Organisational Performance

By asking ‘Why’ we create purpose which drives organisational culture, governance and performance.

We often look at organisational performance through the lens of the media (and increasingly crowd sourced opinion) to understand the organisations outputs and sometimes impacts of their activities. In order to have the intended positive performance (we will talk about metrics later) we need to understand the purpose of the organisation; this then leads us into Governance and how this should be done which then leads us to the intended performance. Performance is not an outcome based on luck, but a result of focus and discipline underpinned by a culture that craves success.

Purpose and before that; Why?

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Whilst the legendary business consultant Peter Drucker is credited with the quote ‘Culture eats Strategy for Breakfast’[1] many organisations overlook the importance of the culture in the workplace. The wrong culture can lead to an acceptance of mediocre performance or indeed micro-cultures within different teams removing themselves of accountability and responsibility of the collective purpose. We need strong leadership to take organisations forward and importantly take the people with them. Many companies talk about how important our people are to the success of the business which is true but what binds us is culture; that common belief of purpose. Therefore, how we deliver social engagement within the company is essential to check in and build the culture which doesn’t appear overnight; this too can be considered as a few aspects of how the organisation responds to things that matter to the culture of the team (more on social governance below).

Organisational Governance

The UK Companies Act 2006 has been amended to require certain organisations to report on their compliance to Section 172 of the Act[2] this is “the duty to promote the success of the Company”. It is under this section that we may well see more organisations reflect on their non-financial performance.

Environmental and Social Governance has appeared in recent years to demonstrate how the organisation is dealing with these issues often used as a pseudonym for sustainability which as a term is sometimes everything and something very specific. This has evolved over the past two decades from the traditional Corporate Social Responsibility (CSR) agenda which was somewhat outward looking and often viewed as a ‘licence to operate’. The last part of this term seems to have survived and remains part of the business vernacular in the guise of ‘Responsible Business’.

Levels of disclosure in corporate reporting are set to increase both in terms of granularity but also impact and outcomes; whilst disclosure systems such as the Global Reporting Initiative (GRI)[3] have helped shape voluntary reporting it still requires insights to avoid the ‘so what’ question from stakeholders which inevitably brings us back to ‘why’.

Many of these things are aspects of demonstrating assurance; traditional management systems for Quality, Environment and Health & Safety also add to this layer of organisational assurance; third party accreditation to such systems add further rigour to these processes. Frameworks provide a systems approach to help organisations shape their own aspects and impacts.

Non-financial Metrics & Performance (or are they interdependent?)

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As we head towards 2030 many organisations are looking at the UN Sustainable Development Goals to help steer their own aspects of performance to align to some of the 17 goals and their many sub-objectives[4]; there are of course other more (but still can be slotted under the SDGs) programmes of change such as the Task Force on Climate Related Financial Disclosures[5] and Modern Slavery Legislation[6]. There is a growing number of single metric interventions in industry whether they are looking solely at energy efficiency, wellbeing or circularity; BREEAM, CEEQUAL and HQM are holistic schemes and will continue to be so. Many things are interconnected and need to be considered in their contexts; for example, a high level of indoor air quality can be achieved by consuming huge amounts of energy (there are other options too).

Schemes such as BREEAM, CEEQUAL and HQM are asset and project focussed but where does the role and attributes of the organisation connect? There needs to be recognition that those organisations that are better performers will produce better quality outputs which include the projects they run and deliver. Something for us all to consider.

In closing…

The Matrix Trilogy films (bear with me here) concluded nearly 20 years ago; I reflect upon the final battle scene between Neo (the character played by Keanu Reeves) and Agent Smith (played by Hugo Weaving).

“Agent Smith: Why, Mr. Anderson? Why, why, why? Why do you do it? Why get up? Why keep fighting? Do you believe you’re fighting for something? For more than your survival? Can you tell me what it is? Do you even know? Is it freedom? Or truth? Perhaps peace? Could it be for love? Illusions, Mr. Anderson. Vagaries of perception. Temporary constructs of a feeble human intellect trying desperately to justify an existence that is without meaning or purpose. And all of them as artificial as the Matrix itself, although only a human mind could invent something as insipid as love. You must be able to see it, Mr. Anderson. You must know it by now. You can’t win. It’s pointless to keep fighting. Why, Mr. Anderson? Why? Why do you persist?

Neo: Because I choose to…” [he had a purpose].

References

[1] https://www.forbes.com/sites/andrewcave/2017/11/09/culture-eats-strategy-for-breakfast-so-whats-for-lunch/#40ad17727e0f

[2] https://www.iod.com/news/news/articles/Corporate-governance-reporting-under-Section-172-of-the-Companies-Act-2006

[3] https://www.globalreporting.org

[4] https://sustainabledevelopment.un.org/?menu=1300

[5] https://www.fsb-tcfd.org/

[6] http://www.legislation.gov.uk/ukpga/2015/30/contents/enacted