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Recalibrating Performance ManagementGeert ScheipersPartner Delaware ConsultingAcademic Director OPM Antwerp Management School

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1920193019401950196019701990 2000 201019001910Scientific managementTaylor, 1911

Gantt chartGantt, 1914

Participatory managementFollet, 1924

Hierarchy of needsMaslow, 1943

How to deal with resistance to change?Lawrence, 1954

A behavioral theory of the firmCyert & March, 1963

The managers jobMintzberg, 1975

Competitive strategyPorter, 1979Strategy is about making choices, trade-offs; its about deliberately choosing to be different

In search of excellencePeters & Waterman, 1982

The Balanced ScorecardKaplan & Norton, 1992

Leading changeKotter, 1995If you only do what worked in the past, you will wake up one day and find that youve been passed byDisruptive innovationChristensen, 2003

Emotional intelligenceGoleman, 1998

AnalyticsDavenport, 2007Great milestones in management1980

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I have the impression my employees are not motivated at all We always have discussions around salaries My boss really doesnt understand me nor the work that I do Instead of working together the other departments seem to boycott me In our company we waste so much time chatting and debating in the meeting room that I don't have time to do my stuff I dont think our company has a vision, everything we do seems randomly chosen Nice plans but please give me the proper workforce and a decent set of tools and equipment Whats the use of these fancy reports if I know they do not reflect reality

Great in theory, but

A day in the life of

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And we cant say we havent been warnedWe hope for But we often reward Sustainable long-term growthTeamworkSetting challenging stretch objectives Rightsizing Commitment to total qualityCandor, surfacing bad news earlyQuarterly earningsIndividual effortMaking the numbersOn Time In Full shipments, even with defectsReporting good news, & agreeing with the boss, whether or not (s)hes right

Source: Kerr S. AoMJ (1975) On the folly of rewarding A, while hoping for B

So now what?

IndustryCultureStrategyMCSOrganizational performanceTechnologyStructureSize

Adapted from EDEN Doctoral Seminar, Brussels, 2003 Rob ChenhallContingency theory: Didnt we forget something?Society

Zoals de kikker in het langzaam opwarmende water7

Back to the drawing boardSince many of the biological needs are cared for and a sense of security exists for most employees in the Western world, people are more and more aware of their deep seated desire to live a life of purposeMost algorithmic tasks and transactional repetitive work has been automatedAll of our workers are connected, informed, better trained and knowledgeablePeople know they have a choice

So, we need

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A Simple PlanPerformanceEffortResources & CapabilitiesMotivationDirection

Intrinsic ExtrinsicProcesses & initiatives Success Personal well being Happiness

Performance management definedA process of motivating and inspiring managers and employees to perform actions that contribute to the achievement of the organizations goals and to the implementation of its strategies in an effective and efficient waygetting things done as a science rather than an art

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Complementing the motivation toolboxExpectancy theory seeks to understand the types of measures & rewards that motivate employeesAgency theory seeks to understand the contracting behavior between principal & agentGoal setting theory seeks to understand optimal level of target settingSelf-efficacy theory reflects on the initial selection of tasks in that higher self-efficacy (individual characteristic) leads to the choice of more challenging tasks to performSelf determination theory describes how socio-contextual factors influence autonomous motivation

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Measuring the right things, the right way

You get what you measure

Source: Ariely (2010), HBR, You are what you measure

Klantenkaart, Spaarkaart in warenhuisBonusTijdsregistratie, prikklokExamens

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Abundance in Measures quid Insights?

Simple RulesWhy they work?They provide flexibility to pursue new opportunities while maintaining some consistencyThey can produce better decisions when information is limited and time is shortIn contrast to complicated models, simple rules focus on only the most critical variables. By Ignoring peripheral factors and tenuous correlations, rules of thumbs (heuristics) eliminate a great deal of noise. The absence of noise results in decisions that work reasonably well across a wide range of scenarios, rather than being optimized for a single situation. Simple rules also capture correlated information about the context.Simple rules minimize the risk of overweighing peripheral considerations by focusing on the criteria most crucial for decision making. They allow members of a community to synchronize their activities with one another on the flyThey make it more likely that people will act on their decisions, because they are easy to remember and less cumbersome to follow than complex guidelines for action

Source: Eisenhardt & Sull (2015) Simple Rules, how to thrive in a complex worldDo not match complexity with complicated strategies but use simple rules to shape critical processes on a daily basis.

Making vision explicit: the strategy mapCost efficient managementboost market share at targets clientsBrand imageInnovative and complete portfolioCross functional research and developmentCustomer acquisitionEnhancement of existing profitable customer relationsCustomer satisfactionQualitative service Deliverytruthful price/qualityWell organized processesAwareness of cost implicationsMotivated employeesInspiring teamspiritFocused trainingKnowledge of customer needs

FinancialCustomersInternal processesLearning & Growth

Systematic improvement of marginCreative & effective marketingProfitable growthBeing a Recognized Reference

The Balanced Scorecard

Brand imageCreative & effective marketingInnovative and complete portfolioCrossfunctional research and developmentKnowledge of customer needs

FinancialCustomersInternal ProcessesInnovation & LearningStrategic ThemeWhat is essential for successful development of the organisation, what is the content of this strategic element Success Factor

How do we evaluate the performance Indicator

Which performance level do we want to achieveTarget

What improvement actions will we execute to improve performance Initiative

Balanced ScorecardAction planWe work on our image in order to attract new customers, to deepen the current relations and the legitimacy of our organisation

We wish to be recognised asSolid, Reliable, Customer-orientedProfessional Expert1] Top of Mind

2] Interbrand value

1] highest quartile

2] 200k (3% more than last year)A] New marketing campaign above the line through Ogilvy, responsible Hilde C, budget 46k

B] Development of a new house style, responsible Mike M, budget 20 man-days

Coherent collection of a series of critical success factors, describing a specific strategy component. The themes explain the most important processes, vital for the realisation of the mission and the achievement of the goalsBeing a Recognized Reference

Diagnostic versus interactive Use

Indicator 1Indicator 2Indicator 3

Indicator nInteractive UseDiagnostic UseOrganizational Capabilities

Innovation Entrepreneurship Customer Orientedness Learning+-

Its culture stupid

How human nature shapes our choicesPeople are guided by four basic emotional needs, or drives, thatare the product of our common evolutionary heritage:The drive to acquire: obtain scarce goods, including intangibles such as social statusThe drive to bond: form connections with individuals and groupsThe drive to comprehend: satisfy our curiosity and master the world around usThe drive to defend protect against external threats and promote justiceEmployee Motivation - Nohria, Groysberg, & Lee, 2008

Enabling versus coercive formalizationCoercive formalizationEnabling formalizationPerformance measurement systems only serve higher-management needs and control employees behaviorPerformance measurement systems support employees to do their work better (by providing feedback, identifying problems, revealing improvement opportunities, help prioritizing action, ...

Whether formalization is perceived as coercive or enabling depends on the process of performance measurement design and useWouters & Wilderom, AOS, 2008

Shaping an organizational cultureConsistent behavior of enough people, for long enough time to internalize the common way of thinking, and to make the new behavior a new habitFor long enoughManzoni, EIASM, 2011Consistent BehaviorOrganizational DNA

Of enough of us

Co-creation

Co-creation = Involvement & influenceHigh quality strategyOwnership of strategy

Characteristics of a high performance cultureDissatisfaction with the status-quoMaking things betterWe can and will do itDrive out helplessnessThe sense of usThe irrational drive to make it to the topSource: Manzoni (2002), 2nd Conference on PM & MC Strong self-confidenceChange offers opportunities

Together we will make it happen

Intensity in performance management

from idea to system

goede wil en enthousiasme is niet voldoende. Organisaties moeten richting geven maar voor veel bedrijven is het hebben van een plan een verplicht nummertje. Het plan dat vooral ook gebruikt wordt om variantieanalyses op te doen en mensen af te rekenen op dat wat niet gelopen is volgens dat plan. Uiteindelijk gaat het niet om het plan op zichzelf maar datgene wat we bereiken en de leerervaringen die we daarbij opdoen.25

Cultural controlThe process in which organization members behavior is primarily influenced by cultural systems (e.g., training, indoctrination).Boundary controlThe process in which organization members behavior is primarily influenced by rules and procedures which must be respected. (e.g., mission, code of conduct).Structural controlThe process in which organization members behavior is primarily influenced by structural systems (e.g., organizational structure, responsibility centers).Diagnostic controlThe process in which organization members' behavior is influenced by formal accounting and non-accounting control systems (e.g., budgets, performance measurement systems).Interactive controlThe process in which organization members' behavior is influenced by sharing information, collective learning and challenging the status quo (e.g.; performance and strategy review meetings)

The Nature of Management Control - Werner Bruggeman & Wim Van der Stede

Management control levers: lets put them to good use!

Classification of different types of control (Ouchi , 1979)KNOWLEDGE OF THE TRANSFORMATION PROCESS Complete / IncompleteMEASUREMENT OF OUTPUT High / Low

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CultureDefine, communicate & reinforce the vision & values of the organization

BoundariesEstablish explicit rules which must be respected, provide clarity and focus on guidelines for strategy formulation

StructureMake explicit roles, facilitate coordination, create a context to stimulate collaboration (both within & across organizational boundaries)

Diagnostic controlMonitor organizational outcomes & correct deviations from performance targets

Interactive controlFocus attention and force dialogue & learning throughout the organizationAS ISTO BELooseTight

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Calibrating our levers for the futureLooseTight

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With 7 Practical implicationsFrom hire to inspirefrom control to engagefrom drive to coordinatefrom one-way to multi-wayfrom piecemeal to integratefrom plan to learnfrom measure to manage

So lets just do it

Thank you!Lots of success in recalibrating the systemand realizing your purpose !

Geert Scheipers

Academic Director Organizational Performance Management AMSPartner Delaware Consultinggeert.scheipers@delawareconsulting.com