organization performance

8/3/2019 Organization Performance

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Organisation Performance

Lecturer: Prof. Lorraine Uhlaner


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A Strategic HRM (or organization

performance) Model

It starts at the top with goals of (or challenges

faced by) the enterprise;

not at the bottom with a question of what humanresources should measure.

Human resources is charged with helping

people make a greater contribution to theorganizations overall strategy and mission.


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At McKinsey

The Organization Health Index (OHI) is used toestablish a baseline and identify any obviousproblems (and strengths).

Implementation of a new strategy may behampered because the firm:

Lacks alignment of goals/clear shared vision

Does not have the proper talent to carry out the plan Measures the wrong metrics for performance

The OHI can spot key areas which requirecorrection; where the firm is underperforming.


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The Organization Health Index (OHI) in

more detail

Nine organizational performance outcomes wereidentified, which together make up theorganization performance profile.

The average of all nine outcomes, together, is ameasure oforganization performance.

This index of organization performance is a verygood predictor of financial performance.

Furthermore, each outcome is associated withone or more clusters: alignment, execution,and/or renewal.


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OHI identifies four practices which

may enhance the motivation outcome:

Values: Motivating through company culture

(colloboration).

Leaders: Motivating by leaders charisma.

Opportunities: Motivating by job design,

autonomy.

Incentives: Motivating by financial rewards orrecognition.


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The Nine key outcome areas grouped

by clusterCluster 1: Alignment

1. Direction

2. Environment, values (culture)

3. Leadership (also execution and renewal)

Cluster 2: Execution4. Accountability

5. Capabilities

6. Coordination, control

7. MotivationCluster 3: renewal

8. External orientation

9. Innovation (also execution)


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Alignment:The ability of the firm to create and align

its employees with the same vision Direction: Do people understand and are they

aligned with its strategy; i.e., where the company

is heading and how it plans to get there? Environment/values/culture: Does the quality of

employee interactions (e.g. Culture) foster ashared understanding of core values?

Leadership: Do leaders at all levels shape andinspire the actions of employees to drive betterperformance?


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Execution: The ability of the

organization to turn ideas into action

Accountability: Are there clear and explicitreporting relationships and performancemeasurement to ensure that all people areaccountable for business results?

Capabilities: Does the company have sufficientinternal skills and talent to support its strategyand create competitive advantage?

Coordination, control: (How well) are business

performance and risk measured and reported? Motivation: Are employees inspired to perform

and encouraged to stay with the company?


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Renewal:Is the organization changing

at the rate required by its industry?

External orientation: Does the company have

constant 2-way interactions with customers,

suppliers, partners or other external groups to

drive value?

Innovation: Does the company generate a

flow of ideas and embrace change so that it

can sustain itself, survive and grow over time.


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Furthermore, each outcome is linked with

3-4 practices to achieve that outcome

For example: Coordination and Controlcan beachieved by:

1. Managing via HR systems (people)

2. Use of Key performance indicators (KPIs),targets and metrics

3. Managing financial performance (budget

reports, etc.)4. Values/standards: managing actions through

ethics, boundaries.


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OHI Basics, continued: Practices vs.

Organization Performance Outcomes

Outcomes & relationship


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Organization Performance OutcomesOutcomes & relationship


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Organization Performance OutcomesOutcomes & relationship


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THE BASE CASE

Proved most effective for over halfthe cases

Approaches the following three outcomes

Direction: by articulating a compelling vision of

the future

Accountability: via clear roles within a structure

matched to the needs of the business

Culture: by developing an environment thatencourages trust, openness and challenge.


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Direction-a critical outcome in the

base case

General description (aspect of alignment):

People understand and are aligned with where the

company is heading and how to get there.

Three common practices and which is best:

Visionary: A top-down, attractive, broad,

stretching, and personally meaningful vision

Directive/strategic: Detailed top-down specifics forreaching end state

Engagement: driven by input from below.


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AccountabilityA second critical

outcome in the base case

General description (aspect of execution):

Reporting relationships and performancemeasurement set up to ensure that people areaccountable for business results.

The Four accountability practices and which isbest:

Formal structures creating role clarity

Explicitly stated performance contracts

Consequence management: Rewards, penalties

Implicit agreement on whats involved.


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Environment, values (culture)-a third

critical outcome in the base case

General description (also aspect ofalignment):

The quality of employee interactions (e.g. Culture)

fosters a shared understanding of core values. Four culture practices and which is best:

Open, trusting, collaborative, transparent

Competitive

Operational/disciplined, process driven

Entrepreneurial/creative/innovative


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Summary of the ideal or base case

Setting direction with a clear broad vision: A top-

down, attractive, broad, stretching, and personally

meaningful vision

Accountability through formal structures creatingrole clarity

A culture/Environment that fosters trust, openness,

experimentation


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The notion of a metric

What we can measure.

Should have strategic value to the

organization

give it competitive advantage by loweringcost/increasing quality/innovation/productivity

Individual performance

Company productivity

Employee turnover (separation) rates

Engagement


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The Organization Health Index has

three categories of metrics

Measures for each of the 34 practices (whichpractices are used at that firm).

Measures for each of the 9 organization

performance outcomes (direction,accountability, innovation, motivation, etc.)(How well is this outcome being met,regardless of the practice used.

Measures for financial performance outcomes(EBITDA, Growth in net income/sales, etc)


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Revising Coordination and Control, for

example

The outcome: To what extent are business performanceand risk measured and reported? (How well is coordinationand control achieved).

Practices: How is this achieved?1. People: Managing via HR systems (people)

2. Operational: Use of Key performance indicators (KPIs),targets and metrics

3. Financial: Managing financial performance (budgetreports, etc.)

4. Values/standards: managing actions through ethics,

boundaries.


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Financial Metrics used in the McKinsey

study

For Financial performance:

EBITDA: Earnings before interest, taxes,

depreciation and amoritization

Growth in enterprise value/book value

Growth in enterprise value/sales

Growth in book value/sales

Growth in enterprise value

Growth in net income/sales


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Providing Feedback


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Feedback: An introduction

Feedback:

Any communication to a person that gives him or

her information about some aspect o his or her

behaviour and its effect on you.

Importance of being skilled at feedback:

it can increase employee performance


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Tips for giving feedback

1. Focus on specific behaviors

WRONG:

You have a bad attitude.Im really impressed with the good job youdid.

Both are vague. They dont explain why you

are being critical or complimentary.


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1. Focus on specific behaviors

Examples of getting it right:

Bob, Im concerned with your attitude toward your

work. You were a half hour late to yesterdays

staff meeting and then told me you hadnt readthe preliminary report we were discussing. OR

Jan, I was really pleased with the job you did on

the Phillips account. They increases theirpurchases by 22% last month based on yourrecommendations.


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2. Keep it impersonal

WRONG: There you go again. I notice your left

eye is twitching. (said by supervisor to

subordinate upset about her contract; trying

to change the subject)

RIGHT: So Janice, I understand you wanted to

see me about your contract renewal.


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3. Keep it goal-oriented

Be sure that the feedback relates to the

persons work, not just wanting to air your

own grievances.


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4. Make it well timed

It is helpful to give feedback shortly after the

performance

so that the circumstances are fresh in both

peoples minds

So that the recipient can quickly correct his or her

mistake (vs. Waiting for the annual review).

However, it should be done in a private place.If this means waiting, then do so.


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5.Ensure understanding

Be sure the recipient understands.

Pause after a key point rather than onlyhearing yourself speak.

Ask the recipient to paraphrase what you justsaid, to see if it captures your meaning.

WRONG: Did you understand what I just said to

you?RIGHT: Could you put in your own words what I

would like you to do?


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6. Be sure the behavior is controllable

by the recipient

Is the feedback something the recipient can

do something about?

In the eye-twitching example mentioned earlier,

the subordinate had just had major surgery on hereye and her eyelid was partly swollen. This may be

the reason her boss thought she was giving him

strange looks.

It may be helpful if a suggestion is made for

improvement.


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7. Tailor the feedback to fit the person

Consider the persons past performance and

your estimate of his future potential.

Poorer performers in need of improvement

without being fired may need closer attention

than average or top performers.


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Review these guidelines

1. Get your emotions under control.

2. Find a private place.

3. Consider timing.

4. Focus on the actions, not the person.

5. Be direct.

6. Describe specific behaviors

7. Stop talking and seek confirmation.

8. Reaffirm your faith in the person.

9. Define positive steps, provide possible solutions andbe goal oriented.

10. Document the feedback for future reference.


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Some other dos and donts:

Try to avoid evaluative terms (good/bad) or

abstract terms (irresponsible). Use

behaviorally descriptive terms instead.

Be sure to give feedback in private.

Be sure behavior the recipient can do

something about

Limit to 1-2 behaviors at a time.

organization performance

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