We’ve known for a long time about the importance of organisational culture and ways of working. Intuitively we know how to achieve great things - hire motivated people, equip them with great tools, then work towards a common purpose.
It’s also common for companies to say that their people are their greatest asset. But HR isn’t really considered a strategic function, and there aren’t many boards that devote considerable time to their people strategy. Why?
Look at it this way - how many CEOs come from an HR background versus a finance background? Robert Half, a recruitment consultant, estimates that 52% of FTSE 100 CEOs come from a finance background, while only 2 CEOs have served any time in an HR function.
To change this, we need to prove that HR is a strategic function. We need to show that improvements in organisational models and people practices are linked to what matters most - growth, profit and customer NPS.
Organisational Fitness - a definition
Organisational Fitness is a new way of measuring company performance. It gives you specific metrics for every area of your business and culture, linking them to growth, profit and customer NPS. It doesn’t matter how complex the topic is - Organisational Fitness can track everything from inclusion and communication, to leadership and motivation. The ultimate goal is to make sure your people strategy is solid, and that your entire company is happy and united behind it.
How to measure organisational performance
Over several years, Qlearsite has been measuring Organisational Fitness using employee surveys. We’ve asked hundreds of questions to hundreds of thousands of employees. Over that time, we’ve discovered some questions are highly predictive of organisation performance and future employee behaviours, while others are not.
Using these insights, we distilled down all of the questions to just 16. We removed overlapping concepts, structured them into a framework to make them actionable and the result is a new measure called Organisational Fitness.
Fitter companies perform stronger
When asked in a short survey, these 16 questions can collectively predict and are directly correlated to growth, profit and customer service NPS.
For example, companies that show high levels of fitness are:
- 4.6x times more likely to have high levels of revenue growth.
- 16.0x times more likely to have the highest levels of customer service NPS.
- 1.4x times more often to be the most profitable in their sector.
These 16 company culture characteristics are indicators of Organisational Fitness. We show them in a map or matrix so that the results are visual - which makes it easy to communicate priorities. Once everyone has the same goal in mind, it’s much quicker to start changing culture within an organisation.
The scores of each indicator can be used to measure the overall fitness of an organisation. But, it can also show scores that can be improved across a whole dimension (culture, for example) or for a single important indicator.
Each organisation then has a systematic path to improving the business KPIs by making meaningful change to their people model. You can do this by building on strengths, or prioritising investment in lower scoring indicators. We believe this is the key to developing HR as a strategic capability.
We understand this is a big claim. That’s why, as organisational scientists, we validated our findings with an independent test. It was conducted by a leading research agency, who asked our 16 questions to 2,027 organisations. They also gathered data on each organisation’s performance.
Find the full findings of our research here - Organisational Fitness: how culture affects your business.