As we work with organizations to increase their performance, better express and formulate their goals and delineate a path to achieving those goals, we turn to the Performance Imperative model to define essential organizational best practices.
The Performance Imperative, shown above, outlines seven pillars of best practices for NGOs. Taken together, the pillars create a foundation for a culture of assessment and performance management. This organizational culture values honest appraisal, open dissent, and constructive feedback. Our experience working with NGOs across issue areas has convinced us that such culture is essential for building exceptional, impactful organizations. We, therefore, focus on examining a company’s performance management and metrics:
Performance Management: According to a McKinsey report, robust performance management had the highest correlation with superior financial performance. Indeed, performance management beat out other important organizational attributes like innovation, capability, and environment. Companies with top-quartile performance in practices such as the consistent use of targets and metrics were 2.7 times as likely to financially outperform the median than those in the bottom quartile.
An Effective Board: We frequently encounter serious frustration over board dysfunction. Board members often have varying sets of expectations and understanding about their roles. Some feel that they are only there to attend the board meetings and rubber-stamp everything; some feel that it is their legal and ethical duty to ensure that the organization is in a good financial and organizational health. Board roles must be defined and expectations must be clarified.
Performance Metrics: When public or private funders establish performance metrics and tie rewards or consequences to an organizations’ capacity to meet them, organizations and people migrate to the behaviors that will allow them to reach their defined targets. If the metrics are appropriate and closely tied to mission, the organization can benefit. However, if the metrics are simplistic or unrealistic, organizations often get lost and move in the wrong direction.