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If You’re Using These Management Methods, You’re Wasting Both Time and Money!

Organizations that aim to earn the label HPO, or “High Performance Organization,” can draw upon literally hundreds of management techniques, methods and activities to help them reach this enviable stature. Most seem perfectly reasonable things to do except for one “minor” detail: in most cases, there is absolutely no proof whatsoever that any of them will actually improve performance in the short term, let alone in the long term, let alone at all!

If You’re Using These Management Methods, You’re Wasting Both Time and Money!
It is difficult to figure out which of these methods are genuinely important for an organization to embark upon in its quest for HPO status. That’s why in my extensive global research of 290 HPO studies, I attempted to resolve this dilemma by identifying 189 characteristics in the various descriptive literature, then evaluating and comparing them all to 35 tried-and-true HPO characteristics. Below is a partial list of what I found out NOT to do.

Caveat: the many HPO studies I reviewed do not definitively state that the techniques, methods and activities listed below are not important in any sense. Some of them in fact are important, e.g., every organization does need a strategy because without one it would be rudderless and could easily go adrift. However, simply having a strategy will not make an organization an HPO because its competitors will also have strategies! So merely having a strategy is not enough. Instead, HPO research shows a strategy must be unique.

Similarly, the following techniques, methods and activities will, on their own, constitute a waste of time and money:

- Organizational Design or Structure
It turns out that no specific organizational design or structure shows a correlation with achieving high performance status. It makes no difference at all (neither positive nor negative) whether management chooses a functional design, a process design or a matrix design for its organizational structure. Consequently, launching a reorganization to boost a firm’s performance cannot be recommended. In fact, my research kept finding that most reorganizations failed to yield any long-term performance improvement.

- Employee Autonomy
It’s been fashionable in recent years to grant more and more empowerment to employees but this does not necessarily contribute to high performance either. My research results showed me that a high level of autonomy in fact can have a negative correlation on competitive performance. Too much freedom for employees can lead to an internal disorder and confusion unless backed up with sufficient means of coordination. Without coordination, employee autonomy can even seriously damage an organization. People want clarity about goals, what is and isn’t allowed, and what is expected from them. If they know these then they will not need further empowerment.

- Strategy
With regard to the strategy, it turns out that it’s not so much the chosen strategy that’s important— but the uniqueness of a strategy compared to competitors in the same industry. All characteristics concerning cost leadership, product differentiation and customer intimacy strategies must be distinguishing characteristics. Adopting merely a “me-too” strategy is thus not enough to become an HPO.

- Technology/ICT
Many organizations spend a lot of time and resources on implementing new information and communication (ICT) systems. Sadly, this too will not necessarily transform them into a HPO. Although several HPO characteristics such as “continuous improvement and renewal,” cannot be improved without ICT systems, a standalone implementation of new systems and technology does nothing to help the organization perform any better for a sustained period of time as implementation has to support at least one of the principle HPO factors.

- Benchmarking
My study results show that benchmarking is much less effective than everyone assumes. When an organization embarks on a benchmarking project, it usually aims to identify best practices, emulate these and attain if possible the same level as the industry’s best. True HPOs, however, have a completely different view on best practices, regarding their competitors’ best performance benchmark merely as the baseline for their own performance, i.e., a starting point from which the HPO distances itself as much as possible.

- Communication
In many organizations, top management can often be heard to comment: “We have to communicate more! If we do, they will understand.” However, it turns out that employees are typically not concerned about understanding what management has to say, but rather about whether or not management is listening to what they have to say. Thus ‘communication,” defined as one–way traffic from manager to employee, is not what’s critical, instead dialogue is critical. In a dialogue there is two-way communication with both sides listening and hearing and exchanging ideas and working towards mutual understanding. In other words, HPOs spend less effort on “soap-box speeches” and on town hall meetings and more on roundtables and back-and-forth discussions.

- Bonuses & Reward Systems
There remains a continuous interest in the topic of bonuses and reward systems but he HPO research reveals that these are not distinguishing factors for creating and sustaining HPO status. Instead, they are mere “hygiene” factors. An organization needs to have an appropriate reward system (whether or not this includes bonuses) and one that is considered by employees to be fair and equitable. If such a reward system is not in place, the organization will run into trouble and opposition with its employees, making HPO status virtually impossible.

If a fair and equitable system is in place--and note that it does not seem to really matter what type of reward system this is as long as it’s appropriate for the organization in question--- then employees will consider it acceptable and will be content. At that point, the organization can start legitimately thinking about how to turn itself into a genuine HPO.

André de Waal is Associate Professor Strategic Management at the Maastricht School of Management and Academic Director of the HPO Center. His research reported in this article will be fully explained in his upcoming book What Makes a High Performance Organization: Validated Factors of Competitive Advantage that Apply Worldwide, to be published in June 2012 by Global Professional Publishing

André de Waal Ph.D., MSc, MBA (1960) is Associate Professor Strategic Management at the Maastricht School of Management. His teaching assignment is the course Strategic Performance Management and High Performance Organisations. André is also Academic Director of the Center for Organizational Performance, an organization which conducts research into high performance organizations. In addition, he is guest lecturer at the Free University Amsterdam and Erasmus University Rotterdam, and visiting fellow at Cranfield University, United Kingdom. André holds a MSc in Chemistry from Leiden University (the Netherlands), a MBA from Northeastern University Boston (USA) and a Ph.D. in Economics from Vrije Universiteit Amsterdam (the Netherlands). He has been a partner with Arthur Andersen and Holland Consulting Group for 17 years.

André’s Ph.D. thesis was on the topic of the role of behavioral aspects in the successful implementation and use of performance management systems. As an independent consultant, he focuses on performance management and high performance organizations. He has been teaching and conducting projects in this field in countries like China, Vietnam, Bangladesh, Mongolia, Nepal, Peru, Surinam, U.K., Poland, Saudi-Arabia, Yemen, South-Africa, Namibia, Rwanda and Tanzania. André has been selected by as one of the Dutch Masters in Management, ten people who have influenced management thinking in The Netherlands the most in the past decade. Especially his research into high performance organisations and high performance individuals attracts a lot of (international) attention.

André has published over two hundred fifty articles and twenty-four books. Among his books are: Power of Performance Management, How Leading Companies Create Sustained Value (John Wiley & Sons, 2001), Presteren is Mensenwerk (Kluwer, 2001), Minder is Meer, competitief voordeel door beyond budgeting (Holland Business Press, 2002), Quest for Balance, the human element in performance management systems (John Wiley & Sons, 2002), Management Rages, 35 managementconcepten ontrafeld (Kluwer, 2002), Ontwikkelingen en Trends in de Financiële Functie (Kluwer, 2003), Prestatiegericht Gedrag (Kluwer, 2003), Beyond budgeting, het praktische alternatief voor budgetteren (Kluwer, 2004), De resultaatgerichte overheid, op weg naar de prestatiegedreven overheidsorganisatie (SDU, 2004), De financiële manager van de 21ste eeuw (Kluwer, 2006) and Strategic Performance Management, A Managerial and Behavioural Approach (Palgrave MacMillan, 2007), Maak van je bedrijf een toporganisatie! (Van Duuren Management, 2009), 10 Rituelen van Slecht Management (Van Duuren Management, 2010) and Budgetteringsproces: wel of niet veranderen (Kluwer, 2010).

During the spring of 2007, the HPO Center reached the point where it could clearly indicate which success factors have a direct correlation to the competitive performance of an organization. We now know exactly "what" makes an organization high performance! Performing well in the HPO factors not only results in more financial elbowroom, but also a continuous strategic edge on comparable organizations (customer orientation, employee satisfaction, innovation strength, etc.). The HPO Center aims to become the global expert in "what" makes organizations better. Based on studies in 50 countries involving 1.470 organizations, an HPO diagnosis was developed that has been tested extensively in practice. This HPO diagnosis enables us to hold a mirror in front of organizations, providing a clear indication of their strengths and areas requiring improvement. The diagnosis also provides a clear-cut and broadly based focus for improvement.

André de Waal is Associate Professor Strategic Management at the Maastricht School of Management and Academic Director of the HPO Center.
His research reported in this article will be fully explained in his upcoming book What Makes a High Performance Organization: Validated Factors of Competitive Advantage that Apply Worldwide, to be published in June 2012 by Global Professional Publishing.

Lundi 27 Février 2012

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