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The Performance Imperative
A Framework for Social-Sector Excellence
Release 1.0, February 2015
BACKGROUND AND CONTEXT
Who Developed ‘The Performance Imperative’?
“The Performance Imperative” (PI) is the result of a full year of collaborative work by the Leap of Reason Ambassadors Community, a group of nonprofit leaders brought together and coordinated by the Leap of Reason team (leapambassadors.org). The purpose of the community is to:
- inspire, motivate, and support nonprofit and public sector leaders (and their stakeholders) to build great organizations for greater societal impact
- increase the expectation and adoption of high performance as the path toward that end.
Through in-person meetings, teleconferences, online discussions, expert interviews, and the vetting of drafts, the Ambassadors Community sought and then synthesized the knowledge of leaders representing many different parts of the nonprofit ecosystem. On page 14, you will find a list of the ambassadors who participated in this iterative process and endorse what you see here.
We owe a special thank you to Cynthia Figueroa and Michael Bailin, who oversaw the Ambassadors Community’s development of the PI.
Why Did We Develop the PI?
We felt we should begin our work together by crafting a common definition of “high-performance organization.” We knew that without a thoughtfully developed, thoroughly vetted definition of “high performance,” any call for raising performance in our sector would ring hollow. In addition to providing a common definition of “high performance,” the PI also lays out in detail the seven organizational pillars that can help you achieve high performance. To crib from the late author Stephen Covey, these are the seven habits of highly effective organizations.
How Do We Hope Leaders Will Use the PI?
We do not intend this document to be a manifesto. We hope it will be a North Star to guide leaders on a journey of continuous learning and improvement—so they can make as much difference as they possibly can for the people and causes they serve.
- nonprofit boards will use the PI as the centerpiece of retreats focused on living up to their fiduciary responsibility to serve their beneficiaries in the most effective way
- nonprofit executives will use it to develop their strategic plans, professional development efforts, and even performance reviews
- funders and public agencies will use it to spark introspection about how they can better support their grantees’ pursuit of performance and what new skillsets they need to add to their teams
- professors will build it into the syllabus and structure of relevant courses
- management and evaluation consultants will build on it as they help nonprofits plan, build, grow, learn, and improve
- websites for nonprofit information and ratings will take the PI into account as they seek to provide funders with greater insights into the performance of nonprofits.
To What End? In Other Words, Why Should You Care About High Performance?
The journey toward high performance leads to more meaningful, measurable change—whether it’s lifting families out of homelessness, closing global health inequities, preserving land, inspiring artistic expression, raising educational achievement, or any of the myriad missions that give purpose to the world’s social-sector organizations. Along this journey, leaders come to master the critical disciplines they need to ensure that they’re achieving net impact (results beyond what would have happened anyway) and avoiding inadvertent harm.
In this era of scarcity and seismic change, high performance matters more than ever. The social and public sectors simply don’t have the resources to expend on efforts that are based primarily on good intentions and wishful thinking rather than rigor and evidence. They are increasingly steering resources toward efforts that are based on a sound analysis of the problem or need, grounded assumptions about how an organization’s activities can lead to the desired change, assessments to determine whether hard work is paying off, and a desire to keep getting better over time. This formula is at the core of high performance—and it’s just as applicable to organizations that are cutting-edge innovators as it is to institutions that are tried-and-true.
Who Can Benefit from the PI?
We realize that the PI, which calls for investments in seven organizational disciplines, may appear daunting to the many under-resourced organizations caught in the “nonprofit starvation cycle.” But the reality is that achieving high performance does require significant resources. Therefore, we believe the insights in this document are most immediately applicable to organizations that have budgets of $3 million or more and can fathom investing in their own infrastructure. Even if you have a smaller budget and tight financial constraints, you will still find ideas here to help you get better at getting better.
Some of the details you will find on pages 6 to 12 have a special focus on organizations that provide direct services, including those in the fields of health, education, human services, and the arts. We believe the overarching framework is relevant for organizations of almost any type.
The PI can help nonprofits at different stages of their organizational development. We encourage you to read with an eye to your organization’s specific stage of development.
The PI focuses on the level of an individual organization rather than the level of communities, fields, or ecosystems. We put forward an organization-level framework because we believe that high-performance collaborations require high-performance organizations at their core. We hope that eventually others will build on what we’ve defined here and provide guidance on what a high-performance network is and what it takes to achieve it.
Will We Update the PI?
This first public release is not a fait accompli. We will be making periodic updates to refine, adapt, and elaborate on what you see here. We want to improve our work—consistent with the PI itself—with input from leaders with different views and experiences. Indeed, we are eager for your feedback, especially as you begin to use the PI.
If the PI resonates with you, we encourage you to use it to guide and gauge your journey toward high performance. The journey won’t be linear. It won’t be easy. But ultimately it will be rewarding for you, your stakeholders, and the causes you’ve dedicated your life to advancing.
THE DEFINITION AND PILLARS OF HIGH PERFORMANCE
Our Common Definition of ‘High Performance’
High performance is the ability to deliver—over a prolonged period of time—meaningful, measurable, and financially sustainable results for the people or causes the organization is in existence to serve.
Organizations that commit to pursuing high performance generally make the most progress by cultivating seven core disciplines:
- Pillar 1: Courageous, adaptive executive and board leadership (the preeminent pillar)
- Pillar 2: Disciplined, people-focused management
- Pillar 3: Well-designed and well-implemented programs and strategies
- Pillar 4: Financial health and sustainability
- Pillar 5: A culture that values learning
- Pillar 6: Internal monitoring for continuous improvement
- Pillar 7: External evaluation for mission effectiveness
Note: We recognize that even the most exemplary high-performance organizations do not excel in all seven pillars equally or simultaneously.
Pillar 1 — Courageous, Adaptive Executive and Board Leadership
In high-performance organizations:
- Executives and boards embrace their responsibility to deliver meaningful, measurable, and financially sustainable results for the people or causes the organization is in existence to serve.
- Boards are strong, assertive governors and stewards, not just supporters and fundraisers. They recruit, advise, and hold accountable the lead executive (CEO). They ask probing questions about whether the organization is living up to its promises and acknowledge when course correction is needed.
- Executives and boards clarify the mission (purpose) of their organization and inspire people to work to achieve it.
- Executives and boards recruit, develop, engage, and retain the talent necessary to deliver on this mission. They know that great talent is a huge differentiator between organizations that are high performing and those that aren’t.
- Executives and boards marshal the external partners and resources necessary to deliver on their mission.
- Executives and boards passionately push the organization to get better at meeting its mission and to reduce costs without compromising quality.
- Executives and boards are humble enough to seek and act on feedback on their own performance and that of their organization. Even the highest of high performers know that they haven’t figured it all out and acknowledge that they still have a lot of work to do.
- Executives and boards are constantly assessing not only what the organization should be doing but also what it should stop doing, with an eye to redirecting scarce resources to the highest-opportunity areas.
- Executives and boards clearly define their respective roles.
- Executives and boards model thoughtful, clear, informative, and timely internal and external communications. They see communications as a strategic function that is essential for delivering great results and not just good PR.
Pillar 2 — Disciplined, People-Focused Management
In high-performance organizations:
- Managers translate leaders’ drive for excellence into clear workplans and incentives to carry out the work effectively and efficiently.
- Managers’ decisions are data informed whenever possible.
- Managers, like executives and boards, have the ability to recruit, develop, engage, and retain the talent necessary to deliver on the mission. They help staff get the tools and training they need in order to deliver the desired results.
- Managers provide opportunities for staff to see themselves in the work—that is, to see how each person’s work contributes to the desired results.
- Managers establish accountability systems that provide clarity at each level of the organization about the standards for success and yet provide room for staff to be creative about how they achieve these standards.
- Managers provide continuous feedback to team members and augment that ongoing feedback with periodic performance reviews. They view performance reviews as an opportunity for staff development and coaching.
- Managers acknowledge when staff members are not doing their work well. They give these staffers help to improve or move them to more suitable roles. If it becomes clear that staff members are unable or unwilling to meet expectations, managers are not afraid to make tough personnel decisions so that the organization can live up to the promises it makes to beneficiaries, donors, and other key stakeholders.
Note: We recognize that an organization with a very small staff usually can’t afford to draw a distinction between leaders and managers. In our experience, this distinction starts to be meaningful for organizations with budgets of $1 million, and organizations with budgets over $2 million can truly build this kind of thinking into their DNA.
Pillar 3 — Well-Designed and Well-Implemented Programs and Strategies
In high-performance organizations:
- Leaders and managers are clear on the target population or audience they serve and are passionate about serving them.
- Leaders and managers base the design of their programs and strategies on a sound analysis of the issues, insights from intended beneficiaries, and evidence-informed assumptions about how the organization’s activities can lead to the desired change (often referred to as a “theory of change”).
- Leaders and managers design programs with careful attention to the larger ecosystem in which they operate, including racial, cultural, geographic, historical, and political dynamics.
- Leaders and managers implement their programs in a consistently high-quality manner. They view collecting and using data as part and parcel of implementing high-quality programs.
- Leaders and managers do a good job of recruiting, retaining, motivating, listening to, and learning from their participants and intended beneficiaries.
- In the case of direct-service organizations, leaders and managers invest in building strong relationships between staff and participants, because this relationship may be the single biggest determinant of whether participants will stay engaged in programming and thereby achieve the desired results.
- Leaders and managers guard against the temptation to veer off course in search of numbers that look good in marketing materials or reports to funders.
Pillar 4 — Financial Health and Sustainability
In high-performance organizations:
- The board and senior management take charge of their organization’s financial destiny. They articulate the value they deliver and develop overall financing strategies, tightly aligned with their mission, to support and sustain it.
- The board and senior management establish strong systems for financial stewardship and accountability throughout their organization.
- The board, management, and staff build and participate in budget processes that are oriented toward achieving results and not just conducting activities. This means allocating adequate resources for monitoring and evaluation. And it means making hard choices, especially in tough financial times, to direct money where it needs to go to drive the intended results.
- The board and senior management share their financial results transparently with key stakeholders at regular intervals.
- The board and management nurture the external financing relationships required to support their operations. They treat fund development as a strategic function that requires focus, management, capital, and specialized skill sets. They ensure clearly defined roles for the board and staff.
- The board and senior management operate their organization with margins that allow them to build their balance sheet. They fund the depreciation on buildings and equipment. They build internal cash reserves that brace them for unknown events, put them in a position to finance their own receivables if necessary, and enable them to negotiate a line of credit with a financial institution.
- The board, management, and key staff understand their organization’s cost structure, which aspects of it are required to produce high-quality programs and/or services, and how it aligns with reliable revenue sources for funding it year in and year out. They are relentless in making necessary investments with an eye to costs and benefits while being equally relentless in reducing unnecessary costs.
- Senior management uses financial models to make clear and transparent the organization’s financial condition and, at any given point, predict how it will end the year (and what will make the prediction more or less reliable).
- Senior management instills an organization-wide discipline of compliance with all regulatory requirements.
Pillar 5 — A Culture That Values Learning
In high-performance organizations:
- The board, management, and staff understand the organization’s mission and desired results and review them periodically to ensure that they are still relevant.
- The board, management, and staff continually seek to do even better for the people or causes they serve.
- People in all parts of the organization have high expectations of themselves and of their peers.
- The board, management, and staff take on the challenge of collecting and using information, not because it’s a good marketing tool, and not because a funder said they have to. They believe it is integral to ensuring material, measurable, and sustainable good for the people or causes they serve.
- The board, management, and staff look for opportunities to benchmark themselves against, and learn from, peer organizations that are at the top of their field.
- Senior management leads by example and encourages people throughout the organization to be curious, ask questions, and push each other’s thinking by being appropriately and respectfully challenging. High-performance cultures are innovative cultures, mindful that every program and process eventually becomes dated, even obsolete.
- Senior management creates the conditions for staff members to feel safe acknowledging when there are problems. They use what others might deem “failures” as an opportunity for learning.
- Even the busiest leaders, managers, and staff members carve out some time to step back, take stock, and reflect.
Pillar 6 — Internal Monitoring for Continuous Improvement
In high-performance organizations:
- The board, management, and staff work together to establish clear metrics, tightly aligned with the results they want to achieve, for each program and for the organization as a whole.
- Management and staff produce frequent reports on how well the organization is implementing its programs and strategies. Management and staff use these reports to chart course corrections and make operational and programmatic improvements on an ongoing basis.
- Management and staff make the collection, analysis, and use of data part of the organization’s DNA. They ensure that people throughout the organization understand the key metrics. And they invest in helping staff gain comfort in working with data as a natural part of their job.
- Management and staff don’t collect excessive information. They focus on collecting information that is relevant for determining how well they are achieving the desired results, understanding what mix of efforts is critical to achieving those results, and continuously improving their results over time. Ideally, applying this information makes staff members’ jobs easier and more effective, rather than simply adding to their burden.
- The board, management, and staff draw extensively on lessons from organizational assessments and evaluations of like programs serving similar causes or populations.
Pillar 7 — External Evaluation for Mission Effectiveness
In high-performance organizations:
- Leaders complement internal monitoring with external evaluations conducted by highly skilled, independent experts.
- Leaders commission external assessments to learn more about how well their programs are being run, what these programs are or are not accomplishing, who is or is not benefiting, and how the programs can be strengthened. Leaders do not use external assessments as a one-time, up-or-down verdict on the organization’s effectiveness.
- Leaders recognize that there are many different types of external assessments, and no one type is right for every organization or for every stage of an organization’s development. Independent evaluators who understand how different methodologies fit different contexts can help leaders match the tool to the task.
- Leaders draw a clear distinction between outputs (e.g., meals delivered, youth tutored) and outcomes (meaningful changes in knowledge, skills, behavior, or status). Those who are working to improve outcomes commission evaluations to assess whether they are having a positive net impact. In other words, they want to know to what extent, and for whom, they’re making a meaningful difference beyond what would have happened anyway.
- Leaders who plan to expand significantly any programs aimed at improving outcomes have a special obligation to commission a rigorous evaluation that can assess net impact.
- Even those leaders who commission the most rigorous of impact evaluations do not stop there. They commission additional assessments to gauge their impact in new settings (or for new populations) and achieve greater positive impact for the money they spend.
- Leaders share the methodology and results of their external assessments to help others learn and avoid mistakes.
Note: We crafted this pillar with a special focus on organizations that provide services, but we believe the core concepts are relevant for other types of nonprofits as well—from those that advance human rights to those that protect ecosystems.
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