finds that high-performing organizations work harder at

creating and maintaining a highly engaged workforce in four significant areas:

They make engagement a priority for leaders at all levels in the organization,

especially for supervisors.

They actively promote and communicate the importance of engagement.

They recognize and reward engagement and build it into other practices.

They build a learning and development culture while investing in their employees.

Much of this behavior supports talent management, and when it comes to effective talent

management, high-performance organizations excel in the following areas:

They have a meaningful definition of talent management for their organization that

supports the business strategy and is understood by all stakeholders.

They have integrated the various components of talent management – recruiting,

onboarding, training and development, performance management, succession

planning, rewards, etc. – in both their processes and technologically.

High-performance organizations have assigned clear accountability for talent

management internally and they also make the business case for talent

management clear in order to gain senior-level support. While an individual in HR is



often responsible for developing and maintaining the tools and processes to enable

successful talent management, in high-performance organizations these people have

enabled individual managers – through training and clear communication – to carry

out and execute talent management.

High-performance organizations determine what metrics they want to capture to

measure the success of their talent management initiatives. They have assigned

clear ownership of those metrics, which are reported on frequently.

The executive team has built organizational incentives into the talent management

process. They monitor progress and reward behaviors that are in line with the talent

management objectives.

Talent management is growing increasingly integrated and valuable as organizations'

respond to uncertain economic times. As the field matures, talent management's

effectiveness as a strong component of overall business strategy is developing rapidly.



4. Culture Culture is the proverbial 800 pound gorilla in the room. Research shows that unless the

organization’s culture is aligned with the organization’s vision, mission and strategy, culture

will override all else. But how does a company know if the culture is aligned? How does a

leadership team build and maintain a supportive culture?

Any conversation about culture typically starts at the top. The leadership usually sets the

tone for the culture, and once the tone is set it is difficult to shift. Culture, however, has

layers like an onion. The culture at the top of the organization does not always reflect the

culture at the bottom. In most companies, there are “tribes” throughout the organization

that have unique and separate cultures. For example, sales is a tribe with their own

language and secret handshakes. Typically, engineering, marketing, HR and finance are also

tribes, with many more emerging in most organizations. What’s important is that each tribe

is aligned with the overall culture of the organization. But to many leaders, culture can seem

a little like mist, constantly shifting and changing as the external world changes. Economic,

demographic and competitive elements are all factors that affect the culture to varying

degrees.

Although it’s difficult to make immediate changes to culture, our research finds that high-

performance organizations have a number of distinct cultural characteristics that help them

to adapt more readily. Primarily, high-performance organizations are aware of external

factors such as customers, markets and competitors, and they are ready to take on new

challenges.

Top 5 Culture Items Average score

for High

Performers

Average score

for Low

Performers

Gap between

High and Low

Performers

Correlation

with Market

Performance

1 Our organization responds well to changes in the

market or elsewhere 5.29 3.87 1.42 .36

2 Our culture adapts to changing market conditions 5.09 3.68 1.41 .35

3 Our organizational culture is externally focused

on our customers, markets, and competitors 5.55 4.29 1.26 .35

4 Most employees think this is a good place to work 5.63 4.54 1.09 .34

5 Our organization emphasizes readiness to meet

new challenges 5.32 4.07 1.25 .33



The ability to not only effectively manage change, but to embrace change, is a hallmark of

high-performance organizations. In addition, being seen as a “good place to work” is a solid

indicator that an organization is a high performer. Not only is this characteristic the most

widely cited by high-performance organizations, it is also one of the areas in which those

organizations furthest outstrip low performers.

Culture is largely made up of values, actions, beliefs and ethics. Our research has grouped

these areas into four categories that drive high performance:

1. Approach to work: In addition to some of the values noted above, employees in

high-performance organizations tend to be loyal to their company and they tend

to participate in their organization’s social events. They also tend to be more

involved and more comfortable with their co-workers.

2. How the organization treats its employees: High-performance organizations

create an environment that fosters cohesiveness, loyalty and readiness to

change. Such organizations tend to treat their employees well, and employees, in

turn, treat the organization well. These organizations also tend to be more

concerned about their employees than are low-performing organizations, and they

tend to have employees who are able to find helpful, knowledgeable opinions

among their coworkers.

3. Employees have the freedom to use their judgment: In high-performance

organizations, employees have more freedom to use their own discretion than

employees do in low-performance organizations. Employees in these

organizations also have more liberty to change processes or procedures to

improve outcomes. Their supervisors have the same type of freedom. All of these

changes are made within a more cohesive group than in low-performance

organizations.

4. Ethics: High-performance organizations tend to have a stronger set of ethics-

related values than low-performance organizations.

It makes sense to look harder at these issues today, because i4cp research indicates that

the external factors influencing culture will have an even greater impact ten years from now.

In the highly multicultural, technologically mediated organizations of tomorrow, it will be

crucial for far-flung organizations to forge unique identities as part of their “branding”

efforts, both for customers and employees.

Corporate cultures will also need to be more adept at becoming “talent magnets” in the

future, and they’ll probably need to adopt stronger values related to sustainability, diversity,

resiliency and agility. In addition, they’ll often need to represent and express their cultures



via virtual, online worlds where geographically dispersed employees can get a greater sense

of belonging and understanding.

None of these shifts will be easy. Even organizations that currently have effective corporate

cultures will be challenged to maintain such cultures amid the changing and tumultuous

environment of the coming decade. The good news is that positive cultures are linked to

greater adaptability. Therefore, leaders should view the topic of corporate culture not only as

important to high performance today, but also as potentially critical to their organization’s

ability to survive and thrive in the future.



5. Market Focus As we have seen in the other domains of high performance, having an external focus is

extremely important. To paraphrase Peter Drucker, “No great change comes from looking

internally. Change only comes from having an external focus.” Our research shows that great

organizations intimately understand the market they operate within and their customers. In

high-performance organizations, even those employees who do not have the opportunity to

interact face-to-face with the customer understand their needs.

Top 5 Market Items Average score

for High

Performers

Average score

for Low

Performers

Gap between

High and Low

Performers

Correlation

with Market

Performance

1 We do a good job at accessing our customers’

future needs 5.66 4.52 1.14 .37

2 Our functions and departments are organized in

order to maximize customer value 5.28 3.94 1.34 .37

3 Our organization’s strategy is based on customer-

related data 5.58 4.33 1.25 .36

4 We strive to be the best in the world in providing

value for our best customers 6.04 4.92 1.12 .35

5 Our internal processes are designed to best meet

the needs of the customers 5.37 4.08 1.29 .34

Understanding and acting on the future needs of customers is one critical element that

separates high performers from the rest. High performance is also associated with a very

strong emphasis on customer service, including vigorous efforts to serve customers better

than anyone else in the industry. Our research has found that high performance is often

linked with the use of customer-related data as part of product planning, as well as using

that data to align functions and departments and developing future strategies. In short,

high-performance companies regularly and proactively seek out and act on the insight they

gain from their customers.

High-performance firms also understand that different customers have different needs, and

that some customers add more to the bottom line than others. Such organizations create

different types of processes to manage different categories of customers.



1. External focus: In general, high-performance organizations are more willing than

other organizations to hear what is best for the customer rather than what is best for

the organization.

2. Philosophical approach: High-performance organizations tend to be the “best in the

world” in providing value and exceeding customer expectations. These are not just

lofty words or statements but actions that are put into practice. As with strategic

approaches, high-performance companies are more likely than other organizations to

“walk their talk” in terms of customer focus.

3. Internal design: High-performance organizations tend to be better at creating and

maintaining internal processes that best meet the needs of the customer. Their

customer-focused processes are also more flexible than those in low-performance

organizations, and leave room for employees to use their judgment in meeting

customer needs.

Most corporations recognize the importance of customer focus. It’s the full commitment to

customers and the market that elevates the high performers. For those organizations,

customers feature prominently in vision statements, scorecard measures, innovation efforts,

employee performance standards, organizational design, reward programs and other

important areas of business operations.



The Importance of Alignment and Execution While i4cp research has identified five domains of high-performance organizations,

improved performance won’t happen without alignment and execution. It’s important for a

company’s culture to align with its strategies – which then must align with its focus on the

market, as well as its talent programs and leadership approaches. These five domains must

work together as an integrated system. Once alignment occurs, execution in these areas is

paramount.

Our research in this area also suggests that, while the five domains of high-performance

organizations are likely to remain stable over the next 10 years, the focus for companies

within those domains will evolve. There will most likely be innovations in leadership

competencies, talent-management programs, technology usage, customer service,

performance metrics and other areas affecting an organization’s human capital. Achieving

and maintaining high performance will require that companies adapt to a changing

marketplace and shifting social attitudes.

Organizational leaders will need to adapt to new theories and understandings of high

performance by staying abreast of the research in the field. Today’s favored strategies and

best practices can easily become tomorrow’s failures of imagination. Amid these changes in

practices and environment, there will always be companies that stand out in terms of their

ability to consistently perform at a high level for many years. These organizations will have

much to teach us.



About the Author

Kevin Oakes - CEO

The Institute for Corporate Productivity

As CEO of i4cp, Kevin provides strategic direction and vision,

and is responsible for the overall operations of the

organization. Kevin has been a pioneer in the human capital

field for the last 15 years, and is a frequent author and

international keynote speaker on topics such as talent

management, leadership, innovation, metrics and strategic

learning in organizations.

Prior to founding i4cp, Kevin created SumTotal Systems,

(NASDAQ: SUMT), the world's largest learning management system company and the

industry's leading provider of talent development solutions, when he merged Click2learn

(NASDAQ: CLKS) with Docent (NASDAQ: DCNT) in 2003. The merger won Frost & Sullivan's

Competitive Strategy Award in 2004.

Kevin was also the 2006 Chair of the national American Society of Training & Development

(ASTD) board, and served five years as an ASTD board member. Kevin was also the 2008

ASTD Board Selection Committee Chair. ASTD is the largest association in the world

dedicated to workplace learning and performance, and its global membership reaches over

70,000 members. Kevin is also an advisory board member of Intrepid, a Seattle-based

provider of outsourced workplace productivity solutions, and he serves on the board of

Longworth Ventures, a Boston-area venture capital firm.

Email: [email protected]

mailto:[email protected]

Peers. Research. Tools. Technology.

i4cp enables high performance in

the world’s top organizations.

Contact us at:

1-866-375-i4cp (4427)

or on the web at i4cp.com

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