The Issues of Low-Performing Organisations

High-performing organisations generate their energy to succeed. They induce staff and Team members to elevate themselves to perform at their highest potential. However, even though people achieve more in high-performance environments, staff and Team members tend to find working in such an environment less taxing. The working day feels shorter and vastly less frustrating.

At the other end of the scale, low-performing organisations are plagued by dysfunction, are incredibly stressful to work within and suffer from inconsequentially low levels of customer service. Leadership's most common failure points are the most challenging part of a Director or Team Leader’s role. Poor-performing Directors or Team Leaders blame the wrong people, fail to hold people accountable and give little or no direct feedback, especially when it is negative.

These management and leadership aspects push the Director or Team Leader into an uncomfortable zone. They don't have the support, resources, or skills in these critical areas, especially in large corporate or public sector organisations.

There appears to be a high social price and a substantial personal risk in the Director or Team Leader's future if they dare to deal with the issues of low staff or organisational performance. Directors or Team Leaders become incredibly risk-averse when managing low performance. The problems are apparent when it comes to dealing with the following:

 

• Unproductive staff.

• Staff who lack the intellect or intelligence for the role that they have been engaged.

• There is no political will to overcome the organisational weaknesses.

Low-performing organisations suffer from an incredibly diverse range of issues, which have been allowed to develop into significant problems, typical examples of which might include:

 

• Public Sector Bodies that fail to ensure compliance with the UK Governments Procurement legislation. Every year that these organisations fail to follow such practice increases their costs by an average of 2 – 7% per annum ahead of the open market, depending on the Consumer Price Index (CPI) rate.

• A Heavy Construction Equipment Dealer importing construction equipment from Europe. The construction equipment was CE-compliant upon import. However, it was sold to UK customers without CE compliance when the construction equipment was adapted for the UK Market. The organisation failed to ensure CE compliance by implementing model-specific fitting instructions for UK-sourced options and attachments. The organisation also failed to mitigate any commercial risks of equipment failure by ensuring that the threat was transferred back to suppliers by having the appropriate customer/supplier contracts in place.

• A Construction Company failed to manage its Accounts Payable Invoicing system, resulting in over £5M worth of supplier invoices remaining unpaid for over two years. The high value of outstanding invoices made it incredibly difficult for the organisation to raise finance, pay its suppliers, and deliver construction projects on time. The issue of unpaid invoices pushed costs up as suppliers viewed the risk of doing business with the organisation as unacceptably high.

• A Retail and Manufacturing operation failed to manage its Manufacturing Requirements Planning (MRP) system, which increased the lead times for raw materials, subassemblies and finished goods. The increased lead times led to significant customers being lost as lead times, stock levels, and capital tied up in stock increased whilst product availability, profitability and sales were reduced.

• A Manufacturing operation failed to match demand with supply, leading to products being manufactured without levelling production schedules to maximise manufacturing efficiency at least cost. The low availability of stock increased the value of customer back-orders, order lead times, risk-hedged stock levels, supplier minimum order values and stock obsolescence costs. There was a resultant reduction in customer order fulfilment rates, cash flow, sales and profitability.

Within the UK, four in ten UK business organisations fail within five years of their start-up. This could be for several reasons, such as:

 

• Weak leadership: A director or Team Leader who excels at leadership will communicate, direct, reward and offer the opportunity for personal growth to their staff and Teams, whilst a poor leader will demotivate and allow their Teams to become ineffective as they fail to inspire those around them.

• Bad Planning: failing to prepare is preparing to fail. Long-term Planning is the key to success. When mapping organisational growth, a Director or Team Leader needs to conduct market research to establish their customers and their requirements.

• Lack of Strategy: Without a well-thought-out strategy, an organisation does not have identifiable business objectives and will lack the focus required to achieve its goals and objectives to move forward. A lack of goals and objectives means that an organisation will not have a clear vision of its future. Goals and objectives are used to develop long-term growth and productivity plans for the organisation’s sustained success.

• Losing Financial Control: An organisation must always know its financial and cash position. Accurately forecasting income and costs is a pre-requisite and will ultimately support an organisation’s cash flow. Directors and Team Leaders must understand and control their costs and acknowledge the risks and opportunities to minimise any nasty surprises. Inadequate financing can lead to the failure of an organisation, as without access to sufficient capital, an organisation may not have the funds it needs to grow.

• Poor Cash Flow: Cash flow is the lifeblood of any organisation. Poor cash flow management can lead to the demise of any organisation. Even a profitable organisation can incur a crippling cash flow crisis. It is often caused by the ineffective management of debtors, high stock levels, bad debt and late invoicing.

Low-performing staff, Directors and Team Leaders drive low-performing organisations. Poor performing Directors set the culture that ensures low performance across the organisation, as they fail to:

 

• Integrate horizontally between functions.

• They do not listen to cross-functional Teams.

• Talk to staff to get a steer on issues.

• Mentor and coach Managers in the development of tactical planning.

• Seek input to create the organisation’s strategy.

Team Leaders set the performance criteria to ensure low performance across the organisation, as they fail to:

 

• Tactically plan to achieve higher performance.

• Plan for improvement and productivity gains.

• Set sufficiently challenging performance targets.

• Communicate with staff.

Customers do not have a right to incur poor performance. Directors and Team Leaders need to be accountable for the organisation's performance. Organisations fail to manage accountability, as low-performing Directors and Team Leaders are allowed to remain low-performing Directors and Team Leaders rather than being dealt with.

Low-performing Directors and Team Leaders also forget that staff are paid for their services in exchange for a salary, preferring to prioritise staff "rights" at the expense of customer service. High-performing Directors and Team Leaders know that staff and customers have equal importance and never put one at a disadvantage over the other.  

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