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Exploring the role of Performance Measurement in integrated Top-Down and Bottom-up ChangeResearch brownbag April 12, 2012

Geert Letens

Kurt Verweire

© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School

Objectives of the Presentation

Introduction and need for this work

Provide an overview of previous research on Integrated Performance Management and Transformational Change

Share the primary results of the ongoing research that investigates the role of performance measurement in integrated Top-Down and Bottom Up Change

Clarify future research goals

Stimulate discussion and reflection

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Integrated Performance Management:

Research Need

An increased number of organizations have attempted to implement more effective integrated performance measurement systems –Kaplan & Norton, 2002

Many have failed to make significant progress in fully implementing and utilizing their measurement system -BSC Collaborative, 2003

Design

Implement

Use

Balanced Scorecard


Integrated Performance Management and

Transformational Change

“Kaplan and Norton see BSC as a central management concept for the whole organization. This requires a totally different management approach, and a huge organizational transformation”

Verweire & Van den Berghe, 2004

“To achieve an intense strategic focus, organizations had to institute comprehensive,transformational change.”

“They had redefined their relationships with the customer, reengineered fundamental business processes, taught their workforces new skills and deployed a new technologyinfrastructure.”

“The management system provided a mechanism to mobilize and guide the process of change; a new culture emerged, centered on the team effort required to support the strategy”

Kaplan & Norton, 1996

Organizational change literature reports failure rates of change efforts up to 70% -Abrahamson, 2000; Higgs & Rowland, 2005

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Integrated Performance Management and

Transformational Change: a Multi-level

Evolutionary Perspective

Geert Letens

Ph.D. Dissertation Ghent University – Royal Military Academy


Research Opportunities

Performance management is “the management of a system put in place by an entity with a predetermined socially constructed reality (its context) that has chosen a relevant viewpoint of itself (its objective) towards which it means to progress using a set of recognizable characteristics as its measurement apparatus (performance measurement) to monitor this progress” – Folan, Brown & Fadev, 2007 p. 616.

Study specific contextsLittle research attention has been paid to the implementation of integrated performance management in new product development environments – Jiménez, Martinez and Gonzales, 2006

Investigate the measurement apparatus of organizationsPerformance management should be studied as a mechanism supporting organizational transformation -- Waggoner, Neely & Kennerley, 1999

Explore how organizations change their relevant viewpointsMore research is needed to clarify processes that are of immediate help to practitioners to support the creation of a learning organization - Cummings & Worley, 1997; Örtenblad, 2007.

Part 1

Part 2

Part 3

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Part 1 - Integrated Performance Management and Enterprise Transformation in New Product Development Environments


Developed by E. Van Aken, informed by literature such as Kotter

Description of a structured approach that combines performance measurement and other improvement methodologies in an integrated

transformation effort in an engineering environment .

Transformation Methodology

(TransMeth)

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Install. new CISs in existing vehicles

Install. CISs in new vehicles or sites

CIS configuration modifications

Requests for study

Requests for installation

Requests for modification

User information

Life Cycle Model

Agreement Processes

Project Management processes

1 3 54 62 7

ISO 15288

Life Cycle Model

Agreement Processes

Project Management processes

1 3 54 62 7

ISO 15288

Engineering

Studyworking groups

Mechanicalprototyping

CAD

Installationworking groups

Integrated project team

Concurrent Engineering

Engineering

Studyworking groups


CAD


Engineering

Studyworking groups


CAD


Integrated project team

Concurrent Engineering

HIT!

1 year20% $

SatisfiedCustomer

Lean

Pilot Project - Reengineering of the

Product Development Lifecycle


χConsulting

completed projects

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dec/01 mrt/02 jun/02 sep/02 dec/02

Periode

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studie 2

studie 1st

Doubled turnover compared to 2001ERM

χConsulting

LOPENDE JOBS STUDIE I

13 14 11 96

0246

81012

1416

31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE II

1218213030

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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE III

1317172121

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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02

Reduced inventoryDM

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Eff/Lt St I Mar 02 Eff/Lt St I Jun 02 Eff/Lt St I Sept 02 Eff/Lt St I Dec 020

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Norm:15 %

Eff / Lt LOPENDE PROJECTEN STUDIE I

DM Less waiting

χConsultingLT St II Mar 02 LT St II Jun 02 LT St II Sept 02 LT St II Dec 02

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Norm :450werkdagen

LEADTIM E LOPENDE PROJECTEN STUDIE II

ERM Reduced Leadtimes

Improvement Cycle Between Project Turnover-Project Inventory-Waiting

Time-Project Leadtime

χConsulting

completed projects

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dec/01 mrt/02 jun/02 sep/02 dec/02

Periode

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studie 2

studie 1st

Doubled turnover compared to 2001ERM

χConsulting

LOPENDE JOBS STUDIE I

13 14 11 96

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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE II

1218213030

05

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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE III

1317172121

0

5

10

15

20

25

31/12/01 31/03/02 30/06/02 30/09/02 31/12/02

Reduced inventoryDM

χConsulting

Eff/Lt St I Mar 02 Eff/Lt St I Jun 02 Eff/Lt St I Sept 02 Eff/Lt St I Dec 020

10

20

30

40

50

60

70

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Norm:15 %

Eff / Lt LOPENDE PROJECTEN STUDIE I

DM Less waiting

χConsultingLT St II Mar 02 LT St II Jun 02 LT St II Sept 02 LT St II Dec 02

0

200

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600

800

1000

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1400

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Norm :450werkdagen

LEADTIM E LOPENDE PROJECTEN STUDIE II

ERM Reduced Leadtimes





The identification of complex system characteristics as an important reason for the lack of integrated performance management in

engineering or new product development environments

Progress and Performance Monitoring:

Inter-level Dynamics

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Part 2 - Approaches to Identify Conditions and Processes that Support or Inhibit Integrated Performance Management


Transformation Methodology

(TransMeth)

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Scoring Dimension Assessment Dimensions/Items Examples of Supporting Tools Approach

- Structured approach for defining metrics - Cross-functional involvement in defining metrics (e.g., leadership team, …) - Use of group process tools to define metrics

Strategy mapping, BSC, Performance prism, etc.

Deployment

- Metrics (scorecard design) deployed to lower levels if applicable - Metrics clearly and consistently communicated: + internal to the organization, promoting accessibility and real-time use + external to the organization - Metrics cover all critical: + functions, processes, and work units in the organization

Visibility boards, email/intranet, newsletters, all-employee meetings, … Stakeholder meetings Audit of metrics deployment

Study

- The scorecard has metrics that are: + focused (the “vital few”) + aligned with:

- burning platform - vision and value-added - higher-level system - desired behaviours - reward system

+ balanced (across dimensions in multiple frameworks) + ….. - Proposed relationships across metrics have been defined. - Metrics can be linked to employees work activities

Audit of metrics to vision, mission, KSFs Metrics Balance Check on System Components Metrics Balance Check on BSC/EFQM Metrics Audit Metrics Deployment Chart

Refinement

- Metrics are refined based on study activities, if environment changes, and/or if are no longer needed

Action reports & follow-up mechanisms

A structured and comprehensive approach to assess

performance measurement systems as part of the overall organizational improvement system

Measurement System Design


Scoring Dimension 0% 25% 50% 75% 100% Approach How did you create the output?

No evidence or anecdotal

Some evidence Good evidence Significant evidence Complete evidence

Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Deployment How did you deploy the output (F/P/WUs)?


¼ of potential ½ of potential ¾ of potential All of potential

Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Study How did you assess quality of output?



Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Refinement How did you refine the output?



Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Overall score 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Strengths Points for improvement - A: brainstorming, EFQM sessions, external support - D: Intranet, managers boards, screen above badge clock, competence

matrix, EFQM sessions participated by more people - S: ERM ok for internal processes, ERM in the impact and influence zone

of TW - R: ok for internal processes

- A: not everyone was involved, who needs to be involved (brainstorming by all supervisors – TOS) who had the chance to give input/feedback and how; consistency/linkage between KPA, ERM, DM

- D: Only to the level of TOS; managers boards not consistent and not

enough deployed vertically; more communication to stakeholders; not enough benchmarking

- S: Adjust the scorecard – not everything on the right place; DM don’t have

always an impact on ERM; only PD mostly S no Act - R: Action Reports; Deployment to the floor

To be verified Critical improvement elements

Measurement System Design

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Insights confirm the findings from the literature on integrated performance management with regard to implementation difficulties and reveal even bigger challenges related to performance review.

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Review Process

Assessment:Analysis of

Performance Measurement

Use

Overall ADSR Assessment Results

Part 3 - The Evolution of Multi-level Organizational Transformation

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We Need a Strategy, a Performance Management System…

And a lot more !


An Evolutionary Perspective to Performance

ManagementSpiral DynWorldView

Perf MgtFocus

Financial Financial Accounting Cost Financial Financial Anecdotes & ABC Measures Benchmarks

Customer CustomerSLA Satisfaction

Service LT Measurement

Process Internal LT Repair LT

Planning & Control WIP Strategic Value Adding Projects ProjectPerf Meas

Canibalisation Spare parts availability

Purchasing LT

Continuous Improvement Projects

Learning Cross training Cross trainingsindex Competence& ScoreGrowth 5S 5S 5S Score

Communication PersonnalSatisfaction

Teambuilding Events Measures

SocialNetwork

Spiral DynMindCapacities

Obey rightful authority and find meaning insacrifice for later rewardto avoid shame

Dominate other without guilt Communities-Collaborationcompete for influence in life

Test options for greater autonomy and

Orange Green

Red Blue Orange Green

World is full of viable options:There are plenty of alternative choices

Habitat for allHumanity

Individual experts

World is tough:It's eat or be eaten

World is divinely controlled:a distinct right and wrong according to a plan

Red Blue

2004

2005

2006

2007

Crisis Management Basic Operational Strategy Map Expanded Operational Strategy Map

Cross functionalIntegration

Functional Cel

Technical Priorities Process Discipline EntrepreneurshipStrategy Map

Balance

CustomerSupplier

Cooperation

StrategicAlliances

Evolution of purpose

Evolution of social structures: Int > Ext

Improved understanding of the impact of evolutionary thinking systems on integrated performance measurement systems.

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Conclusions Related to

Integrated Performance Management

Integrated performance management implies:

The integration of various organizational levels

The appropriate management of inter-level relationships

To achieve integrated performance management through transformational change, organizations should consider:

The development of different thinking systems

The alignment of the maturity of various organizational systems

Design

Implementation

Use

Corporate

Bu Unit

Process

Function

Blue

Orange

Green

Red

Exp

ertis

eQuarter

Month

Week

Year

internal externalLT ST

Org

nisa

tiona

lLe

vels

Deve

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ent

Leve

ls

Coo

pera

te

Diff

ernt

iate

Inte

grat

e

Design

Implementation

Use

Corporate

Bu Unit

Process

Function

Blue

Orange

Green

Red

Exp

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eQuarter

Month

Week

Year

internal externalLT ST

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Integrated means more than balanced!


Published Research as a Research Fellow

1. Martínez León, C.H., Farris, J.A., Letens, G. (2012). Improving Product Development Lead Time Performance through Iteration Front-Loading, IEEE T ransactions on Engineering Management, - under review.

2. Martínez León, C.H., Farris, J.A., Letens, G., Hernandez, A. (2012). A Risk Management Framework for

New Product Development Projects Featuring Uncertain Iterations, Journal of Engineering and Technology Management, - under review.

3. Letens, G., Farris, J.A., Van Aken, E.M. (2011). A Multilevel Framework for Lean Product Development

System Design, Engineering Management Journal, Vol. 23, No. 1; pp 69 – 85. 4. Farris, J.A., Van Aken, E.M., Letens, G., Chearskul, P., Coleman, G.D. (2011). Improving the

Performance Review Process: A Structured Approach and Case Application, International Journal of Operations and Production Management, - Vol. 31, No. 4, pp. 376 – 404.

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Published Research as a Research Fellow

1. Letens, G., Verweire, K., Slagmulder, R., Van Aken, E.M., and Farris, J.A. (2011). Integrating Top-Down and Bottom-up Change: Lessons Learned from a Longitudinal Case Study, Proceedings of the 32th ASEM Conference. Lubbock, Texas (USA), October 19-22, CD-ROM.

2. Nepal, B., Raghuraman, R., and Letens, G. (2011). Framework for Supplier Selection in Global Sourcing

Considering Supply Chain Costs and Risks, Proceedings of the 32th ASEM Conference. Lubbock, Texas (USA), October 19-22, CD-ROM.

3. Martinez, C., Farris, J., and Letens, G. (2011). Improving Product Development through Front-Loading and

Enhanced Iteration Management, Proceedings of the 2010 Industrial Engineering Research Conference, Engineering Management Track, Reno, Nevada (USA): May 21-25, 2011, CD-ROM.

4. Gandhi, J., and Letens, G. (2010). Towards a better understanding of procurement Risks, Proceedings of the 31th

ASEM Conference. Rogers, Arkansas (USA), October 13-16, CD-ROM 5. Verweire, K., Slagmulder, R., Letens, G., Chearskul, P., Van Aken, E.M., and Farris, J.A. (2010). Towards

customer intimacy: Implications for performance measurement, Proceedings of the 2010 Industrial Engineering Research Conference, Engineering Management Track, Cancun, Mexico: June 5-9, 2010, CD-ROM

The role of performance measurement in

integrated Top-Down and Bottom Up Change

Kurt Verweire

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Performance management from a strategic perspective


Clear strategic focus

24 |

� Do we have a

winning strategy?

� Do we take the

right actions in line

with our operating

model?

� Do we have the

right organization to

implement all this?

Strategy Alignment Commitment

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Case study

Strategy Implementation and Alignment


Strategy implementation

Strategy implementation is a hot topic in management

But there is no generally accepted academic framework that explains what it is and what are the dimensions of successful strategy implementation

Integrated Performance Management Framework (Verweire & Van den Berghe, 2004) identifies the five dimensions of strategy implementation

Strategy implementation is about translating strategy in each of those five domains

In line with one of the three operating models identified by Treacy & Wiersema (1995)

| May-2011 | IERC Conference 201126 |

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Strategy implementation



Strategy implementation at customer-intimate firms

Strategy implementation is about alignment. It is aligning the different activities of the Integrated Performance Management Framework to the customer intimacy strategy.

This also implies that a strategy implementation model for an operational excellence firm or a product leader looks different.

We have identified 15 crucial actions (from management literature) that customer intimacy firms apply


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Direction and goal setting:

Is top management dedicated to explain to employees what customer orientation means and do they lead by example?

Is there a willingness to serve customers differently, with the best customers

getting the best treatment?

Does the company use feedback from its customers as a guideline for the definition of its business objectives?

Operational processes:

Does the company have both the expertise and the experience in a particular business field to deal with customers professionally?

Does the company support a relationship orientation with an in-depth knowledge about the customer?

Are customer intimacy efforts supported with incentives that reward loyal

customers?




Support processes:

Does the company regularly collect and update background information on

the key customers (e.g., needs, attitudes, habits, and behaviors)?

Has the organization clearly defined the responsibilities for the collection, update and analysis of customer information?

Has the company set clear roles and responsibilities in dealing with its customers?

Evaluation and control processes:

Do key performance indicators (KPIs) include a measure of customer

retention?

Is data on customer satisfaction disseminated at all levels in the organization on a regular basis?

Does the company offer a bonus to the employees if certain customer satisfaction objectives are met?


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Organizational behavior:

Does the company pay special attention to attracting and hiring people that

are open-minded, flexible, and people-oriented?

Is the organization held together by a pervasive culture designed to provide superior quality and value for the customer?

Do responsibilities and authorities reside with staff at the local level so that the organization can flexibly deal with each client situation?

Database of more than 100 customer-intimate firms at Vlerick

Companies that expressed they pursued customer intimacy at Vlerick strategy workshops

Questionnaires filled out by at least 4 members of management team of the business unit

Average scores of the firm compared with scores of the benchmark database



Becoming customer intimate: Case European Rural Bank

The investigated Rural Bank is one of the bigger local banks within a European cooperative banking group

At the start of the transformation project (March 2001):

Financial problems

Organizational problems (27% turnover of employees; absenteism: 9%)

Strategy: “Grow market share”

Decision to tackle this situation with the help of a performance management consultant

Development of 2 (almost similar) strategy maps (September 2001-March 2002)


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Invite each of these customers for 1-hour personal talk – listening rather than selling, noting the needs of the customers through FINAPs (‘Financial Needs Analysis Profiles’)

Focus to only serve customers who wanted more than 1 product (mostly an unprofitable current account)

Creation of Customer Relationship Management database (developed by the IT staff in close collaboration with sales and marketing people)

New sales and service culture introduced (Cohen Brown) (April 2002)Branches had to report on Monday morning what they would sell

Debrief on Friday afternoon how much they sold

Focus on learning and identification of best practices

Sales boomed in the branches

Champions League competition – different departments competing with each other – in 2003 and 2004.


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Financial results:

Absenteism: 9% (2001) � 2% (2004)

Turnover: 27% (2001) � 8% (2004)

Employee survey: 90% indicated that they knew the strategy of the firm


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Clear strategic focus

Working paper: Verweire K. Ferguson T. Debruyne M. 2007. Toward an integrative framework of strategies that work. (5) : 28p.

Research reports: Verweire K. De Grande J. Greef G. 2011. Operational Excellence: What does it mean? What does it take? 100p.

Verweire K. Carchon S. Escalier J. 2010. Customer intimacy: what does it mean? What does it take? 122p.

Verweire K. Escalier J. 2009. Sustaining competitive advantage through product innovation -How to achieve product leadership in service companies. 115p.

Case studies:Verweire K. Van den Berghe L.A.A. 2006. ING direct: Rebel in the banking industry.

Thibeault A. Verweire K. 2012. ING Direct USA: Asset or liability for ING Group?

Verweire K. Meuleman M. Leleux B.F. 2010. Kipling (A) + (B): Monkey Business - Kipling tries to conquer the world/An entrepreneur in stormy weather.

Verweire K. De Grande J. Letens G. Slagmulder R. 2011. Bringing German Cooperative Bank Berlin back on track: Can a rural bank thrive in the city? (A) + (B) + (C) + (D)

PhD project Judith Escalier Revollo

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Case study

Top-Down and Bottom-Up Integration

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Research Need

Organizational success depends on the ability of the organization to adapt to a changing environment

There are several approaches how to manage change

In “Cracking the code of change”, Beer (2001) proposed an integrated approach

The validation of his theory based on ODC literature remains unclear

His theory was only based on change at the corporate level

41


Theory E

According to Theory E (Beer, 2001)

purpose of change is the creation of economic value, often expressed as shareholder value.

change should be planned and programmatic

focusing on formal structures and systems.

It is typically driven by the top with the help of specialist consultants and financial incentives.

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Supporting Literature for Theory E

Fayol’s (1949): management as planning, organizing, commanding, coordinating and controlling

Beckhard & Harris (1987): Change from a present state to a desired future state through deliberate management actions

Strategic choice and self-determination (White et al., 1997

Responsibility of the top to align their organization with the changing environment (Rajagopalan and Spreitzer, 1996)

Changes defined by a sequence of steps (Kotter, 1995; Nadler, 1998)

Optimistic view of achieving intentional change (Goshal and Bartlett, 2000)

view aligns to a large extent with contingency models (Huy, 2001), if contextual factors are taken into account


Theory O

Theory O is characterized by a completely different approach towards change (Beer, 2001):

The purpose is to develop an organization’s capability to implement strategy and to learn about the effectiveness of change from actions taken

Theory O assumes change is emergent and therefore less planned and programmatic

The focus is on the development of a high-commitment culture

Through the high involvement of the bottom, it relies far less on consultants and incentives to drive change

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Supporting Literature for Theory O

French and Bell (1995): Managers as coaches that seek to ‘structure activities to help organization members to solve their own problems and to learn to do that better’

Incremental, developmental change that shapes organizational capabilities through the improvement of organizational problem solving, leadership, visioning and task accomplishments between groups (Waddell et al., 2004)

Socio-technical character of change: goals of both organizational improvement and individual development (French and Bell, 1999)

Change is not predefined, but rather emerges from the positive qualities and capabilities of the organization and its individuals: importance of meaning making (Weick, 2000) and double loop learning (Argyris)


Theory E and O Combined

There are clear differences between Theory E and Theory O how academics study organizational change (the underlying assumptions in their research)

how practitioners engage in change actions (what they believe they can achieve and how they should approach this)

There is evidence in the literature to support both theories

Ultimate challenge: resolve the tension between Theory E and Theory O in a way to maximize the benefits and to minimize the negative consequences of each theory (Beer, 2001)

Sequential approach

Preferred approach: simultaneous implementation

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Theory E and O Combined

47 |

Source: Beer & Nohria (2000)


Research Questions

Combined theory should be more than an arbitrary mixing of Theory E and Theory O: in stead of a halfhearted approach, managers might be better off picking a pure theory (Beer, 2001)

Until now there is little or no guidance on when, where and how the mixing of both theories should occur in practice

How did this mixing occur in a Dutch rural bank?

Longitudinal perspective (3 years)

Business unit level

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Methodology

Retrospective case study approach

Unstructured interview with internal change agent (fully transcribed)

Survey instrument (2001 & 2004)

IV: PM use practices*, PM system maturity

DV: Organizational learning, organizational performance

Structured and unstructured interviews with management team + follow-up interview

Collection of documents

Summary of all information in a case study (34 pages, several company documents, video Interviews)

Validation by change agent

Timeline of various initiatives

Delphi approach to assess the change approach, using Beer’s model as a assessment framework

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Theory E – Theory O Assessment

Change interventions Dutch Savings Bank Timing Theory E <--------> Theory OUnderstanding the financial and organizational context of DSB 2001/03 XOIntroduction of external performance management consultant (to support in shaping the solutions)

O X

Better understanding "where are we now" 2001/05 O XCreation of financial reporting system X O

Open communication on "where are we now" 2001/05 XODefinition of three strategic options to solve problems XO

Strategy mapping exercises 2001/09 O XStrategy discussion corporate division XOStrategy discussion retail division XO

Translate strategy conclusions into concrete actions 2001/09 O XDevelopment of financial, commercial, operational and people goals O X

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Change interventions Dutch Savings Bank Timing Theory E <--------> Theory OPresentation of two strategy maps 2002/05 O XMore structured management meetings O X

From financial targets to operational targets 2002/05 XO

Creating a winning team: create the appropriate behavior with managers 2002/05 XO

Encouraging to take actions XOInvestment in training XO

Setting clear marketing goals (developed from the strategy maps): whom to serve - explaining rationale

2002/05 XO

Creation of Customer Relationship Management system 2002/06 O XIntroduction of a new sales management approach O XTarget setting, reporting on results, and sharing of best practices in branches

O X

Structuring of sales process 2002/09 XO

Customer contact center: new role of customer contact center 2002/09 XOEmancipating the back office: introduction of non-negotiable rules XOIntroduction of non-negotiables XO

Change interventions Dutch Savings Bank Timing Theory E <--------> Theory OProcess management initiative 2003 XORolling out of Champions' League competition to all departments O XProviding transparent measurement system XOAllocation of monthly awards XO

Creation of open, transparent performance-oriented culture 2003 XOCoaching leadership style XO


Theory E illustration

Mission:“Rabobank Den Haag wants to reach a leading position as a broad, financial and cooperative services provider in the heads and hearts of the people in its operating territory, by showing its connection with local society and to stimulate the economic activities in there.”

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• Sell differently :

- proactive instead of reactive

- recognise and understand customer needs

- work with targets

- discuss results openly

Theory O illustrations

• Reinforce main principles through courses and workshops

• Implement best practices in common day processes

Every month trophies are handed out at an informal gathering


Illustration Theory E & O CombinedSeperate Map for Bussinesses

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Conclusions

Change requires a careful selection of initiatives that seek the balance between Theory E and Theory O

Initial assessment of the organization requires a balanced perspective (financial and organizational capabilities)

Initially Theory E oriented initiatives, quickly followed by Combined E-O approach, ultimately followed by Theory O initiatives

Assessment framework can support change agents in balancing their interventions

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Case study

Performance Measurement Evolution

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Introduction and Literature Review

Organizational success depends on successful strategy formulation and implementation

Customer Intimacy is a strategic choice

Implementation however is key

CI strategies require appropriate Performance Measurement (PM) systems

But this seems to be difficult to implement in practice

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Introduction and Literature Review

Research questions:

How have PM use practices been key in achieving breakthrough performance in the case study organization?

How are PM use practices in the performance review process aligned with a strategy of customer intimacy?

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Methodology

Survey instrument

IV: PM use practices*, PM system maturity

DV: Organizational learning, organizational performance

Retrospective case study approach

Structured and unstructured interviews with management team + follow-up interview

Survey instrument

Insights in documents

59


PM System Use Processes

60

Key Process Subprocesses Definitions: The action performed or policies instituted pertaining to…

Monitoring

Gathering The process of collecting performance data from different sources to provide input to performance reviewprocess.

Updating The process of preparing visual portrayals, reports and presentations to reflect updated performanceinformation based on new performance data.

Reporting The process of distributing and sharing updated performance information to decision makers.

Evaluating

Clarifying The process of ensuring a common understanding of how performance measures are defined or calculatedand how performance information is prepared.

Analyzing The process of assessing performance levels, trends, variability and comparing them to predeterminedgoals, targets or standards.

Interpreting The process of identifying causes to explain current performance and extracting insights from performanceinformation.

Validating The process of defining and evaluating relationships betweenperformance measures and the relationshipsbetween improvement actions/strategies and performance measures

Forecasting The process of projecting future performance based on current performance and review process findings.

Decision-Making

Generating The process of identifying potential improvement actions/strategies.

Justifying The process of evaluating potential improvement actions/strategies to identify the best course of action.

Deciding The process of selecting a course of action and specifying action plans.

Taking Action Implementing The process of completing actions to put decisions into practice.

Communication and Knowledge Management

Disseminating The process of distributing performance information and review process findings to communicate tointernal or external stakeholders.

Storing The process of accumulating performance information, reviewprocess findings, and lessons learned fromthe performance review process for future reference and use.

Unlearning The removal of obsolete performance information, decisionsand lessons learned or invalid assumptions tomake way of new ones, if any.

Chearskul, 2010

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31


Case Application

Transformation in a part of a European bank (2001-2004)

Bad financial results

Towards more intimacy

Balanced Scorecard was the change management tool that transformed the entire organization (implications on communication, HR practices, rewarding, etc.)

The performance review process has changed over the years

Still 2h weekly meetings

But attendance rate reduced

And the number of people involved reduced

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Results

62

123456

GatheringUpdating

Reporting

Clarifying

Analyzing

Interpreting

ValidatingForecasting

Generating

Justifying

Deciding

Taking Action

Disseminating

Storing

a) PM Use Sub Process Evolution BeforeAfter

1

2

3

4

5

6

Rate

r Sco

re

PM Use Key Processes

b) PM Use Key Process Evolution BeforeAfter

0

1

2

3

4

5

6

Shared Vision Systems Thinking Team Learning

Rate

r's S

core

Learning Dimensions

d) Learning OutcomesBeforeAfter

1

23

456

Quality of products or

servicesSuccess rate in launching new

products

Customer satisfaction

Level of innovation

Adaptation to the changing

environmentEmployee

satisfaction

Cost performance

Business growth

Reputation in its sector

Overall financial performance

c) Organization's PerformanceBeforeAfter

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32


Conclusion and Contributions

Successful strategy implementation requires more than a performance ‘review’ process

Maturity of the entire performance review process is correlated with organizational learning and performance – it is more than just setting up a good PM system

63

Future Research Opportunities

Geert Letens

10-4-2012

33


Top-Down and Bottom-Up Change

Develop an assessment framework that can support change agents in balancing their interventions

Project change Initiatives on Transformation Methodology

Investigate the role of Performance Measurement during the different steps of the Transformation Methodology

In particular for evaluation and control (Use Phase)


Research Design

Quasi Experiment with four Organizations

0 - X - 0

0 - . - 0

. - X - 0

. - . - 0

X stands for Intervention

Strategic Alignment

Balanced Top-Down & Bottom-Up Change

0 stands for measurement of:

Technical performance

Social performance

Strategic Alignment

Organizational Maturity

To be used as selection criteria for case study organizations

To be repeated for different strategic orientations

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34


Strategy, Performance Management, and Organizational

Learning

Successful strategy implementation requires more than a performance ‘review’ process

Maturity of the entire performance review process is correlated with organizational learning and performance – it is more than just setting up a good PM system

Change in PM system use and other strategy disciplines

Integrated Performance Management

Performance Measurement Meetings:

Evolutionary Performance Measurement


Organizational Learning, Leadership and Performance

Management in Crisis Environments

Learning in crisis

Organizations operating in difficult environments are required to adapt to their fast changing environments

Pilot project investigates:To what extent deployed military units show more characteristics of learning organizations than territorial units

To what extend these characteristics are correlated with mission difficulty and transformational leadership

Future projects: NGOs, Profit organizations operating under deep uncertainty

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35


Research Questions

What is the role of Performance Measurement in support of Strategy Implementation and Organization Development and Change?

What is the Interrelationship between Transformational Leadership, Performance Management and Organizational Learning in High Risk Environments?

How are military organizations currently assessing their performance (methodology and measures)? What are potential common measures that would benefit individual nations while addressing the needs of NATO at the same time?

How can we develop metrics, data collection, and data sharing frameworks to support the transition framework in Afghanistan?

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