Want Peak Performance? Find Out What's Holding You Back

Summary

Achieving peak performance requires addressing constraints, aligning objectives, and making strategic investments. By identifying and tackling these issues, your organization can optimize resources, improve profitability, and achieve sustainable growth.

Introduction

Pinpointing the exact reasons for poor performance can be challenging without specific details about the outcomes your organization is pursuing. The starting point is clearly defining the issue and assessing your company’s performance. Is it operating at its peak?

Key Questions to Assess Performance

Is Your Company Performing Optimally? Are you spending more dollars for diminishing returns?
Are Investments Yielding Results? Does investing in expanding business capacity translate into increased revenues and profits?
Are Resources Allocated Effectively? If investments aren’t delivering results, it may indicate poor investment choices or underlying barriers preventing maximum impact.

Organizational Performance Constraints

A business may appear to be progressing for several reasons, but fail to achieve the desired results. Below are frequent constraints that can hold an organization back:

Lack of Clear Organizational Objectives: Organizations struggle to align efforts and measure success effectively without well-defined goals.
Undefined Performance Objectives: Functional groups, teams, and individuals may lack specific performance targets, leading to unfocused efforts.
Misaligned Performance Objectives: When team or individual objectives don’t align with organizational goals, efforts can conflict or undermine overall success.
Misaligned Compensation Structures: Compensation systems (both tangible and intangible) that reward the wrong behaviors can derail progress and incentivize counterproductive actions.
Inadequate Corrective Action for Poor Performers: Failing to address underperformance drains resources and morale, hindering overall organizational success.
Unclear Role Definitions: Employees may struggle to contribute effectively without clear roles tied to achieving objectives.
Misguided Investments: Investing in areas that don’t genuinely expand capacity can waste resources and limit growth.
Inability to Execute Strategy: A lack of necessary skill sets, funding, or internal structures can prevent the successful pursuit of chosen strategies or tactics.
Poor External Perception: If the market’s perception of your company, product, service, or technology doesn’t support your pricing or positioning, it can undermine sales.
Substandard Product or Service Quality: Poor product quality can erode customer trust and limit business success.

Importance of Organizational Alignment

Organizational alignment and consistency between internal operations and external perception are critical for peak performance. Key determinants include:

Objective Selection: How your organization sets its goals.
Strategy Execution: How you pursue strategies.
Resource Structuring: How you organize people, money, and systems to generate returns on investment and profits.

Pitfalls in Revenue-Focused Strategies

Chasing Revenue Without Profitability

Many organizations prioritize revenue growth without setting gross margin or profitability objectives. This lack of consideration can lead to increased sales but declining profits due to:

High Sales Costs: Pursuing every sale regardless of the time, dollars, or missed opportunities for higher-margin sales.
High-Maintenance Customers: Failing to account for the cost of servicing demanding customers can create a domino effect on profitability.

Over-Reliance on Outdated Tactics

Even when performance declines, organizations often stick to familiar tactics. Change is hard, so it is tempting to apply a “more is better” approach without evaluating effectiveness. For example, adding, it may be tempting to add to your sales team. You may think more people, more sales. Well, that isn’t necessarily true. So, before you add to your sales team, assess whether your existing team can improve. Consider providing better tools and information. Perhaps, your team needs additional training to learn new sales methods or more about the products and services sold. Also, look beyond your sales team to see how customer service is doing. It may be that you are losing sales due to inadequate customer service.

Misguided Investments

Overlooking Core Infrastructure

Investing heavily in revenue-generating areas like technical staffing or marketing while neglecting core business infrastructure (e.g., accounting, finance, human resources) can create inefficiencies. These areas:

Enable effective business growth.
Provide control and risk management.
Prevent wasting high-value resources on administrative tasks.

Focusing on Image Over Substance

Spending on non-essential image-related expenses, such as high-end real estate, luxury company cars, or extravagant travel, diverts resources from meaningful growth.

Unsustainable Compensation and Benefits

Rapidly expanding compensation and benefits can strain finances. While quality benefits support work/life balance, they must be affordable as the organization scales. Phasing in benefits as profitability grows is a prudent approach.

Addressing Performance Issues

Managing Underperformers

Avoiding performance issues can harm morale, drain resources, and reduce ROI. Every dollar spent on underperformers is a missed opportunity to invest in progress. Underperformance can also demotivate other employees.

Handling Valued Employees with Outdated Skills

Organizations face tough decisions when a valued employee’s skills no longer align with business needs. Options include:

Reassignment: Move the employee to another role if the organization is large enough.
Transition Planning: Develop a fair transition plan, such as helping employees find opportunities with clients, vendors, or other organizations.
Honest Communication: Work collaboratively to identify external opportunities that leverage the employee’s strengths.

Diagnosing Organizational Issues

If your organization isn’t performing at its peak, invest time and resources in identifying the root causes. Options include:

Internal Assessment: Engage your leadership team and employees to gather insights. Be open to positive, negative, or challenging feedback without defending or dismissing it.
External Expertise: Bring in an outsider with broad knowledge across organizations and the ability to assess all business operations (e.g., accounting, finance, HR, operations). Ensure they communicate honestly and provide a comprehensive view of internal and external factors.

Want Peak Performance? Find Out What’s Holding You Back