Contemporary Issues in Performance Management

Performance Improvement Through Quality Management Practices

Performance management is a systematic practice which helps an organization achieve its mission and strategic goals by improving effectiveness, empowering employees, and streamlining decision making. By improving both performance and quality, organization practices get better results.

Performance Improvement Through Quality

To achieve performance improvement, organizations stress on quality management practices that include cost reduction, productivity, teamwork, communication, training on problem- solving, decision-making, organizational dynamics, and interpersonal skills development. All these can significantly bring positive changes in the organization, and thereby can contribute to performance improvement.

Performance Management (PM) is a systematic process and engage in quality improvement activities by improving effectiveness, empowering employees, and streamlining the decision-making process.

Quality Improvement (QI) is an exercise of a deliberate and defined improvement process, such as PDCA namely Plan-Do-Check-Act, which is focused on activities that are responsive to organizational overall organizational efficiency and effectiveness. It indicates a continuous and ongoing effort to achieve measurable improvements in the efficiency, effectiveness, performance, accountability, outcomes, and other important indicators of quality in services or processes to achieve equity in an organization.

For performance improvement, quality management programmes emphasize on developing the capability of people to troubleshoot quality problem and to develop quality as an critical in-built attribute of products and services.

Quality management views an organization as a collection of processes and now become a benchmark for achieving quality improvement in organization. A literal definition of TQM, among others, is that it considers an organizational improvement strategy through development of people. Therefore, quality is intertwined with the people development activities of an organization.

Quality management practices can also improve performance through massive savings in the cost of quality. By waste management, process simplification, and customer-focused approach it can exert many performance improvement issues and thereby achieve improved business results. Over and above, as quality management prioritizes the development of people, with renewed capabilities, people can also perform better.

Quality Management Principles

Quality management is becoming increasingly important to the leadership and management of all organisations. These principles provide understanding and guidance on the application of quality management. Derived from the ISO 9001:2000 standard, the following eight quality management principles, organizations can produce benefits for all its stakeholders.

• Customer-focused organization
• Leadership
• Involvement of people
• Process approach
• System approach to management
• Continual improvement
• Factual approach to decision-making
• Mutually beneficial supplier relationships. ‰

Teamwork through Quality Management

Quality management practices can institutionalize teamwork. The most familiar vehicle for employee participation is a team. Teams range in scope and responsibility from problem-solving groups to self-managed work teams that schedule work, allocate jobs, engage members, and set standards and volume of output. A participative work culture is encouraged when quality becomes everybody’s responsibility. Employee involvement practices may differ in terms of organizational policies and strategies from one organisation to other organisation. Universal employee involvement practices are:

• Suggestion system
• Survey feedback
• Quality circles
• Formation of quality of work life team
• Job re-engineering or re-design
• Formation of self-managed teams
• Formation of TQM team ‰

Participative management is used as the most vital approach for introducing TQM culture in any organization.

Employee Empowerment

Employee empowerment signifies the present legitimate right of employees, irrespective of their nature of job and hierarchical level to make judgments, to take decisions on their own. Therefore, employee empowerment can smooth the progress of employees and in the process improve their performance ability.

Operationally, in organizations, we empower employees first by developing their capabilities and second by giving them indulgence to commit mistakes. Unlike other quality management approach, empowerment not only calls for employee contribution in the operational area, but also allows them to contribute in corporate level decision-making, so that employees emerge as a synergy.

An empowered employee, in other words, is not a mere seller of his time and labour for a contracted sum of money. The empowered employee acquires compulsory skill and authority to own.

Employee empowerment, involvement, and participative management as vital corporate practices have been experimented in numerous multi-national and national organizations. In all these cases, it was identified that the employee possession and commitment (which is possible through employee empowerment) are the two ingredients that achieved efficiency and productivity. Some organizations are even empowering their employees at the strategic level rather than confining their involvement only to limited operational activity. With full empowerment, organizations achieve excellence in performance.

Quality of Work Life (QWL)

Quality of Work Life is becoming an increasingly popular concept in recent times. In very simple terms QWL is the quality of relationship between employees and the total working environment attribution. It is a process by which an organization responds to employee needs.

QWL is most traditionally defined as those perceived essential personal needs, which an individual tries to satisfy by working in an organization. Its conceptual details, though laid by a host of behavioral scientists, were in reality advocated by Chris Argyris (1975) in his famous work on personality and organization. The socio-technical Systems Theory, pioneered by Tavistock Institute of Human Relations, London during the 1960s is considered as an essential QWL construct.

It basically talks about the practices in which an organisation can ensure the holistic well-being of an employee rather than just focusing on work-related aspects.

Although common QWL strategists stress on job re-design, formation of autonomous work groups, and worker involvement in management, there exists wide differences among the philosophers in this area as to what should be consider as QWL factors.

The process of QWL can be defined with the help of the following criteria:

• Adequate and fair compensation
• Safe and healthy working conditions
• Immediate opportunity to use and develop human capacities
• Future opportunity for continued growth and security.
• Social integration in the work organization.
• Work and total life space
• Social relevance of working life. ‰

Based on studies carried out both in India and abroad, it is evident that the essence of QWL is the opportunity for employees, at all levels, to have substantial influence over their work environment. This is the result of their participating in the decision-making process relating to their work, thereby increasing their self-esteem and the overall satisfaction from their work.

Hence, QWL calls for an open style of management, i.e., sharing of information and genuinely encouraging the efforts relating to the overall improvement of the organization. This makes it amply clear that QWL, in fact, is an important managerial activity to develop employees of an organization.

The success of TQM programmes mostly depend on appropriate HRD interventions like focusing on continuous training and development activity, encouraging employees contribution in management through small group forums, enhancing employee motivation, looking after the career development of employees, employee empowerment, and infusing attitudinal changes at the top (like accepting a flatter organization structure, following an democratic approach, becoming receptive to changes on a continuous basis, supporting group performance, etc.).

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Business Process Reengineering

Business Process Reengineering (BPR) is defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality and speed. It aims into the workflow within and between the enterprises.

A typical BPR project includes the following main stages:

• Identify business processes
• Review, update and analyze as-is business processes
• Design to-be business processes
• Test and implement to-be business processes
• Focus Areas of Business Process Reengineering

Following are some of the focus areas of Business Process Reengineering:

• Benchmark Assessment
• Process Mapping
• Six Sigma Analysis and Improvement
• Technical Blueprint
• Organizational Readiness Assessment
• Change Impact Analysis
• Organizational Structure Redesign
• Financial Impact Assessment
• Business Case and Return on Investment
• Continuous Process Improvement
• End-user and Executive Training
• Leadership and Organizational Change Management Support and Services

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Mckinsey 7s Framework

The McKinsey 7S Model was pioneered in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm and has been used to examine over 70 large organizations, since then. The model was shaped as a recognizable and easily remembered model in business.

The seven variables, which the authors termed “levers” all beginning with the letter “S” include “structure”, “strategy”, “systems”, “skills”, “style”, “staff”, and “shared values/ superordinate goals” (Peters & Waterman, 1982).

It is supposed that for long-term benefit, these variables should be changed to become more congruent as a system. Effective organizations achieve a fit between these seven elements. These elements are categorized in so-called hard S’s and soft S’s. The hard elements (strategy, structure, and systems) are feasible and easy to identify. The four soft S’s (shared values, skills, staff, and style) however, are hardly feasible.

The external environment is not mentioned in the McKinsey 7S model, although the authors do acknowledge that other variables exist and that they describe only the most crucial variables in the model (Peters & Waterman, 1982). The key sources of academic work on the 7S model can be used for more studies about the model.

Regarding the high capability of the 7S model to give a comprehensive view of every organization, authors have exploited the model in developing their conceptual framework. This would help them have a proper and comprehensive look on organizational diverse dimensions and their associated factors.

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Lean Management

Lean Management System, an integrated management approach that fosters daily progress, meaningful purpose, and lasting value. It is an significant part of lean thinking. As we apply lean in any organization the traditional way of managing does not guarantee right focus nor help sustaining lean initiatives. If no action is taken to change the way we manage process, people and products we are likely to see failure of lean implementations.

Many people on lean journey fail to apply lean in a holistic manner. Usually they start with applying tools without proper guidance and leadership the company cannot move to the next level. Thus a management system that specifically meets the needs of a transforming organization is very much essential.

So what is traditional management and why does it fail to sustain Lean?

One of the main characteristic of traditional management is that it is resulted oriented. Is it good or bad to be result oriented? It is not bad to have goals but once people stop caring about how to get there rather and only focus on end result, that’s when we have a problem. This leads malpractices like expediting orders, over production, and excess inventory.

Lean management performs the following functions:

• Addresses the purpose problem by identifying product family ‰ value streams for specific customers:
  • Makes value simpler to specify
  • Makes the flow of value simpler to see ‰

Addresses the process problem by assigning a leader to each ‰ value stream:

• Makes current state of entire process clear to everyone
• Proposes a better “future state” process and takes responsibility for implementing it.   
• Makes condition of the new “current state” clear to everyone. Proposes a still better “future state,” etc.

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Just-in-time

The JIT concept was developed by Taiichi Ohno of Toyota to enhance Toyota’s competitiveness in the global market. By early 1980s, many Western managers found themselves losing ground in the manufacturing “race” against the Japanese. Imai, liked many other Japanese, recognized the Japanese industrial success to the concept of JIT.

JIT had many definitions, some of the common definitions are:

• A system that produces the required item at the time and in the quantities needed.
  
  
• A manufacturing system where the parts that are required to complete the finished products are produced or arrive at the assembly site as they are needed.
  
  
• A philosophy that centers on the elimination of waste in manufacturing process.

It could be recognized that all those definitions include either the term manufacturing or the reference to making a product. However, JIT principles are also valid in non-manufacturing environment.

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Kaizen

Kaizen means improvement, continuous improvement involving everyone in the organization from upper level to lower level i.e. top management, to managers then to supervisors, and to workers. In Japan, the concept of Kaizen is so deeply engrained in the minds of both managers and workers that they often do not even realize they are thinking Kaizen as a customer-driven strategy for improvement. Kaizen is a Japanese philosophy for process improvement which is made by two words ‘Kai’ and ‘Zen’.

These two Japanese words means:

Kai = Change
Zen = Good (for the better)
Kaizen = Continual improvement

The Kaizen Institute defines Kaizen as the Japanese term for continuous improvement and it is largely depends on cross-functional teams that can be empowered to challenge the status quo. Kaizen deals with the management of change and is a methodology in the right direction to enhance manufacturing operations, on a continual and incremental basis following the right steps:

• Establish a plan to change whatever needs to be improved,
• Carry out changes on a small scale,
• Observe the results, and
• Evaluate the results and the process and determine what has been learned.

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Performance Improvement Through Six-sigma Practices

The literal meaning of six-sigma is six standard deviations from mean. The word ‘sigma’ is a Greek term indicating standard deviation. Essentially, it helps in process improvement by making use of statistics as a tool to identify and address performance management issues. It was first started in Motorola and then gradually became a globally accepted tool to improve organizational performance. The underlying philosophy of six-sigma is that no process is error free. Hence organizations should continuously focus on achieving excellence through process improvement by recreating it every time.

Using the DMAIC cycle – define opportunities, measure performance, analyze opportunities, improve performance, and control performance, the six-sigma approach constantly reviews a process to recreate it again and again to achieve error-free performance results.

Six-sigma is essentially a customer-centric break-through process improvement approach for business results. Improvement in processes lead to error-free production and so also services, achieve cost effectiveness, earn customer satisfaction, which ultimately cascade to increased profitability and improved business results. Higher sigma value indicates better business results.

For performance improvement, six-sigma is now widely accepted in organizations globally. To introduce six-sigma in organizations, certain sequence of activities need to be followed, as enumerated below: ‰

• Emphasis on training and learning
• Collection of data and consolidation of information
• Understanding the customer needs
• Thorough understanding of the inputs of a process ‰

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E-performance Management

E-performance management, a web-based tool, has been designed to make your performance reviews easier than ever. E-performance management places effective performance management where it belongs in the hands of managers.

Performance contracting and appraisal have never been as easier with E-performance management. The goals of the organisation are linked to the balanced scorecard elements giving the organization an overall view of performance with drill down capability to departments, sub departments and individuals.

It’s very well said that a good performance management system works towards the improvement of the overall organizational performance by managing the performances of teams and individuals for ensuring the achievement of the overall organizational ambitions and goals.

An effective e-performance management system can play a very crucial role in managing the performance in an organization by:

• Ensuring that the employees understand the importance of their contributions to the organizational goals and objectives.
  
  
• Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations.
  
  
• Ensuring proper aligning or linking of objectives and facilitating effective communication throughout the organization.
  
  
• Facilitating a cordial and a harmonious relationship between an individual employee and the manager based on trust and empowerment.

An effectively implemented e-performance management system can benefit the organization, managers and employees in several ways as depicted below:

• Organization’s Benefits: It improves organizational performance, employee retention and loyalty, improved productivity, overcoming the barriers to communication, clear accountabilities, and cost advantages.
  
  
• Manager’s Benefits: The managers receive instant feedback on performance with drill down to individual employee performance. With this there is no need to rewrite performance contracts each year. Simply you could upload and edit from a previous period and then, development the needs emanating from performance discussions would be automatically fed into the individual development plan.
  
  
• Employee’s Benefits: Clarifies expectations of the employees, self assessment opportunities clarifies the job accountabilities and contributes to improved performance, clearly defines career paths and promotes job satisfaction.

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E-performance Management Practices in Indian Organizations

Technology has changed the face of business. Many HR transactions have been automated especially performance management. The following are some of the examples of IT enable performance management practices of some leading companies in India.

Example: At Nokia India, there are no performance appraisal forms. Performance criteria are set by employees in concurrence with his manager in the appraisal tool. Reviewing officer reviews the same. This tool helps to update the goal setting and achievements periodically.

Example: At Pepsi Co., employees upload their performance targets on MDN, a global portal which is available to PepsiCo employees across the world. Mid-term review and final appraisals facilities by MDN, which also guide employees in tracking their career plans by preparing Career Development Action Plan. The data is subsequently used by HR.

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Key Terms

• Performance Management (PM): It is a systematic process ‰ aimed at helping achieve an organization’s mission and strategic goals by improving effectiveness, empowering employees, and streamlining the decision-making process.
  
  
• Quality Improvement (QI): It focuses on the process to help bring services to the next level with the aim to improve the overall health of a community.
  
  
• Total Quality Management (TQM): TQM, among others, is that it considers an organizational improvement strategy through development of people.
  
  
• Employee Empowerment: It means to confer legitimate right to employees, irrespective of their nature of job and hierarchical level to make judgments, to take decisions on their own.
  
  
• Quality of Work Life (QWL): QWL is most conventionally defined as those perceived important personal needs, which an individual tries to satisfy by working in an organization.
  
  
  
• Business Process Reengineering (BPR): It is defined as fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality and speed.
  
  
• Lean Management: Lean management system, an integrated management approach that fosters daily progress, meaningful purpose, and lasting value. ‰
  
  
• Just-in-Time (JIT): It is a broad-based philosophy of ‰ management, which embraces everybody in the organization and covers every process towards a culture of never ending or continuous improvement by removing wastes and non-value- adding processes.
  
  
• Kaizen: It means improvement, continuous improvement involving everyone in the organization from top management, to managers then to supervisors, and to workers.
  
  
• Six-sigma: It is essentially a customer-centric break-through process improvement approach for business results.
  
  
• E-Performance Management: It is a web-based tool, has been designed to make your performance reviews easier than ever.

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