Why Build a Perform Culture?

Introduction

While macroeconomic influences, marketplace dynamics and increased competition may constantly change and have an effect on most service sector business models, the one common factor that has not changed is that the success of service businesses has and will be dependent upon the daily performance of the workforce.

 To compete in today’s complex service markets, not only is it required to be effective at workforce management, we must focus on consistent re-engineering of business processes, outsourcing functions, and consistently upgrading the skills and capabilities of our company’s workforce.

Additionally, cost and pricing pressures have directed us to create workforces that incorporate more variable pay cost structures, have incentive compensation concepts tied to financial outcomes, and which are aligned with business objectives.

What is clear to Ephor is: it is up to us as CEO Entrepreneurs to invest in and develop our “Employer Value Proposition” so that we gain a competitive advantage in recruiting, so that top talent will opt into larger companies that have a history of practices and programs to motivate and retain key performers.

The following findings of our recent studies and surveys provide the details of adoption, benefits thereof, and utilization of High Performance Workforce (HPW) practices:.

For those companies that reported excellent financial and marketplace performance and successful HPW programs:

• 98% report that employees are actively involved in decision-making.

• 9 out of 10 outsource at least two functions with the majority of outsourcing in the following areas: marketing, IT, payroll, and other project-oriented initiatives.

• 3 out of 4 utilize Incentive Variable Compensation as a significant portion of the workforce total compensation package.

• 3 out of 4 use Flextime and Flexible Scheduling, which match work to lifestyle considerations.

• 3 out of 4 have developed and utilized “Informal Leader Programs” to accelerate change and drive performance.

• 74% report that the CEO is an advocate of HPW programs.

For those companies that do not have an HPW program, and do not illustrate Perform Culture attributes, the following feedback was most prevalent:

• Only 1 in 3 small businesses reported having established regular scheduled performance reporting rhythms (i.e. accountability management programs).

• Only 40% utilize either industry or competitive benchmarking as a venue to monitoring performance/productivity improvement.

• Less than half track simple Human Capital metrics like duration of open job to fulfillment, turnover rates, employee engagement scores, etc.

Contrary to popular belief, creating a high performance workforce starts with process excellence.

“A Call to Action for Effective Leadership”

For most companies, people represent the largest single expense and a significant upfront investment before outcomes are realized. Few companies ever invest in software systems or open a new location without a financial model and plan to generate meaningful ROI; yet the vast majority of companies fail to initiate and focus on programs related to their human capital assets and their results. This underscores the need for the creation of a Perform Culture.

All too often, executives and managers are willing to tolerate lackluster performance, convoluted reporting structures, irresponsible behaviors, ambiguous career paths and ad-hoc decision making to the detriment of company performance, many times due to cultural challenges.

On the other hand, HPW organizations that enjoy a Perform Culture reflect fast and effective decision-making frameworks and processes that:

• Set clear priorities

• Ensure the “Qualities of Right” (aka: the right people are doing the right job, in the right amount at the right time, at the right cost, and with the right quality)

• Adhere to formal decision rules with focused creativity and innovation on specific initiatives, and

• Have defined business processes that are continuously refined, coupled with a service excellence culture and behaviors that are synergistic to the business objectives.

Regardless of the stock market or large company performance, success is not going to come easy for small businesses, especially with respect to their cost of labor. For any business leader, the most important ongoing question to ask yourself is:

What strategy and operational components need to change or have changed for my business and what resulting actions are now required to engage the employees and create an HPW culture?

The success of the business model depends largely on employee innovation, drive, skill, motivation, and dedication. Employee engagement does not require micro-management; it requires:

a)Effective management systems

b)Effective executive leadership

c)Engaged, incentivized, and empowered employees

Conclusions

 The generally accepted definition of Culture is:

• A Culture is a defined set of acceptable norms and values of behavior within an organization.

Therefore, we as leaders and stewards of emerging businesses need to define very pragmatically what is our definition of a Perform Culture in our business:

• What are the norms and what will we normally accept?

• What are the values and principles that must be adhered to, such that our employees/associates “fit in”?

• What is the minimum professional standard of performance and behavior beyond norms and values?

• What will add value and contribute to our company mission, objectives and outcomes?

At Ephor, over our many years, we have learned and been the beneficiary of the outcomes of creating Perform Cultures in terms of best of breed enterprise valuations and exits along with the development of thousands of employees whose careers have advanced as a result of the cultures we have created.

Therefore, we, as CEO Entrepreneurs, hope this informational and guidance document provides you high-level guidance and attribute targeting so you can create a Perform Culture and thus enjoy a High Performance Workforce.

A High Performance Workforce = A Perform Culture = Increase Shareholder Value