Organizational Performance

Kanter & Brinkerhoff state that organizational performance is differentiated into three types: “task effectiveness or goal attainment, organizational structure and process, and environmental adaptations” (1981, p. 322, para. 2). A different perspective is that when the organization's employees have a higher financial intelligence quotient, they contribute to the company’s health by making better, financially sound decisions (Berman & Knight, 2013). Yet another theory is that organizational performance is based on its financial and market performance and shareholder value (Nordqvist, 2021). All these theories are accurate, plus a great deal more! This page will cover some of the concepts that I have picked up and utilized regarding organizational performance while performing my duties in sales leadership.

Company Culture & Climate

Key Performance Indicators

Leading indicators are metrics, or key performance indicators (KPIs), measured to determine a future outcome. Lagging indicators are metrics or KPIs resulting from some activity. Leading and lagging indicators can be separated in minutes or through years (Toro, 2017).

Examples of KPIs for industries are to the right. Below is an example of a KPI dashboard that I monitor daily at my present company. In this particular dashboard we are measuring the performance of our existing partners:

  • Proposed MRR (monthly recurring revenue) month over month

  • New proposals created

  • Booking conversion ratio

  • Total bookings in MRR

  • Number of booked deals

  • Partner status

  • Bookings by product (excludes security software)

  • Deal Velocity

Each of these metrics helps me and other leaders make timely, accurate business decisions that help company performance. For instance, the proposed MRR for April is low for mid-month. To generate activity among the partner community, I can provide incentives to increase proposal generation. Or, if the bookings conversation rate doesn't improve soon, I'll design a training class on how to close business promptly.


KPI Dashboard

References

Berman, K., & Knight, J. (2013). Financial intelligence (Rev. ed.). Boston, MA: Harvard Business Review Press.

CFO Editorial Staff. (2021, November 1). Treat Employees Well, See Stock Price Soar. CFO. Retrieved April 16, 2022, from https://www.cfo.com/corporate-finance/2014/04/treat-employees-well-see-stock-price-soar-9044/?_ga=2.3230640.1045185208.1650114565-1113066634.1650114565

Chamberlain, A. (2021, December 21). Does Company Culture Pay Off? Analyzing Stock Performance of “Best Places to Work” Companies - Glassdoor. Glassdoor Economic Research. Retrieved April 16, 2022, from https://www.glassdoor.com/research/does-company-culture-pay-off-analyzing-stock-performance-of-best-places-to-work-companies/?_ga=2.75247378.1045185208.1650114565-1113066634.1650114565

K. (2012, June 24). Does corporate culture drive financial performance? Forbes. Retrieved April 16, 2022, from https://www.forbes.com/sites/johnkotter/2011/02/10/does-corporate-culture-drive-financial-performance/?_ga=2.73418642.1045185208.1650114565-1113066634.1650114565&sh=576bd1257e9e

Kanter, R., & Brinkerhoff, D. (1981). Organizational Performance: Recent Developments in Measurement. Annual Review of Sociology, 7(1), 321-349.

Nordqvist, C. (2021, November 23). Organizational performance – definition and meaning. Market Business News. Retrieved April 16, 2022, from https://marketbusinessnews.com/financial-glossary/organizational-performance-definition-meaning/

Shape culture. (n.d.). Deloitte Insights. Retrieved April 16, 2022, from https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2016/impact-of-culture-on-business-strategy.html?id=us:2el:3dc:dup3020:awa:cons:hct16

Toro, C. (2017, August 15). What is a KPI? Lead and lag indicators [Video]. YouTube. https://youtu.be/ztn1XBsYUAI