The impact of conflict in an organisation (HPtE #11)

In order to achieve sustainable high performance an organisation must achieve three necessary conditions:

  • Commercial Responsibility
  • Consumer Value
  • Constructive Culture

In his paper about the “Balanced Scorecard and Theory of Constraints: A synergistic framework” Dr Mahesh Gupta provides a summary of the traditional metrics used to drive organisational performance.

Traditionally, Commercial Responsibility has been the sole interest of shareholders. More specifically there is an attempt to answer “How do shareholders view the organisation?” To deliver on Commercial Responsibility leadership focuses on cost-based strategies.  Key components of cost-based leadership strategies might include constructing efficient- scale facilities, emphasizing operating efficiency, and vigorously controlling and reducing costs and overhead.  The most common financial measures may include net profit, return-on-investment, and cash flows.

When performance drops in a cost-based environment the pressure to compete for money goes up, the conflict increases and the behaviour becomes more defensive. This becomes a vicious cycle.

Traditionally, Consumer Value has been the interest of operations management and consumers.  More specifically there is an attempt to answer “How do consumers view the organisation?”  This usually involves retention related measures such as quality, flexibility, work in progress and on-time performance. The increasing Agile, Six Sigma and TOC based initiatives in the past few decades demonstrate an increasing realisation of the importance of consumer focus and customer satisfaction.  Poor performance from this perspective is seen as a leading indicator of future decline in profitability.

When performance drops in a consumer-focused environment the pressure to compete for time goes up, the conflict increases and the behaviour becomes more defensive.  This becomes a vicious cycle.

The conflict is compounded when a consumer focus is attempted in a cost-based environment because now we have increased competition for both time and money.

Traditionally, Culture was ignored. In the main, this was because it was perceived to be difficult to measure. Human Synergistics International are global leaders in culture assessment. Their Circumplex model describes “Flight” based behaviours as Passive Defensive (green on the circumplex) and “Fight” based behaviours as Aggressive Defensive (red on the circumplex).

Left unchecked the impact of competing for time and money causes a Passive/Aggressive culture and reinforces the cycle of poor performance.

This cycle fuels a passive-aggressive culture. It is unsafe, provides little security and less satisfaction.

This cycle fuels a decline in consumer value. Products and services are poor in quality, slow and perceived to be expensive:

This cycle drives costs up and reduces income leading to commercial failure:

This is not an environment where sustainable high performance can exist.

Now that we understand the challenge and obstacles to achieve sustainable high performance we can begin to explore how to reverse this cycle.

Up next in the #HPtE series: What to change to and how? (HPtE #12)

Want to learn how to start working on sustainable high performance? Ask us about our Discover HPtE Strategy® Video Conference – a one-hour introduction to the HPtE Strategy® Framework. Contact Karl or Richard via direct message on LinkedIn

The SUCCESS Framework – A Case Study

Many organisations throughout the world have adopted a high performance through engagement approach of some kind. Each have customised it to make it their own. That is how it should be.

In Utah, the Governor’s Office of Management and Budget call their high performance through engagement strategy their “Success Framework”. 

Watch and listen carefully to the following video and see if you can identify the following principles:

  1. A system of work that harnesses the knowledge, intuition and experience of people through improvement teams (committees). 
  2. A commitment to the safety, security and satisfaction (i.e. culture) of the people doing the work. 
  3. Leadership that facilitates people to improve the work system.
  4. The utilisation of problem solving methodologies. 
  5. A focus on increasing customer value.
  6. Ensuring commercial responsibility.
Used with permission from Utah GOMB