Imagine you are on the football field – What if 15% of your performance is dependent on the play you select, and 85% of your performance is dependent on your ability to make the play? Where would you invest most of your time, training your team to pass, catch, run, and block, or picking out the right play?

By and large, studies have found execution is the clear driver of company value and financial performance. How much? Well, about 15% of company’s performance is attributable to strategy – the remaining 85% is attributable to execution, as found by Becker and Huselid’s “ High performance Work Systems and Firm Performance.” Joyce, Nohria, Roberson found a similar ratio in “What really works.”

That’s right – Execution of the strategy is 6 times more important than the strategy itself!

How do you execute on a strategy? In a word: People. At the end of the day, it is the employee who makes things happen, who gets results – not machines, strategies, vendor relationships or what have you. People are your real differentiator and now typically make up 70% of a company’s cost (and growing). This is doubly true in today’s knowledge-focused economy. We see today that about 80% of a company’s valuation cannot be explained by the balance sheet, which shows the growing importance of intangibles and people performance to future cash flow. The value of a company is no longer in its factories, IT systems, or physical assets – it is created by the company’s people.

Your company is in fact already on the field, fighting for customers, revenues, and a competitive position. Instead of “picking out the best play”, focus on what will most help you move downfield toward your goals: people performance, 85% of your success depends on it. Goal alignment, individual accountability, and engagement equal strong execution. Build up these strengths and capabilities of your company to help ensure you can make the big plays. So yes, people performance does matter, because their ability to execute is the key factor in creating value and driving results for your company.

Max’s Note: As part of our quest to post more and more often, I’m proud to present this guest post by Sammi Nuttall.

According to a new survey completed by Korn/Ferry International, nearly 73% of executive level employees believed that they could outperform their manager. Surprisingly, 42% of those surveyed also believed that their boss was doing an “excellent” or “above average” job.

That’s an interesting contradiction.

One interpretation is that employees, even at the top levels, are not leveraging all they have to offer their employers – and as a result are feeling somewhat less than challenged. This puts the onus on managers and strategic HR groups to understand who their high potentials are and to discover and cultivate their strengths. It’s only by developing employees that their full potential can be released, and if you can do that – the sky’s the limit.

The Atlantic Monthly has been running excerpts from old issues as part of their 150th anniversary celebration. Reading over an issue this weekend, I came across an article written by a Colonel R. Williams about a decade after the civil war ended – in 1878. His issue? That the military’s practice of promoting those with the longest tenure was “fostering apathy” rather than bravery or a commitment to excellence.”

Amazing that the same battles we fight today for meritocracies were equally well articulated 150 years ago.

Here’s an excerpt:

Our army presents the only known example of a business or profession, either public or private, in which incompetency and want of zeal bring the same substantial rewards as energy, capacity, and active attention to duty. Such a system of promotion is in violation of all the rules of common sense by which men are governed, as well as of those by which they are incited to strive for superior excellence, and the condition of our army at the outbreak of the rebellion affords an excellent example of its inevitable result. At that time the superior grades of the army were filled by old men, who, having outlived all above them, had been regularly promoted, in accordance with this system, to the positions which they occupied, regardless of the well-known fact that in the majority of instances they were unfitted, both by age and infirmity, to perform any military duty whatever. The spectacle was so pitiable, and the lesson it taught so apparent, that it might be supposed the government would have profited by such crushing experience, and been led by it to the adoption of wiser measures. Such, however, was not the case. Our system of army promotion is the same to-day as before the rebellion, and we are slowly, but surely, approaching the same result, from which the same experience, disastrous as it was to the country, must necessarily follow. At the close of the rebellion, and with the sad experience it had taught still before us, some effort at a change was made. The army was reorganized, and many young officers who had acquired experience, both of the regular and volunteer force, and who had especially distinguished themselves, were deservedly placed in high positions; but this spasmodic effort at reform was deemed sufficient, and we have again fallen back into the system of promotion by seniority, which, unless some dire necessity forces a change, must render the condition of our army equally as deplorable as when the rebellion commenced, by filling its superior grades by worn-out and superannuated old men. It seems needless to describe the effect which this system must produce upon the subordinate and junior officers of the army. In most instances it is deadening to all effort at improvement or professional skill, and suggests the natural conclusion: that, as superior rank is obtained only by longevity, each should strive to avoid all exposure, hardships, or dangers by which health may be impaired or life risked.

A note: if the title offends you, please excuse me. I think the content and concepts make it worthwhile. Also, it’s the title of a real book – and so that makes it okay (right?).

He’s got a new book coming out next month called “The No Asshole Rule – Building a Civilized Workplace and Surviving One That Isn’t.” Today, at our all-hands company meeting, we got a chance to hear Bob speak on the topic.

The No Asshole Rule is something we actually have, use and abide by at SuccessFactors. We have a “rules of engagement” document which is posted all around our offices and on our website (#5) that reminds us of some of the basic tenets of working at the company. This particular rule, now softened a bit to “No Jerks,” understandably gets the most attention.

Why are assholes such a big deal? According to Bob, a professor of management and engineering at Stanford, they can easily take the wind from the sails of an otherwise successful company. Assholes can lower engagement, raise turnover and cost companies a lot of money. One guy Bob spoke about cost his company an estimated $160,000 over the course of a year – factoring in the costs of time spent by management, hr and executives in dealing with him – as well as anger management and training classes, overtime spent by other employees responding to his last minute requests and so on.

But its likely you don’t need any data points beyond ones from your own experience to make you aware of the preponderance and impact of assholes in the workplace. We’ve all dealt with them at some point and been the victim of behavior that makes us feel awful. According to Bob, there are two tests that identify the presence of an A-hole:

1. – “After talking to the alleged asshole, do their “targets” feel oppressed, humiliated, deenergized or belittled by the person?” and

2. – “Does the alleged asshole aim his or her venom at people who are less powerful or people who are more powerful.”

There are a few things to be careful of with your newfound A-hole identification powers. An important one is to be mindful of rushing to a-hole judgement – once you accuse someone of being one, you may quickly find you’ve created a monster.

So what do we do about the a-hole problem? Bob counsels us to simply avoid working at places where the a-hole factor is high (if you’re an employee), and to avoid hiring them (if you’re a company). He notes that “asshole poisoning is a contagious disease. Get out and stay out of asshole infested places – they will change you, you wont change them.” And the opposite effect is true as well – hire too many and it wont be long before your whole company is acting like an ass.

Another answer is to me mindful of “moment to moment conversations.” Be aware of asshole behavior – both yours and that of others. Noting and making small adjustments in response can make all the difference in whether a colleague perpetuates the -Ass-holishness.

We were lucky enough to get a copy of Bob’s new book today and I’ll be reading it soon. I hope to be back with further reflection once I work through it, but in the meantime, you should take a look at his blog for more thinking on the topic.

Fortune magazine just came out with their annual list of the 100 best companies to work for. In the interactive presentation you can sort by components of the evaluation like “best” benefits, pay, growth in the number of jobs, turnover, % minorities and % women. These are all important things to consider when choosing a job, but I’m left wondering.

I’m left wondering why questions like “is this place a meritocracy?” or “does this company pay for performance?” or “what’s my chance of being promoted here?” or “how many jerk managers work at this place?” get lost.

While perks like free basketball games (Quicken Loans) or grocery delivery (Microsoft) or on-site laundry (Google) are great – studies have shown that they aren’t the most critical components of job satisfaction. So I’m left wondering – is this really a list of the best companies to work for?

A colleague sent me this article from the Studer Group called “The Long Goodbye”. It caught my eye because it formalized something I’d been considering for a long time: When someone decides to leave his or her company, it’s rarely an immediate reaction to a shockingly negative experience. On the contrary - it’s often the delayed result of an experience that “left a bad taste.”

The article tells the story of a nurse who applied for a position for which she was ultimately not selected. What left the bad taste was not that she didn’t get the job, but rather that she found out that she wasn’t selected when the new hire was announced and it wasn’t her.  That’s an understandably difficult blow. If your organization doesn’t have enough respect for you to talk to you personally in such a case, why would it be reasonable to invest your loyalty in it?

Now, such an occurrence doesn’t mean the nurse is headed out tomorrow – but “will she return calls from another organization if called? Yes. Will she look online for openings at other organizations? Most likely. Will she leave? Yes, if something doesn’t happen to retighten her loyalty.”

The negative experience plants a seed of discontent that may one day grow into full blown rejection. So how do you avoid alienating your employees like this? The article first suggests a specific communications program for employees who aren’t selected for promotions -but that seems to me to be a point solution. The second suggestion is more appropriate: talk to your employees.

I was sent this article written by Joe Torre, the manager of the New York Yankees, that was recently published in BusinessWeek. Now, regardless of what you think of the team, you have to admire Joe. Just being able to remain the manager of the Yankees for this long while working for George Steinbrenner has to give you some insight into the man’s pluck.

The truth is that he’s a very insightful guy with real heart (somehow in my mind, I always envision him crying after winning something), and in the article he shares some of his thoughts on managing talent. In part, he talks about how he uses one of the team’s worst moments (letting the Red Sox take the momentum, and the world series, away in 2004) to motivate his people to always be ready. But he contrasts that motivational technique with a keen understanding of the fine balance between emotionality and competitiveness. A quote:

These days it is so important for a CEO, or any manager, whoever it is, to be aware of his or her personnel. We are in an age of computers, and everything is so damn impersonal. But in the end, it still comes down to people. You have to make people feel necessary. Even if their contributions are minor, it adds to everything else. That’s what makes the machine work. I love players with heart, not necessarily emotion, but those who deep down are driven by something more than mind and body. I don’t play favorites. The 25th member of the squad is just as important as the first guy. And I can’t let my own emotions get in the way of competing. I have had to release guys I loved, and keep players I didn’t necessarily care for.

According to this survey, more than 66% of workers describe their jobs as a source of “personal fulfilment.”

Wow, that’s fairly remarkable.

But just when you think you’re getting somewhere on this whole engagement thing, they hit you with: “the survey also confirmed that work remains simply a way of making a living for many people. Half (51%) said their work was ‘a means to an end’.”

And……we’re back where we started.

So while work can be fulfilling, most people would also rather be doing something else. I guess that rings pretty true. What do you think?