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7-1 Discussion: Performance and Organizational Capabilities
Kennara Vuong posted Nov 24, 2021 4:18 PM
The statement that best-performing companies worry less about performance and more about their organizational capabilities hold true for companies that are performing well or exceeding target expectations. I also believe that the statement is true in reference to what stage/age their company is in. Regarding companies that are in its infancy, performance measures will likely not hit target, especially financially. This is a growing period in which the capabilities of internal and external growth are pivotal to the survival and success of its future. A company’s capabilities are what holds the key of unlocking new value and hold a higher ranking than performance at this stage (Hagel, 2020).
Organizations that are performing well or above target expectations should also value capabilities rather than performance. I personally believe that excellence is not a destination but rather, a moving target that can never truly be achieved. This means that organizations should never remain stagnant when they exceed benchmark performance markers, but rather, seek new opportunities and continue to innovate to remain or become a market leader. Bititci explains that a multidisciplinary approach in sharing capabilities and building a support network will help bring purpose to plans and see to come into action (Bititci, 2015)
Company A, which has a strong financial performance as evident by their gross and net profit margins have inefficiencies that may be hindering them from an even better performance portfolio. Although training is in place for employees, there is a large turnover due to lack of employee enrichment which seems to have occurred with the hiring of the new president. Although the performance of the company is seemingly well now, if turnovers continue to happen and waste of product and increased inefficiencies occur, the company performance will soon begin to fall, and revenue will inevitably suffer. According to the chief of operations there is a surplus of employees and lack of training beyond the minimal standards. A suggestion would be to create more specialized roles for existing employees to retain experienced employees and to contribute to company innovation while maintaining good customer satisfaction scores. Unfortunately, there may be some cuts that need to occur if there are too many employees beyond what the future budget can account for.
Company B, on the other hand, has an innovative vision through their IT manager and is willing to invest in transformation as evident by the senior leader pay cuts. The performance of this company is suffering as sales remain flat and the net profit margin is well below 1%. The employees are also reaching retirement age and the training of new recruits are lacking. This is a clear example of when capabilities matter in a time where performance is low. To increase both operational and financial performance and boost employee morale, a sacrifice in budget must be made. There needs to be an investment in recruitment and training while senior employees are still on board to train, software developments that reach the consumers, and training or hiring new personnel to increase marketing and sales. The poor performance of the company is not justified by the companys current state since they are not a start up nor do they have the financial reserves to accommodate for such low markings.
Bititci, U.S. (2015). Managing Business Performance. Retrieved from vbk://9781119025696
Hagel, J. (2020). Human inside: How capabilities can unleash business performance. Deloitte. https://www2.deloitte.com/us/en/insights/focus/technology-and-the-future-of-work/building-capability-unleash-business-performance.html
8-1 Discussion: Performance and Organizational Capabilities (Part Two)
In Module Seven, you developed an argument based on the following statement: “The best-performing companies worry less about performance and more about their organizational capabilities” (Bititci, 2015).
You also shared your thoughts about Company A and Company B and their cultures and capabilities.
This week, you will review and respond to your peers’ posts. Respond to at least two of your peers (providing feedback for peers without any feedback first).
Review the posts by your peers and provide your feedback by answering the following questions:
Do you agree or disagree with your peers’ initial posts about the relationships between organizational culture, capabilities, and performance? Explain.
What is different about their perspectives, and how do you think it will affect the overall performance evaluation of these companies?
Directions
For your response post, do the following:
Write a post of one to two paragraphs.
When responding to at least two of your peers postings, your responses should show that you have given thought to what the original post said. They should also push the conversation forward, offering insights or asking clarifying questions if necessary.
Consider the following questions:
Does your response push the conversation forward?
Does your response offer your perspective?
What about your peers stories can you relate to?
What can you learn from your peers stories?
Are your responses clear?
Have you considered the viewpoints or insights of the original posts?