The development of a conceptual framework to guide sustainable organisational performance

Abstract

The emergence of the networked economy implies that traditional management approaches no longer suffice in addressing the challenge of complexity. This is compounded by the existence of divergent approaches to determining organisational performance in both management practice and academia, resulting in an execution gap occurring between strategy formulation and results. This article contributes to an understanding of organisational performance by integrating the divergent approaches to determining organisational performance into the Performance ‘ESP’ framework. This provides a conceptual framework to guide organisational development. The research to validate the framework includes a grounded theory approach, comprising a meta-analytical study of existing research, in-depth qualitative interviews and the pilot testing of the Performance ESP Index, which provides a composite measure of the multi-faceted stakeholder view of organisational performance. The research concludes that organisational performance resides in an organisation’s ability to integrate the divergent approaches, to create an execution culture with the necessary dynamic capabilities for sustainable organisational performance in addressing the challenge of complexity. There needs to be diversity in executive abilities at board level to ensure the integration of strategy and people to create the execution culture. Furthermore, leadership should focus on the strategic fusion of strategy and people, whilst management should focus on developing the strategic paradigm throughout the organisation to ensure an execution culture. The Performance ESP framework provides a diagnostic tool to assess the existence of an execution culture to address the challenge of complexity. The purpose of the assessment tool is to complement the financial metrics of profitability, to ensure a balance between short term profitability and growth for sustainable organisational performance. Further research is required to confirm the reliability of the Performance ESP index as the initial pilot study, whilst indicative of the potential of the instrument, did not provide conclusive evidence of reliability.