INSIDE SUCCESSFUL COMPANIES

Corporate Health-Check

Is an enterprise going to be durably successful

There is an overwhelming body of research and experience that can enable everybody who can be bothered to clearly differentiate between companies: those that will survive and prosper for the long run and those, which, no matter how glitzy they may appear for short periods, have the worms of failure gnawing away in their entrails.

We are pleased to offer a diagnostic self-check questionnaire that will enable users to develop a clear understanding of the fundamental characteristics of good companies and, if appropriate, simultaneously rate an organisation they know.

It can also be used to generate useful questions about particular enterprises - and identify what the respondent does not know about them.

This material should be of use to:

The content of this questionnaire has been developed by Don Young and Dave Francis, an experienced consultant and prolific business author, with books and other materials published in the US and Britain.
The material is created by the authors and, if used, should be acknowledged.
It has also been carefully checked as being consistent with research carried out on the characteristics of durably successful companies by such writers as Jerry Porras and James Collins in 'Built to Last' and Jay Lorsch and Gordon Donaldson in 'Decision-making at the Top' and many others.

FIVE DIMENSIONS THAT MAKE SUCCESSFUL COMPANIES

1. Strong Identity and Culture

Research tells us that durably successful companies know 'who they are' - they possess an enveloping personality and culture. This pervades the organisation from top to bottom and strongly influences behaviour - internally and towards customers.
The identity of the organisation is strongly represented by top managers, who have an intimate knowledge of their companies and consistently express its values by words and actions.

Corporate personality is also derived from knowing customer needs and serving them well - and from understanding what differentiates the company from its competitors.
Commitment to the enterprise and what it stands for is deliberately encouraged.

2. Effective Planning, Control and Performance Management

There are effective processes for looking forward and setting goals, objectives and plans. Goals are consciously set to encourage continuous improvement and high achievement. Planning involves a wide spectrum of the organisation's membership and is the responsibility of those that will implement the plans. Units, functions, teams and individuals are clear about what they are trying to achieve and how it contributes to the success of the wider organisation.
Planning processes are reinforced by appropriate information and rigorous processes for reviewing performance - negative variances are rapidly identified and action taken to bring improvement.

High performance is well rewarded and under performers supported to help them improve. But, in the end, underperformance is not tolerated.

3. Fit for Purpose, Adaptive and Well-resourced

It is clearly understood that the quality and effectiveness of the organisation is the key to competitive success.
The organisation is shaped to the needs of the business and continuously adapted as circumstances change and new opportunities or threats emerge. This usually means that change is progressive, continuous and actively involves the whole organisation. Sudden, convulsive, top-down change is avoided.
The operations are well-resourced to keep them at the peak of effectiveness - investment in people, systems, equipment and productive facilities is sufficient to stay at the cutting edge.
All resources - people, facilities, processes and practises that have become obsolete or redundant are stringently shed.

4. Meaning and Commitment.

People at all levels believe that the organisation's mission to serve customers is very worthwhile and a source of pride and commitment.
Top managers manifestly demonstrate their commitment to the success and survival of the enterprise and evoke similar commitment in others.
The quality of work and organisational membership provides meaning to employees' working lives - it is clear that people care about the organisation and their colleagues.
It is recognised that the enterprise is a part of the wider society - genuine efforts are made to make a positive contribution to society and limit damage to the environment.

5. Governance, Development and Cohesion

The board contains the range of skills required to understand and direct the enterprise. There are sufficient independent directors to bring an objective perspective and ensure that all the company's affairs are carried out with integrity. Independent directors spend sufficient time to gain in-depth and personal exposure to the company's operations - so that they are not solely dependent on management or formal reports for their understanding.
The process and relationships in the board makes for open, frank debate where contrary opinions can receive strong airing. The board is cohesive and capable of strongly withstanding external pressures if they are not in the enterprise's long-term interests.
The enterprise has a strong commitment to learning and is highly curious and exploratory. Development equally emphasises tradition and progress. Management development practises encompass all from entry level to the top. The aim is always to develop succession for the top roles from within the organisation.
Thus top managers know and are known by the organisation and regarded as a part of the community. They understand their business and industry intimately. Their behaviours and rewards do not create an excessive divide between the top and the wider organisation. They share in success and adversity in the same way as other employees.

The Full Questionnaire

Reflect briefly on each statement below and consider how you believe it applies to the enterprise in question. Use the following convention:

Generally true
Possibly true
Generally untrue

The Statements

1. This organisation keeps closely in touch with relevant external research and events
2. There is clarity and agreement amongst top management about strategic direction and ensuing priorities
3. Top managers are consistent - they do not constantly change their 'stories' or say one thing and do another
4. Long term planning is designed to involve a wide range of people with relevant knowledge and understanding of all facets of the business
5. All key dimensions of performance - market, technical, efficiency, cost, finances - are measured and monitored effectively
6. Excellence and high achievement is clearly rewarded
7. The level of policies, procedures and rules is sufficient to guide employees but not to stifle initiative
8. Consistent effort and investment is put into developing managers' skills
9. Facilities are lean but represent state of the art
10. Employees feel a strong sense of pride in the enterprises products/services
11. Top management exhibit genuine concern for the well-being of employees
12. The organisation has adopted an involved and responsive stance towards the communities in which it works
13. Non-executive directors spend enough time to really understand the business (for medium and larger companies, 50 days per annum)
14. There is a sufficient flow of external recruits to ensure that management does not become stale
15. The overriding concern of top management is for the long term future of the enterprise
16. Great care is taken to understand what customers really want
17. Management can clearly articulate 'what business we are in'
18. Managers work hard to enlist employee commitment to the company and its values
19. Plans are converted into measurable objectives and tasks
20. Costs are rigorously measured and continuously reviewed
21. Top managers personally generate high levels of motivation in other employees
22. The organisation changes and adapts in response to external pressures and opportunities
23. Problems are solved with insight and skill, and fast
24. Facilities, equipment, systems, practises and people that have outlived their usefulness are aggressively changed or eliminated
25. To management care about the 'products', not just seeing them as a source of profit
26. People are encouraged to go out of their way to be co-operative for the good of the enterprise
27. Those who violate ethical or legal standards are sanctioned - even if the enterprise would gain
28. Non-executive directors get around enough to have direct personal experience of the enterprise's strengths and weaknesses
29. The enterprise strives to avoid external recruitment into the top job
30. If it comes to the choice, top managers will put the long-term success of the enterprise ahead of personal gain
31. Customers probable future needs are systematically evaluated
32. Top managers will knowingly sacrifice immediate results for a better long-term future
33. Employees manifestly feel closely identified with the success of the enterprise
34. The culture strongly supports action - informed by concern for long term consequences
35. Performance reporting and management systems pick up variances from targeted performance rapidly and accurately
36. People at all levels receive differential rewards for good performance
37. Things that need to be done get done. Full stop
38. The capacity of people, equipment and productive facilities are continuously evaluated and up-rated
39. The cost of everything that matters is clearly known
40. There is great emphasis organisation-wide on product and service quality
41. Decisions that adversely affect employees interests are taken as a last resort - 'casualties' are treated generously and with dignity.
42. All possible action is taken to protect the environment
43. The board has the right mix of skills to cover all key aspects of the business
44. Management development emphasises two things: deep knowledge of the business and acute awareness of developments in the wider world
45. Pay differentials between the top and the rest of the organisation are widely known and capable of internal justification
46. Competitors actions, products, strengths and weaknesses are carefully analysed and form a basis for action
47. There is a well-developed corporate 'personality' that encompasses a vision of what makes the enterprise distinctive and special
48. Top management exerts a strong positive influence on employees' opinions and behaviour
49. Achievement in relation to key objectives is clearly measured and used as a basis for accountability
50. Top management are rapidly aware when inefficiency and waste become a problem
51. Achievement is the basis for reward
52. The organisation has good recourse to external perspectives and benchmarks
53. Investment in plant and facilities is sufficient to remain at the competitive forefront
54. There are no under-used assets
55. Feedback from customers is disseminated through the whole organisation, not just sales and marketing
56. Mutual respect is a clear hallmark of the relationships between top managers and other employees
57. The organisation encourages constructive relationships with educational establishments.
58. The board exhibits a culture of openness - all directors can express their views freely, and those contrary to the majority are heard and taken into account
59. Top managers demonstrate that developing quality successors is a high priority
60. The values and behaviour of those at the top offer a positive model for others
61. Substantial efforts are invested in projecting a positive image to external influencers
62. There is a clear and shared understanding of what differentiates the enterprise from its competitors
63. The organisation uses a wide range of media to communicate a sense of common purpose.
64. The enterprise is capable of standing back to objectively evaluate its market positioning
65. Information about performance is openly shared by middle and top management so that co-ordinated action can be taken
66. Low performance is not tolerated at any level
67. Organisation change is adaptive and continuous - so that it has become the norm
68. When inadequate facilities or investment causes underperformance, all stops are pulled out to rectify the problem
69. Manning is lean and constantly reviewed
70. Members of the top management are held accountable for the quality of customer offerings
71. Managers are concerned to make employees work stimulating and satisfying
72. Good causes in the community are actively supported
73. Non-executive directors strongly hold the ring between the demands of investors and the long term health of the enterprise
74. Top management's time horizons stretch beyond the current generation
75. It is possible to clearly identify the contribution of each organisational layer from top to bottom
76. The organisation has a good record in spotting and responding to significant external trends
77. The forward plans of the enterprise are stretching and exciting
78. Senior managers give priority to meeting a large number of employees to listen and communicate their sense of direction
79. There are good mechanisms to allow different functions to work together
80. Top managers are able to spot potential problems early
81. The prevailing management style is positive - aimed at encouraging high performance
82. Compartments, internal barriers and fiefdoms are not tolerated
83. There is careful and systematic assessment of people for jobs and promotions.
84. It would be right to characterise the company as 'lean but fit'
85. 'Get it right first time' characterises all customer relationships
86. Concern for output and high productivity is balanced by attention to the quality of the work environment
87. In balance, the enterprise does more good than harm in the world
88. The roles of executive and non-executive directors are clear and well integrated
89. There is a coherent management development strategy that encompasses all significant levels from entry to the top
90. If the organisation suffers from pain or adversity, management share the burden equally with other employees
91. The likely effects of social, political, technological and economic trends are systematically reviewed
92. Top managers invite people with experience and imagination from inside and outside the enterprise to contribute to strategic thinking
93. People at all levels can articulate the overall goals and values of the enterprise
94. Performance standards are high, clear and widely understood
95. All levels of management feed off the same data base, so that action can be effectively co-ordinated
96. Those who receive significant promotion demonstrate superior performance and merit
97. Great efforts are put into co-ordinating the work of different functions and departments
98. People at all levels are strongly encouraged to develop their talents
99. Waste and excess at all levels are measured and energetically removed
100. Top management priority is given to enhancing customer offerings
101. Employees know top managers as real people and trust them accordingly
102. Top managers exhibit a social conscience
103. Key board committees are proactive, well-resourced and supported. The audit committee designs an audit strategy and the compensation committee initiates proposals for top executives' rewards.
104. It is impossible to reach top management in this company without a balance of experience in several key functions
105. People at the top understand the business as well as those at the front Line

USING THE QUESTIONNAIRE

Readers are free to use the material in ways that are of use to them. This may include training, diagnosis, consulting or simply as a means of stimulating personal reflection, learning and further exploration.
As the material has been specially developed as a result of collaboration between Don Young and Dave Francis, the authors ask that they are acknowledged as its creators if it is used in any public events.

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