Behavioral capabilities drive corporate performance

Organisational capabilities greatly affect long-term corporate success, and none more so than behavioural aspects. But behavioural attributes have high impact only when they’re backed by strong structural capabilities. Efforts to develop robust organisational capabilities are likely to pay off in performance that outstrips that of competitors.

Those are the key findings of Organisation of the Future — Designed to Win: Organisational Capabilities Matter, a new Focus report by The Boston Consulting Group (BCG). The study, conducted in partnership with 12 management organisations worldwide, surveyed approximately 1,600 senior managers, seeking their input on a framework of 20 organisational capabilities — both structural and behavioural.

This framework encompassed a wide range of structural capabilities — from the organisation’s spans of control to project management and business analytics — and many behavioural capabilities, such as adeptness with change management and employee performance management.

All capabilities matter to success, but some matter more than others

The correlations showed that all 20 types of organisational capabilities have an impact on overall performance — though clearly some have much more influence than others. “There’s a definite bias toward behavioural factors — in particular, leadership, employee engagement, and cross-functional collaboration,” said Research Leader Fabrice Roghé, a Duesseldorf-based partner at BCG.

“But the best performance comes when those traits are backed by structural capabilities, such as a strong organisation design and rigorous business processes and controls.”

Christopher Kinsella, Acting Chief Executive of Chartered Management Institute, said, “This research confirms the importance of strong leadership, high employee engagement, and a collaborative approach to work within an organisation – all of which depend on key leadership behaviours. The report highlights how the ‘softer’ behaviours and values can often make more of an impact to productivity and performance than the structural capabilities within a company. It is significant that there is such a gap between best practice and the day-to-day experiences in companies.  This is where the role of management training and enhancing leadership skills is critical to ensure behavioural development, effective delivery of strategy, and the consequent success of an organisation.”

The BCG publication recommends three priorities that can lead to big gains in performance. The first entails paying particular attention to leadership, employee engagement, and collaboration as key performance dimensions. The second priority is to align and improve people practices. The third is about organisation design — ensuring that the company’s structure is aligned not only with its business strategy but also with its cultural goals and target behaviours, and is complemented by clarity in roles and cross-functional processes.

This BCG Focus contains many insights that can help companies gauge the impact of their organisational performance. A follow-on Focus will explore the transformation journey that most companies need to take if they want to close the gap between their current organisational capabilities and those that constitute best practice today.