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The performance management question in the organization of the future.

The Performance Management Question in The Organization Of the Future

Could you define and describe in detail the process by which your organization manages performance? Is that process systematic? Is it effective and efficient? Is the process consistently understood and applied? Are strategies effectively linked to tactics and techniques? Is there effective implementation? Are the people that must implement plans a part of the development of those plans? We suspect that most of you answered these questions with some degree of hesitation and reservation. Over ten years experience with organizational attempts to become organizations of the future led us to capture the process we will define and describe here. That process does not reflect exactly any of the organizations we have worked with over this period of time. Each organization's approach to improving productivity, quality, and perfoamance is unique, and that is as it should be. However, when you stand back from the specific efforts and look for common threads, strategies, approaches, and techniques, you do find a rather generalizable process.

Our suggested response to the challenges, opportunities, and problems posed by your new competition and competitive environment is a redesign and revitalization of your performance management process efforts. Managing performance means, by definition:

* Creating visions of what the desired future state is;

* Planning--assessing present organizational status relative to the vision, creating strategies for how the desired future state can be attained, and building on strengths so as to move toward your visions;

* Designing, developing and effectively implementing specific improvement interventions that have a high probability of moving us toward the desired future state, particularly in terms of levels of performance;

* Designing, redesigning, developing, and implementing measurement and evaluation systems that will tell us whether we are going where we said we wanted to go and how well we are doing along the way;

* Ensuring that cultural support systems are in place so that we are rewarding and reinforcing progress, so that we can maintain the excellence we are achieving, and so we can control levels of performance necessary to compete with our new competition.

A performance management process is a process by which these things will take place in a systematic, consistent, persistent, patient, and comprehensive fashion throughout the organization. An organization's management process must both manage what gets done, as well as how those things get done. For example, the management process must make sure plans are developed, and that the process by which plans are developed is constantly improving; the management process must make sure services and products are delivered on time, and that the processes by which those goods and services are developed is constantly improving. The process by which an organization's management team accomplishes constant performance improvement in all aspects of the business must be given at least equal emphasis to the process by which the organization gets products and services out the door on time. These two aspects of management need to be well-integrated in order for an organization to improve and meet the challenge of world-class new competition. As we said at the outset, in the organization of the future everyone will have at least two primary responsibilities: To get the job done on time, within quality specifications, with the right amount of resources, and to continuously improve individual, group, organizational, and systems performance.

Most managers today see their primary (perhaps even sole) responsibility to be getting the jobs done. They do not envision improving performance as a major responsibility. They are not measured against this objective; they are not rewarded for doing so; therefore, they spend very little, if any, time on this objective. This must change if your organization is to become an organization of the future and compete successfully.

Figure 1 depicts a process flow diagram of the performance management process as it will be defined and described here. The process beings at the top with a stimulus causing the organization or organizational system to attempt to improve performance. This stimulus may be:

* The challenge posed by new competition.

* A champion in the organization with a vision.

* Declining market share and profits.

* Board and stockholder pressures.

* The logic of wanting to get better in a systematic way.

* Fear of failure.

* Some combination of these and perhaps other stimuli.

These stimuli evoke responses, which vary considerably from organization to organization:

* Start a productivity center.

* Start a productivity and/or quality program.

* Hire a consultant.

* Bring in an inspirational speaker to "pump up" our top management team.

* Appoint a vice president of productivity/quality.

* Start a program, e.g., quality circles, suggestion system, gainsharing, or cost reduction.

* Automate the office, factory, warehouse.

* Implement just-in-time inventory and production control.

* Send a team to Japan and copy the Japanese.

* Hire a famous "guru" to solve our problems for us.

* Lay off 10 percent of the workforce.

* Get rid of the union, or implement concessionary bargaining.

* Restructure and sell off losing businesses.

Of course, individually none of these responses can solve all your problems or achieve all the performance improvement potential that exists in your organization. Some may even be strategically unsound, incompatible with other interventions, or ineffective at accomplishing your ultimate goals. For instance, we don't condone getting rid of the union or just starting a program. The most effective, longer-term response is to change the process by which you manage performance. This must start with a revamp of your planning process.

The planning process in most organizations is extremely deficient. We plan for capital investments, acquisitions, budgests, facilities, and staffing, but somehow we neglect to plan for performance improvement. Most importantly, the process by which we plan is not effective. It does not effectively and efficiently involve enough people or the right people. The output of the performance improvement planning process is a grand strategy by which we will, in a step function as well as an incremental fashion, constantly improve performance in strategic areas in the organization. We develop strategies, goals and objectives for improving performance. We focus on improving the performance of the systems and processes in the organization. This is not unlike the use of statistical process control to improve the performance of specific processes. The same concepts apply. The firt basic step to improving the performance management process is to redesign and enhance the planning process.

Out of the planning process should come antintegrated plan for improvement interventions. This plan would include specifying improvement tactics and techniques to be used in various areas of the organization, as well as a project plan. The project plan, milestone chart, and Gantt chart would dictate when each technique would be introduced into the various organizational systems. This project planning is extremely critical and difficult. It requires in-depth knowledge of the techniques themselves, as well as wisdom about the implementation strategy.

The art of developing a grand strategy for improvement interventions is not widely practiced in American business and industry. Perhaps our disciplinary educational system and lack of holistic thinking causes this. Nevertheless, an understanding of what performance improvement techniques are available and what their specific operating characteristics are is critical to this step of the process.

As we implement improvement interventions (note that the performance management process is, in itself, an improvement intervention) a need for measurement arises. We will want to monitor the performance of the organization or organizational system to confirm that the improvement interventions we implemented improved performance We may need to do this as a part of an evaluation or justification follow-up study. Measurement of performance and feedback to people in the organizational system is, in itself, a powerful improvement intervention. Psychologists call this "knowledge of results" (KOR). Measurement as a routine part of the management process, apart from that associated with specific improvement interventions, is the most important aspect of measurement in the organization of the future.

Measurement is separate from evaluation. The process of measurement is a non-value laden process. It is the process of deciding what to measure, collecting data, tracking over time, and analyzing the data. It can and should be separate from the evaluation process.

Evaluation is the process by which we impose standards, specifications, requirements, values, and judgments to determine the degree to which performance meets the needs and/or expectations of our customers or our processes. We believe this separation in the two highly interrelated measurement activities is consistent with Deming's point on use of or inappropriate use of standards and with the literature from psychology on how to improve performance appraisal. Suffice it to say that measurement and evaluation are critical components of the performance management process. The figure identifies feedback from evaluation to:

* Our perceptions of the challenge posed by the new competition.

* The appropriateness of our responses to the challenges.

* Our perception as to potential new responses required.

* Our strategies, goals, and objectives.

* The effectiveness, efficiency, and quality of specific interventions we have made to improve performance.

The performance management process reflects an open system (your organization is in constant contact with its environments) with a closed-loop feedback system (the evaluation component of your measurement process).

The process is designed to drive toward control and accomplishment of longer-term goals, such as becoming the organization of the future, survival, growth, competitiveness, and improving levels of performance. We argue that control is an a result of managing the process. We also propose that bottom line for any organization is not profitability or managing the budget. In our opinion, bottom line is where or not the organization is achieving its visions of what it wants to or feels it must become. The bottom line, over the long term, is survival, growth, constantly improving performance, competitiveness, and behaving in accordance to your values and principles. If you do these things, profits follow.

The performance management process, as depicted in figure 1, seems to be driven in organizations today in at least two ways. Some organizations are simply managing performance by responding to competitive challenges. Some organizations are clearly more successful at this than others. This process is not altogether reactive, and there are certainly many forms that this adaptive response can take. As we indicate in the process flow diagram, the response mechanism can drive planning or it can directly drive attempts to improve some aspect of performance without being a part of any overall planning process. Planning might take place for a single intervention, such as a flexible manufacturing cell installation or an office automation project; however, overall organizational strategy implications may not be addressed. Ideally, it would be preferable to have the challenge-response approach begin with a strategic and comprehensive planning effort, then move to selecting specific improvement intervention tactics and techniques. This would maximize your improvement efforts.

Planning has at least two important components: business unit strategy and performance improvement strategy. To address the new competition, an organization's management team must define and reach some level of agreement regarding its sources of sustainable competitive advantage. What are our strategic variables, factors, and thrusts? What are our strengths and competitive advantages? The focus is on what we will do and on the business plan that centers on marketing, structures used, markets to be served, technologies to be utilized, facilities, staffing, and products and services. We are talking about the portion of strategic planning that focuses on business strategy.

In our opinion, the business plan is a background document. It might contain: long-range objectives, i.e., 20-year horizon corporate objectives; strategic analyses, internal and external perspectives; and general strategy discussion. The business strategy is given life and meaning by a performance improvement strategy that facilitates attainment of its business strategy. It links strategy to action. There is limited value in moving directly to a micro plan, i.e., implementing computer-integrated manufacturing or automating the office, in the absence of a larger, well thought out business strategy.

The other approach that appears to be taken is to drive the process toward a vision of the organization of the future. This might be termed a pull strategy as opposed to push strategy for the challenge-response approach. In one case, we are pulling the systems and process toward a vision of what the organization will have to look like in terms of problem solving, planning, decision-making, structures, levels of performance, measurement and evaluation systems, and reward systems. In the other case, we are driving the systems and process in response to perceived challenges, threats, and competitive pressures. Wehre not necessarily suggesting that one is better than the other or that these two approaches exist in pure form in any organization. Clearly, an organization could do, and perhaps should do, both. We believe it is important for organizations to move a little closer to the pull strategy. It is of the utmost importance to create shared visions of the organization of the future, communicate guiding principles, and develop a grand strategy by which continual performance improvement can be attained.

What is the beginning of the performance management process? It depends. You can begin at either the top or bottom of the process (i.e., with responses to challenges or with the development of a vision of the organization of the future), or that you could begin at both the top and the bottom. For that matter, you could argue that the process of managing performance begins with measuring and evaluating current levels of performance to assess where to begin. Specific situations will probably dictate where you begin with the process. A suitable starting point or entry point to the process will then determine the sequence of steps to be taken from that point forward. Maybe the answer of where to start is answered best by Deming: "Start anywhere and anytime as long as you do it now!"

The assumed sequence of steps to the performance management process is shown in figure 1. A competitive challenge is perceived, and an awareness that performance needs to improve is created. Appropriate responses are contemplated. A vision of the organization of the future is developed and communicated. A planning process is developed and implemented that creates strategies, goals, objectives, and action plans that will move the organization toward its vision of what it must become to compete and succeed. Improvement actions are taken on an ongoing basis as a normal part of doing business. Measurement and evaluation of the progress of the performance management effort takes place at all levels and across all functions on an ongoing basis.

A stimulus for change is developed either by creating a vision that pulls us toward it or by creating a crystallization of a competitive challenge, problem, or opportunity. You react to a situation or you proactively develop actions intended to improve the situation in anticipation of problems or opportunities. You have a sense of urgency: You must do something to improve performance. What next? The answer "to plan" is shallow and meaningless unless you know how to plan. The process by which you plan for performance improvement is as important as the plan itself. The process by which you plan for performance improvement determines the level of quality and acceptance for the plan and actions necessary to implement the plan.

Knowledge of a competitive challenge or threat or even a vision of the organization of the future is insufficient alone to improve performance. A well thought-out plan that is developed by all levels of management is essential to successfully meet the challenges posed by the new competition and become your vision of the organization of the future. The planning process gives substance and meaning to what we perceive has to be done.

Figure 2 depicts a planning process we have used sucessfully to develop performance improvement plans for numerous organizations. The basic planning process entails eight steps.

It begins with Organizational systems Analysis (OSA), which has at least eight areas. In a planning process implementation for an autonomous organizational system, all eight areas of OSA would likely be appropriate. If the planning process were being completed for a quasi-autonomous department down inside the organization, the OSA areas might have to be tailored to fit the circumstance.

Organizational Systems Analysis is the interface step between business planning and performance improvement planning. We tell management teams that the purpose of step 1 (OSA) is to prepare them to plan for performance improvement. In an organizational system that has done business planning and done it well, this step is largely redundant. The team may need only to review the business plan and discuss its relationship to their effort to plan for performance improvement. The relationship between business planning and performance improvement planning you will face is hard to predict; however, there are common situations:

* There is no plan of any type; therefore, the performance improvement planning process will develop the plan. In this case, OSA will need to be done in detail and focus on business strategy issues.

* You are in a semi-autonomous organization, i.e., a profit center/cost center within a strategic business unit. In this case, your performan improvement plan must support the unit's business plan. You will need the management team to carefully review the "upline" plans.

* For a reasonably autonomous organization or organizational system, review of upline plans is always recommended if they exist. However, the performance improvement planning process can serve to develop both the business/organization plan and the performance improvement plan.

* A department or sub-organizational system within a semi-autonomous or autonomous unit should clearly link its plans to the plans of the parent unit. The assumption is that the parent unit has a plan. We find this often is not the case in the real world.

Step 2 of the planning process entails developing planning assumptions upon which the performance improvement plan will be based. Assumptions are developed and analyzed in terms of their importance to the plan and their validity or certainty. These assumptions allow us to consider necessary areas for which contingency plans need to be developed and to assess our plan later based upon critical assumptions that were made. Assumptions allow for a mechanism by which to account for uncertainty and risk.

Step 3 of the performance improvement planning process focuses on developing strategic objectives for performance improvement. This step is accomplished in a structured participative fashion. The output from this step is a prioritized list of strategic objectives for performance improvement for the organizational system for which the plan is being developed.

In step 4, tactical objectives and/or action items are developed; again using a structured participative process. The output of step 4 represents specific improvement interventions that need to be initiated during the next year in order to begin to move toward the objectives established in step 3.

Step 5 concentrates on forming action teams to develop scoping proposals for the priority improvement action items developed in step 4. A scoping proposal outlines what has to be done, who has to do it, sequencing, measures of success (key performance indicators), and costs and benefits. Groups of three to five people comprise an action team. These persons normally volunteer to serve on an action team. Action team duties and effort are expected contributions to the organization in addition to individual job performance.

Steps 5-8 of the performance improvement planning process essentially serve to link strategy to action. In this sense, step 5 of the planning process transitions to the box in figure 1 labelled "performance improvement interventions." We believe that this is where strategic planning has traditionally broken down, and as such, this is a critical step in the performance improvement planning process. It is important to see the fit between figure 1, the performance management process, and figure 2, the performance improvement planning process.

Step 6 is managing the implementation of teh action item. Scping proposals are reviewed and assigned to an implementation team. Implementation proposals are developed and the project management phase begins. A visibility system(s) is developed to create "line of sight" for progress against the plan. Step 7 requires that each action team develop measures that will answer at least two question: Have we successfully implemented the improvement project? What is the impact of the implementation on organizational system performance? Action teams must evaluate the results of their improvement project before moving on to another improvement project. Measures for improvement project success are integrated into the visiblity systems. Step 7 transitions into step 8 by requiring that the action teams managed effective implementation and monitor progress of their improvement project for long enough to make sure that steady state for the solution and design has been achieved. Continuous support and involvement from management and a visible tracking system will help to ensure effective implementation.

This performance improvement process is repeated before the budget planning process. The planning process can be implemented in a top-down fashion to ensure congruity in goals, objectives, action items, and measurement from level to level. The recycle process occurs approximately once a year, but this may vary depending on the organization. The planning process itself is examined based upon lessons learned from the previous year, and any appropriate modifications are made at this point. It is reasonable to expect that the process itself will evolve, and it is here that this redesign and development process occurs.

Specific improvement projects are an integral part of the performance improvement planning process. You can also perhaps appreciate that the improvement projects identified in step 4 and implemented in step 5 may not be comprehensive or well-integrated. This component of the performance management process focuses on integrating broader and more pervasive performance improvement strategies with detailed improvement projects. This component may involve nothing more than an audit of all the action items and improvement projects to make sure that all bases are covered. It may involve filling gaps where improvement projects do not address a needed improvement thrust. Or, it might involve evaluation to make sure that no new improvement techniques have been developed that have not been considered in the mix of improvement interventions being used.

This component of the performance management process also involve analysis to make sure that no incompatible techniques are being used. It focuses on coordination of what is being done throughout the organization to make sure that sufficient networking is being done to avoid reinventing the wheel or repeating mistakes, and to make sure that implementation is as effective and efficient as possible.

In the organization of the future, performance improvement planning is going to be pervasive, and tremendous amounts of proactive improvement will be taking place. This activity will supplement, not replace, traditional improvement mechanisms that already exist in your organization. The performance improvement planning process is a mechanism by which your organization can begin to move from being manager-led and control-oriented to being self-managed and commitment-oriented. This proactive performance improvement process cannot be overlaid on top of your existing improvement processes without considerable planning and coordination. This is what we mean by integrating improvement activity from the performance improvement planning process with the more global strategy for improvement in your organization or organizational systems.

Following figure 1, the next area is measurement, assessment, analysis, and evaluation of performance. By this point in the process, your organization would have: a clearly communicated an awareness of the challenges posed by new competition; developed a vision of what your organization of the future must look like in order to respond successfully to these challenges; developed comprehensive and integrated plans for responding to these challenges; implemented a performance improvement planning process to supplement and expanded ongoing and perhaps traditional performance improvement efforts; and been coordinating the grand strategy or master plan for this performance management effort. Involvement in the performance improvement effort would be pervasive throughout your organization. A tremendous amount of communication, training, development, patience, consistency, top management support, design, conviction, leadership, skill, ability, vision, coordination, planning, and belief would have been exhibited at this point if you are succeeding. You will be succeeding if you begin to sense that the culture is changing. If you begin to sense that people in the organization are beginning to see their jobs and their role in the organization in a new light, you are probably succeeding. You will feel a difference as you walk through the organization and observe behaviors and as you talk to people. You will see people excited about their work and performing at higher levels than in the past. You will see team-building taking place, and as a result of the performance improvement planning process you will see improved focus on group performance as opposed to individual performance.

And you will at times feel like the process is out of control. You will have heard the phrase "shove responsibility and accountability for planning, problem-solving, and decision-making to the lowest appropriate level," and you will wonder if you haven't perhaps shoved it too low, too fast. You will question the value of the experiment. You will be pressured by management for quicker results. You will be asked to tell the "bean-counters" how much money you have saved in relation to the costs of the program. You will face skeptics, cynics, devil's advocates, "snipers," resistors to change, challengers, and down-right enemies. The percentage of people with you will represent the enlightened few, the early adopters, the inquisitive, the risk-prone, and the frightened who don't know what else to do. This group very likely will amount in the first two to three years to no more than 25 percent of your organization. The percentage of people who are against you openly (or even worse, informally and via the grapevine system), will probably total 25 to 50 percent. The remaing 25 to 50 percent of your organization represent those who are indifferent, undecided, risk-averse, late adopters, and those who will join the process as it succeeds. These percentages are in your favor! The 25 percent who are with you is a critical mass of followers and leaders. Make your strengths decisive. If led, the early adopters will ensure the success of the process as a result of their support and leadership throughout the organization.

The next step in the performance management process is to focus on improving performance measurement and evaluation systems. As you will recall, some measurement effort has already begun in steps 6 and 7 of the planning process. However, this measurement focused on specific measures of performance for individual improvement projects and assessing the impact of these projects on organizational system performance. What needs to occur now is a more global analysis of the measurement systems in the entire organization. A good first step is to audit your existing measurement systems. The major development thrust of this step in the performance management process is to improve the quality of measurement systems. This means that we will have to design or redesign measurement systems for the following, often-neglected criteria: effectiveness, quality, productivity, quality of work life, and innovation. The assumption is that efficiency and profitability are the two best-measured criteria in most organizations. The objective is to build "scoreboards" that will provide everyone in the organization with appropriate information about how they and the organizational systems they represent are performing. They need to know whether they are progressing toward longer-range goals, as well as how they are doing on tactical and operational issues. They need to see good news, as well as the bad news. They need to see information that they can personally relate to and understand. They need to understand the relationship between their activity and performance and the larger organization's performance. This is not easy, and requires significant skill and knowledge.

In addition to building specific measurement systems, we must build mechanisms by which the measurement and assessment gets fed back to our perceptions of the challenges posed by the new competition, our planned responses, our strategies for improvement, and our specific tactics and techniques to be used to improve performance in order that "real time" adjustments can be made to the performance management process. Figure 1 depicts these feedback loops. By now it is clear that the performance management process, as depicted in our flow process chart and in our discussions to this point, is extremely complex and dynamic. Consider trying to translate this process in terms of a corporation the size of General Motors. The process might make sense on paper, yet when we try to think through how to apply it or how it corresponds to what is already being done in even a 500-person, autonomous plant, the process becomes just another abstraction of reality.

At this stage of understanding, let it suffice to say that we have presented a process by which an organization:

* Assesses competitive challenges and creates a vision of how to effectively respond to those challenges;

* Enhances the strategic planning process in the organization to incorporate a pervasive performance improvement planning process;

* Develops a grand strategy for performance improvement that integrates ongoing improvement thrust with the improvement projects that flow from the performance improvement planning process;

* Improves the quality of and pervasiveness of measurement and evaluation systems in the organization.

This process is not that difficult to understand, nor is it really novel or unique. Again, it reflects an abstraction or generalization of what we see excellent organizations attempting to do as they strive to become organizations of the future. Their efforts are not as systematically thought through nor as systematically explained. We see our job as one of studying, translating in general terms, and helping to transfer the concepts to other organizations.

At this stage we have the four major components of the performance management process:

* Awareness of the challenges and visions of responses.

* Performance improvement planning processes that are coordinated throughout the organization.

* Grand strategy development for improvement interventions that is integrated and coordinated with improvement projects that come out of the performance improvement planning process.

* Improvement in the quality of measurement and evaluation systems at all levels of the organization and in all organizational systems. The last major element of the performance management process is really focused management of the process. It concentrates on infrastructure development, cultural support systems management, and continuing evolution of the process so as to maintain and build on excellence achieved.

The major components of a performance management process have been assembled. How do the components come together? How are they managed as an integrated whole? These are the issues that are addressed in the last component of the process.

There are several perspectives from which you and your organizations management team could be reacting to our description of this process to this point:

* We do this already, not exactly in this form, or in that sequence, but we do all these things. We may not do them consistently in all parts of the organization, but we do try to encourage our managers to do these things.

* We go about productivity and quality improvement in a lot simpler way. You have made this too complex and academic. The process isn't this cerebral, it's much more intuitive and natural. We tell our managers we need them to cut costs by four percent and they do it. This process, as you've described it, won't work in our organization because it's too complex.

* This is an oversimplification of the process. It is far more complex than displayed in the future and discussed. There are critical elements left off, you can't capture our process on paper, it's just too complex. Furthermore, the process is different from level to level and function to function in our organization. Improvement means something different and how one goes about it in different parts of the organization is entirely different. It is an interesting attempt to capture our process, but it is too simple and too general to be of much use.

* It is logical and it makes sense. We do not do a good enough job at improving performance as an integral part of what we all do and this explanation can help us to better communicate what we want our managers and management teams to be trying to do. It is an oversimplification in some respects, but that is necessary to communicate the basic, underlying process. It is too complex, in some respects, in that many of our managers are not used to thinking this systematically about their jobs and about performance improvement. We can't copy this process, but we sure can use it as a model, a prototype, from which to redesign and improve our existing approach. We can use this as a guide.

Our experience leads us to beleive that the most honest and most common reaction, for American organizations, is the last one. We don't say this because we believe the other three reactions are necessarily wrong. We say this because our years of experience working with even the best of U.S. firms leads us to believe that the last reaction is the most valid and common at this point in the evolution of management process in this country. Those of you who have reacted that way must address several issues at this point. Do we want to do something about how we currently manage performance in relation to how we ought to be managing performance? Do we want to tackle the whole organization or just start with some portion, a pilot project of sorts? How do we begin? Where do we start? How long will it take? How much will it cost? What are the tangible and intangible benefits we can expect? How do we get the board, top management, employee, union, middle management, staff, etc. support? If I'm the top manager, how do I get this started without forcing it on the organization? If I'm not the top manager, how do I get top management's support? How do we manage and coordinate the program? How do we do this and still get all the other things done? How do we stop fighting fires long enough to work on this effort?

If you are from a successful organization, your problem may be one of complacency and a feeling that we don't need this; we're doing OK without it. If you are in a failing organization, your problem may be urgency, A feeling that this will take too long--you may need a "quick fix." The decision to do something is not an easy one, regardless of the situation you may find yourself in. There will not be strong consensus, one way or the other, to do anything different than what you are already doing. There is, in fact, likely to be stronger sentiments for maintaining the status quo. As we said earlier, the predominant belief is that maintaining the status quo will be sufficient for survival and success in the future. This means that most, if not all of you, regardless of your position in your organization, face the challenge of how to sell a more systematic and proactive process for managing and improving performance. We believe, and hope you do too, that something different must be done. We believe that the successful organization in the 90s and beyond will look and behave significantly different than it does today. We agree with Deming that "everyone doing their very best is not sufficient" for the revitalization of U.S. business and industry. If you believe that your organization must change, you better have something to sell your management team. You cannot just go to them and say that we must change and that everyone is going to have to do a better job. As Deming has said, "we must know what to do." We would add that we must know what to do and be willing to pay the price to do it.

In order to pull off an effective implementation of this process, or any other for that matter, an infrastructure has to be developed. The infrastructure is a management of the process design, if you will. We are so used to management structures that manage functions, plants, divisions, disciplines, that it is hard for us to think about management structures that are designed to manage processes. Yet the organization of the future will require that we do more managing collaterally, across functions and disciplines. In some respects the concept is not unlike that of the matrix organization. The performance management process is an umbrella program that cuts across the traditional vertical management structures we find in most organizations. The challenge is to set up an infrastructure for the performance management process without establishing a VP for performance improvement or a productivity and quality center. Performance improvement must be seen as an integral part of everyone's job, and f you implement the process with a center or with a single champion you run the risk of not establishing shared ownership.

Musashi Semiconductor Works spent over five years laying the foundation for its small group activity process. The company trained, communicated, designed, developed, and sold the process top to bottom in the organization. It is this kind of planning and preparation that is essential to the long-term success of a process like the one we are presenting. Programs can be pulled off in shorter periods of time. But you don't need another program if you truly want to become the organization of the future. You need a process that is an integral part of your culture, the way you do business. Will a few champions initially take the lead developing and selling these concepts? You betcha! Will that champion or small group of champions have to build a broader base of support and build a critical mass of champions? Absolutely. The design of the "grand strategy" for the effective implementation of the performance management process application in your organization will likely have to be developed by a small group of "champions" with perhaps the assistance of select outsiders. Very quickly thereafter, that group will have to begin to build this thing called an infrastructure. Many American organizations do this by having a core staff group that coordinates the process with a council that is composed of key decision-makers in the organization. The council acts as a policy making, planning, problem-solving, and decision-making body. It represents a critical mass of top and middle management who will share ownership for the management of the process. They will share the burden of deciding how to guide the design, development and evolution of the process from its conception out into the future. The infrastructure is then the organization and management of the process itself. It is an organization within the organization that is designed to make sure that the performance management process is successfully implemented. The formality of the infrastructure will likely dissipate as the process evolves and becomes more firmly embedded in the way you do business.

Further Reading

Davidson, W. H. 1982. "Small Group Activity at Musashi Semiconductor Works," Sloan Management Review. Spring, 3-14.

Deming, W. E. 1986. "Out of the Crisis," MIT Press, Cambridge, Massachusetts.

Hackman, J. R. 1986. The Psychology of Self-Management in Organizations, Pallack, M. S., and Perloff, R. O. (Eds.), "Psychology and Work: Productivity, Change and Employment," American Psychological Association. Washington, D. C.

Kanter, R. M. and Brinkerhoff, D. W. 1980. "Appraising the Performance of Performance Appraisal," Sloan Management Review. 21(3): 3-16.

Meyer, H. H., Kay, E., and French, J.R.P. 1965. "Split Roles in Performance Appraisal," Harvard Business Review. January-February.

Morris, W. T. 1979. "Implementation Strategies for Industrial Engineers," Grid, Columbus, Ohio.

Naisbitt, J., and Aburdene, P. 1985. "Reinventing the Corporation," Warner Books. New York.

Peters, T. J. 1987. "Thriving On Chaos," Alfred A. Knopf. New York.

Peters, T. J., and Waterman, R. H. 1982. "In Search of Excellence: Lessons From America's Best-Run Companies," Harper and Row. New York.

Porter, M. 1980. "Competitive Strategy: Techniques for Analyzing Industries and Competitors," The Free Press. New York.

Porter, M. 1985. "Competitive Advantage Creating and Sustaining Superior Performance." The Free Press. New York.

Sink, D. S. (1980, 1983, 1984, 1986, 1987). "The Essentials of Performance, Productivity, and Quality Management," short course notebook. LINPRIM, Inc. Blacksburg, Virginia.

Sink, D. S. 1987. "Guiding Principles: The Foundation of Successful Efforts to Better Manage Productivity and Quality," IIE Integrated Systems Conference Proceedings. Institute of Industrial Engineers. Norcross, Georgia.

Waterman, R. H., Jr. 1987. "The Renewal Factor," Bantam Books. New York.

D. Scott Sink, Ph.D., P.E., is director of the Virginia Productivity Center and associate professor of the department of Industrial Engineering and Operations Research, Virginia Polytechnic Institute and State University. He is a frequent speaker at international conferences, and is the author of more than 25 papers and three books.

Thomas C. Tuttle, Ph.D., is director of the Maryland Center for Quality and Productivity, College of Business and Management, University of Maryland. He assisted with the organization of the National Productivity Network and twice served as its chairman.
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Title Annotation:includes related article
Author:Sink, D. Scott; Tuttle, Thomac C.
Publication:Industrial Management
Date:Jan 1, 1990
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