So far, we have discussed two of the 5 factors that are present in all high-performing organizations (HPOs): Management Quality and Openness & Action Orientation. In this blog, I will focus on the third factor that separates HPOs from other companies, Long-Term Orientation. In an HPO, long-term continuity of the organization always takes priority over achieving short-term profit. This type of long-term thinking extends to all stakeholders: customers, suppliers, employees, government, interest groups, society…everyone who has a relation with the organization should be positively affected by it. This article discusses the five characteristics of “long-term orientation.”
1. Stakeholder Orientation
Stakeholder orientation is defined as “the aim to benefit all parties that are affected by the future success or failure of an organization.” HPO employees often find shareholder thinking too limited, and therefore make sure they maintain good, long-term relationships with all stakeholders in order to continuously understand and align stakeholder and organizational needs. They also develop a good corporate reputation by focusing on corporate social responsibility.
According to Jan Maas, a manager at Tata Steel, “We like to involve our stakeholders in what we are doing, ask their opinion, solicit their ideas. We don’t do this in a quick and dirty way, we really take our time to interact with them…We must have done something right because our people are not job hoppers and tend to stay long…Investing in your stakeholders is not only a moral obligation but also makes perfect economic sense: it is a very good, pleasant and, therefore, productive environment here!”
2. Customer Orientation
Customer orientation is defined as “the attitude of an organization towards the persons that buy goods or services.” People in an HPO display a great customer orientation by being, as it were, “obsessed” with the customer. They build excellent relationships with the customers by engaging them and being responsive to their questions, concerns, needs, and values. They focus on increasing customer loyalty by making customer satisfaction a central goal, and then identifying the key factors that are critical for superior customer satisfaction. Subsequently, they regularly obtain feedback from customers and use this information to create high standards.
A good example of this type of customer orientation comes from Schuberg Philis, where they told me, “We do everything in co-creation with the customer so there needs to be lots of contact, particularly because our customers value the contact with highly-skilled specialists who are really interested in their business. Our people thus get their satisfaction from a job well done, from a customer who is fully satisfied, and from working in a team with peers.”
HPO managers show longevity by staying with the organization for a long time. In this way, they become very knowledgeable about the industry, its customers, the organizational mechanism, and the employees, which make it possible for them to put in new ideas very effectively and thereby continuously add value. They avoid “fad surfing” and do not strive for short-term gains, but are interested in techniques that can help their organization to become and stay sustainable. They are also good at balancing organizational interest with self-interest, and they teach colleagues and employees how to put the needs of the organization first.
When I spoke with Alan Clark at SAB Miller Europe, he told me that, “Our turnover rates are very low at senior levels. Of course, that is not necessarily healthy because you do need new blood in the organization. You have got to be careful about becoming too clubby, too insular. But the good thing is…loyalty to the organization is very high. We bring people in who then become very loyal to the organization, and it is not because of the salary (because we typically have average salaries), but due to long-term incentives for higher management. So people can be headhunted for higher salaries, but they stay anyway. There is something about the culture here that binds people and makes them loyal to the organization.”
4. Promotion From Within
“Promotion from within” is defined as “raising a person who already works in the organization to a higher rank.” In the business world, there has been a tendency to bring in outside managers to lead the organization because boards expect that these outsiders will bring some “fresh air” into the organization. However, a majority of the CEOs brought in externally deliver disappointing results, and they are asked to leave after a short while. In contrast, several studies show that organizations with homegrown CEOs far outperform organizations that hire new CEOS from the outside. HPOs ensure that managerial positions opening up can be filled from the inside by encouraging people to become and behave as (future) leaders. HPO managers create leadership development opportunities through job rotation and professional enrichment programs, and identify talented high potentials and emerging leaders and put them in critical business opportunities, to test their competence as leaders.
Theo Rinsema, a manager at Microsoft Netherlands, reported that, “Development of people is key at Microsoft. We consciously intervene to maximize growth for our people. As an example, we developed tools to foster self-awareness. One of them maps how current roles fit to people’s dreams. How do my competencies match my ambitions? This way we provide a mirror for assessing the most suitable next step in their career. Everyone is invited to use the tool whenever they want.”
5. A Secure Workplace
HPO managers create a secure workplace by giving people a sense of psychological safety. They work on retaining employees and do not lay off people until it cannot be avoided. They create an open atmosphere in which employees can voice criticisms and concerns, put forward ideas, are heard by management, and have the freedom to do their jobs as they see fit. HPO managers also work on increasing the self-confidence of their employees, as confident people rely less on rules and procedures and more on their own judgment. Confident people feel more secure in their job and their activities, dare to speak up, and, in general, behave more like high-performance individuals.
“We don’t have a culture of hire and fire,” says Arend de Jong of Air France. “We try to develop and accommodate our staff, coach them, and bring them to a new position. Also, in situations ensuing from an economic crisis, we try to improve productivity, move people from one job to another, but try to keep the family together as much as possible. This is our culture of safety for our employees. It has been this way for a long time, and we like and appreciate it that way.”
The HPO values the long-term continuity of the organization above achieving short-term profit. A key tenant of long-term orientation is a focus on stakeholders. One of the most important groups of HPO stakeholders is its customers, and servicing customers as best as possible is seen as the reason for being part of the organization. The HPO safeguards its continuity by focusing on customer loyalty, management loyalty, and employee loyalty, and building lasting relations with all parties that have dealings with the organization.
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