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The building blocks of Outperformance. Three principles are all you need.

Have you noticed how some organisations do better by every measure? How they can offer great products or services, inspire fantastic loyalty from staff and customers and deliver impressive results?

At Investors in People, we call these organisations the Outperformers. When we redesigned our framework for 2015, we decided to focus on them. What makes them tick? And how can others become Outperformers themselves?  In essence, we wanted to find out what lies behind their success and if it’s a magic formula, how can we bottle it? We decided to test the hypothesis that success isn’t a secret shared by an elite few – it’s a science.  And now we've found the formula. 

What’s behind success:  Secrets vs Science

We tested a set of management principles common to high performing firms to find out whether a focus on these principles could really make a difference to performance.  The analysis found that six factors were statistically significant in explaining improvements in performance and efficiency:

  • Strong and inspiring leaders
  • Having a set of strong values
  • Recognising and rewarding performance
  • Structuring work
  • Delivering continuous improvement
  • Adoption of sustainable practices

Breaking this down for the real world, we sought to examine how these factors could make a difference to real-life organisations.  Looking at the relationship between efficiency (E) and people management (PM), we discovered The Power of Three.

E = PM3  

Firms displaying the attitudes and behaviours identified above operate at higher levels of efficiency than firms displaying fewer of those behaviours. The figures showed that firms which focussed on 3 or more of these principles enjoyed an average efficiency premium of 108% compared to the average UK firm.  When converted into monetary terms, this means that UK businesses are missing out on £84bn in efficiency improvements through poor HR and performance management practices.

As easy as 1,2,3?

Only if you get it right.  In our full length report, "The impact of investing in people", we outline areas which offer the greatest returns for your business – broken down by size and sector – telling you exactly where to focus.

Could your business beat the average?