The Modern Standards of Organizational Performance
A lot of HR professionals, especially Strategic Planners, are placing a big part of their efforts on organizational performance; but as this term arises, we see that operation managers, finance directors, legal advisors and entrepreneurs are also focusing on organizational performance.
But, what is organizational performance?
Let’s break these two words: “Organizational” is an adjective derived from “Organization”, and an organization refers to an organized group of people working together with a specific purpose. “Performance” refers to the action of performing a specific task or set of tasks and it’s measured on how successfully an individual or group performs such tasks.
So, Organizational Performance refers to the analysis of a company’s performance against its objectives and goals. Or comparing the intended results vs the actual results.
An Organizational Performance definition according to Wikipedia says that: “Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).”
We agree although we feel that organization performance really breaks down into three operational terms: financial or economic performance, operational performance and human capital performance.
- The Economic Performance of the organization looks at the financial and market outcomes which include topics like profits, sales, return on investment and other financial metrics.
- The Operational Performance of the organization which focuses on observable indices like customer satisfaction and loyalty, the firm social capital and competitive edge derived from capabilities and resources.
- The Human Capital Performance of the organization which covers topics around Employee Engagement, Culture, development and internal promotion opportunities, etc. Metrics here are often things like eNPS and employer of choice.