Successful organisations sustain their performance over time, taking short-term decisions within the context of a long-term strategy and goals to maintain a long-term focus.
To achieve sustainable organisation performance, there should be integration and co-ordination between employee behaviour and the organisation’s long-term values. Much research has shown that employee engagement is a driver of long-term performance, but it’s important to identify what employees are engaged with. For engagement to support sustainable performance, objectives at all levels need to be aligned with the organisation’s strategic priorities.
In addition, assessing and evaluating progress towards sustainability is critical to inform the future direction and activity of the organisation. Organisations need to consider factors that are affecting their long-term performance, minimising the blockers and maximising the enablers. Sustaining high levels of performance in the long term can be achieved through empowering people at all levels of the organisation to innovate, embrace change and identify with the organisation’s purpose.
What is sustainable organisation performance?
Sustainable organisation performance is the maintenance of an organisation’s high performance levels. These levels are measured by financial indicators, people management and environmental and societal contributions over the long term. Successful organisations sustain their performance in the face of both internal and external challenges over time, rather than simply achieving high performance levels over the short-term or during good economic periods.
How does sustainable organisation performance relate to high performance working?
The concept of sustainable organisation performance brings together two major streams of work associated with driving organisation performance conducted by the CIPD and others in recent years:
- high-performance working practices
- high-performing individuals.
Sustainable organisation performance takes both of these issues and identifies how individual performance and effort is directed within a facilitative environment to enable its translation into performance that is sustainable over the long term.
High performance working practices
Much of the initial research on high performance working practices (HPWPs) was carried out during the 1990s, stressing the importance of effective people management and development practices. Its main focus is the kind of work environment that drives organisation performance.
In 2005, in association with the then Department of Trade and Industry and the engagement specialist firm Best Companies, we published the report High performance work practices: linking strategy and skills to performance outcomes. This report defined high-performance working practices as a set of complementary working practices (or ‘bundles’ of practices) covering three broad categories:
High employee involvement practices: for example self-directed teams, quality circles and sharing/access to company information
HR practices: such as sophisticated recruitment processes, performance appraisals, work redesign and mentoring
Reward and commitment practices: including specific types of financial rewards (such as profit-sharing), family-friendly policies, job rotation and flexible working.
The research pointed out that, while many of the individual practices identified weren’t new, it’s the systematic deployment of such practices that is significant when aiming to sustain high performance in the long term. The report suggests the kind of work practices that can enable performance within each of the three broad categories and also finds that learning at all levels is a crucial ‘given’, or pre-requisite, for high performance.
Our report Maximising employee potential and business performance: the role of high performance working1, produced jointly with the Engineering Employers Federation (EEF), gives further information about high performance working practices. It brings together relevant research in the area and considers the practical issues involved in introducing high performance working.
High performing individuals
Work on high performing individuals has provided evidence that well-designed HR policies and strategies result in higher levels of organisation performance through developing able and motivated individuals and giving them the opportunity to perform to high levels.
Our report Understanding the people and performance link: unlocking the black box showed how effective HR can develop high-performing employees whose efforts contribute to the bottom line. This work identified the components of discretionary behaviour or effort by employees - highlighting line managers’ delivery of HR practices and an organisation culture that is driven by an enabling vision and overarching value structure.
What really drives sustainable organisation performance?
Shaping the Future, a major CIPD research and engagement programme conducted between 2009 and 2011, addressed the overarching question of what really drives sustainable organisation performance. The project provided practical guidance, knowledge and tools for practitioners to use to drive long-term performance in their organisations.
An initial review of previous research into the drivers of sustainable organisation performance led us to focus on three main themes:
- organisation development.
Shaping the Future: stage one findings
The findings from the first stage of the Shaping the Future work confirmed the importance of these three themes and identified particular enablers and practices within each.
Within the leadership theme, the key enablers of sustainable organisation performance emerged as:
- line managers who support and help employees through change
- senior leadership role-modelling and empowering others
- a vision and values that are perceived as valid by all.
Within the employee engagement theme, we found two key enablers:
- an organisation purpose with which employees are engaged - our report Shared purpose and sustainable organisation performance uses case studies to look specifically at the benefits a strong sense of shared purpose can bring and to illustrate how shared purpose works in practice.
- line managers with a motivating and engaging management style that is aligned to the needs of the team.
Within the organisation development theme, we found three key enablers:
- sharing knowledge and learning across functions and departments
- an organisation design that breaks down barriers and has the flexibility to meet short- and long-term needs
- in terms of people management, alignment between individual and organisation objectives as well as clarity around career opportunities.
Shaping the Future: stage two findings
In the second stage of the project carried out between July and October 2010, we further investigated the sub-themes that emerged during the first phase of our research within the six case study organisations. We also remained open to any further themes that could emerge.
In total our research identified eight themes that are important for sustainable organisation performance:
alignment – consistency or integration between the values or objectives of different stakeholders and with business or organisational strategy
shared purpose – an organisational purpose that is shared by employees and often beyond, to include external stakeholders
leadership – involving the articulation of a future-oriented vision in an appropriate style by senior leaders, but also the demonstration of leadership at all organisational levels
locus of engagement – the awareness that people can be engaged at different levels and with various aspects of the organisation or the work
assessment and evaluation – the processes that occur at different organisational levels to gather qualitative and quantitative information in order to assess the impact of actions and to inform decision-making
balancing short- and long-term horizons – active awareness, management and communication of organisational issues and pressures affecting the short term (less than a one-year timeframe) while maintaining an active focus on longer-term priorities
agility – the capacity to remain open to new directions and approaches
capability-building – equipping employees, teams and organisations with the skills and knowledge they need to meet both present and future challenges.
The project’s final report Sustainable organisation performance: what really makes the difference? presents these organisational insights and outlines the practical implications associated with them, as well as some points for reflection for practitioners.
Sustainable organisation performance in SMEs
We’ve researched how people management practices and approaches within SMEs need to change and evolve to support long-term performance.
Our first report from the programme proposed four stages of SME growth or maturity, each associated with different people management approaches. Between each stage is a transition point where the practices and approaches adopted to date may no longer be suitable for the organisation’s future direction. It’s through looking ahead, anticipating and responding to the next transition point, that an organisation can put in place the approaches needed to support their next stage of growth and hence longer-term performance. The report includes in-depth case studies of SMEs at various stages of their growth, detailing how their people management practices have changed and evolved. The case studies demonstrate how the organisations have taken innovative and creative approaches and tailored them to their specific context and organisation cultures.
We‘ve also developed an Achieving sustainable organisation performance through HR in SMEs practical tool which builds on our research findings to help those responsible for people management in SMEs to think about the suitability of their current approach.
We‘ve also carried out further in-depth research into particular people management areas, including: maintaining your culture and values over time, recruitment and development, leadership and management, age diversity, and how to make maximum impact as an HR professional in an SME.
- ENGINEERING EMPLOYERS` FEDERATION and CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT. (2003) Maximising employee potential and business performance: the role of high performance working. London: Engineering Employers' Federation.
BEER, M. (2009) High commitment, high performance: how to build a resilient organization for sustained advantage. San Francisco, CA: Jossey Bass.
COX, A., RICKARD, C. and TAMKIN, P. (2012) Work organisation and innovation. Dublin: European Foundation for the Improvement of Living and Working Conditions.
FRANCIS, H., HOLBECHE, L. and REDDINGTON, M. (2012) People andorganisational development: a new agenda for organisational effectiveness. London: Chartered Institute of Personnel and Development.
HOLBECHE, L. (2005) The high performance organization: creating dynamic stability and sustainable success. Oxford: Elsevier Butterworth-Heinemann.
MCGEE, R. and PEMBERTON, C. (2012) Building high performance in organisations. CIPD toolkit. London: Chartered Institute of Personnel and Development.
WORK FOUNDATION. (2005) People, strategy and performance: results from the second work and enterprise business survey. Employment relations research series. London: Department of Trade and Industry.
Visit the CIPD Store to see all our priced publications currently in print.
ECCLES, R.G. and SERAFEIM, G. (2013) The performance frontier: innovating for a sustainable strategy. Harvard Business Review. Vol 91, No 5, May. pp50-56,58,60.
LEINWAND, P. and MAINARDI, C. (2011) Winning through capabilities. Business Strategy Review. Vol 22, No 2. pp64-67.
PORTER, M.E. and KRAMER, M.R. (2011) Creating shared value. Harvard Business Review. Vol 89, Nos 1/2, January/February. pp62-77.
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.