IMPROVING ORGANIZATIONAL PERFORMANCE - TUTORIAL
Research compiled for The Paper Store, Enterprises Inc.
by Dr. P. McCabe, January 2002
Effective leadership is essential for any company to succeed. This has always been
true but with today's global market and the basic changes in the society, the competencies
of the effective leader have changed. Leadership as a principle is something that is
extremely difficult to define. Bill Bennett said: "Leadership is a nebulous concept. We all
recognize what it is when we see it and we can sense where it's missing" (2000). Gordon
Lippitt, a guru in the leadership field, after decades of studying leadership said:
"Leadership is the worst defined, least understood personal attribute sometimes
possessed by human being" (Bennett, 2000).
We do know, however, the qualities, skills and/or behaviors that effective leaders
Vision: The leader has a mental picture of a goal that represents the future for the
business (Bennett, 2000). Visionary leaders are especially important in today's
Conviction: Effective leaders have the conviction of their goals and beliefs and they are
wholly committed to achieving the goal (Bennett, 2000).
Confidence: Effective leaders must have confidence in themselves, in their abilities
and in their judgements (Bennett, 2000).
Change Agents: Effective leaders are always change agents, sometimes pursuing
radical changes (Bennett, 2000).
Unconventional: Effective leaders tend to be unconventional, that is, they behave in
ways that are different and that do not necessarily follow the prescribed patterns of
doing things (Bennett, 2000).
Communicate their visions to others (Gandz, 2000, p. 10). Effective leaders must be
able to communicate their vision and to gain the support of employees to work towards
Are able to overcome resistance to change (Gandz, 2000, p. 10).
Mobilize resources in the required direction (Gandz, 2000, p. 10).
It is these skills, abilities, characteristics and behaviors that lead an organization to
successful performance. The leader is always involved in performance management and
improving performance of the organization. McNamara described performance
management as including "activities to ensure that goals are consistently being met in an
effective and efficient manner" (McNamara, Performance, 1999). Performance
management may be specific to a department, to the processes used in building a product
or developing a service, to the performance of employees or to the entire company
(McNamara, Performance, 1999).
There are numerous methods that can be utilized to improve the performance of a
company or any division of it. These include:
Benchmarking: this is a method that involves using standard measurements in the
industry to compare the company to other companies in the same industry (McNamara,
Balanced Scorecard: this method uses four indicators to monitor the company's
progress towards its strategic goals (McNamara, Programs, 1999). These include
customer perspective, internal-business processes, learning and growth and financials
(McNamara, Programs, 1999).
Focuses on four indicators, including, to monitor progress toward organization's
Continuous Improvement: this method focuses on customer satisfaction through
incremental and continuous improvements in the process (McNamara, Programs,
1999). It involves eliminating activities that are not necessary as well as initiating
activities that are needed for customer satisfaction (McNamara, Programs, 1999).
Business Process Reengineering: this is a method that involved re-designing the
structures and processes of the company, typically starting from the ground up
(McNamara, Programs, 1999).
Cultural Change: using this method, the company changes its basic values and beliefs
in order to change the culture of the company (McNamara, Programs, 1999).
Total Quality Management (TQM): this is a very distinct way of improving a company's
performance; it includes, among other activities and principles, process measurement
and controls (McNamara, Programs, 1999).
Strategic Planning: the is a process that permeates the entire organization and it
involves identifying the strategic direction of the company, including its mission, vision,
values and goals (McNamara, Programs, 1999). The direction of the company includes
implementing a number of action plans that include multi-level goals, objectives, time
lines and responsibilities (McNamara, Programs, 1999).
These are only a sample of the methods and procedures a company may use to
change and to improve performance capabilities, practices and results. They can be used
singly but most often two or more methods are used simultaneously. The specific methods
used depends on the type of organization, the nature of the organization, the resources
available and the problems the company is presently facing (McNamara, Programs, 1999).
All of these and others are intended to improve organizational performance. Most
companies begin with strategic planning because it is here they specify the company's
mission, vision and goals and objectives (McNamara, Programs, 1999).
Communication in an organization is essential to its success and critical to the
success of any change efforts (McNamara, 1998). In fact, experts argue that "there can't
be too much communication" (McNamara, 1998). It should be remembered that
communication travels in both an upward and downward pattern. The upward pattern is
the communication from employees to supervisors or from lower levels of management to
higher levels of management. The downward communication pattern is the communication
that travels from higher level management to lower level management to employees. Due
to the numerous methods for communication methods in both directions, only a sample of
each will be provided.
Examples of methods of facilitating internal communication in a downward pattern:
Provide every employee with either a copy of or a synopsis of the company's strategic
plan. Whichever is distributed, the company's mission, vision, values statement,
strategic goals and strategies about how those goals will be reached must be
communicated (McNamara, 1998).
Different manuals should be distributed to all employees. These include the employee
handbook with personnel policies and manuals regarding standard operating policies
and practices (McNamara, 1998). It also includes providing every employee with a job
description as well as the organization chart (McNamara, 1998).
Meetings offer an excellent opportunity to share information and respond to questions.
Meetings also offer an opportunity to share successes and discuss challenges and
problems (McNamara, 1998). Meetings must be conducted using proven strategies for
successful and effective meetings in order to be effective. Meetings should be held
among management personnel as well as between management-employees
Examples of methods of facilitating internal communication in a downward pattern:
Managers need to be sure they have personal face-to-face contact with each
employee under their supervision at least weekly (McNamara, 1998). During these
contacts, there is an opportunity for reinforcement as well as for discussing any
concerns the employee may have (McNamara, 1998). The major importance of these
meetings is creating a relationship between supervisor and employee.
Employees can provide a weekly status report to supervisors, as is appropriate to the
position (McNamara, 1998). This is not appropriate for all positions.
Regular meetings, just like in the downward communication pattern provide a forum
for employees to provide feedback to supervisor. It is important for supervisors to act
on the feedback they receive from employees.
Supervisors and managers need to pay attention to the "grapevine" because it is
through this channel they will learn a great deal about problems and concerns
The biggest mistake made in any company is the failure to provide sufficient
information to employees. This is especially true when the company is involved in making
changes. It must always be remembered that change brings anxiety as well as resistance.
The most effective way to minimize both anxiety and resistance is to provide continuous
and honest information to all employees.
Operational risk has historically been directly associated with fiscal issues.
However, every company is subject to risk from losses and these losses could be due to
the company's own operations (Trembly, 2000). Crocker pointed out that operational risk
covers everything from product and environmental liability to staff health and pension
benefits. This creates a vast are in which operational risk exists; it basically covers
everything involved in running the company (1997). Ernst and Young defined operational
risk as "the risk of loss due to deficiencies in information systems, business processes or
internal controls as a result of internal or external events" (Trembly, 2000, 43).
There is another type of risk that companies face, that is the risk they take
whenever they make a change in operations. Any change carries with it a degree of risk. It
should be remembered that the original founder of the organization took huge risks to
establish the firm. Every strategy to improve performance and grow the company also
Few companies involve themselves in excessive risk because that is more fool-
hardy than reasonable. Companies take small risks often and even embark on projects
that would involve moderate risks. Often, the bigger the risk, the greater will be the reward
but this is not always the case.
Ford Motor Company, for instance, wants people who are willing to take risks.
David Murphy, who is vice president of human resources, asserted: "We want people at all
levels who will take risks, who are prepared to coach and to counsel, and who can make
decisions. We can't afford to wait for decisions to come down from the top. If we did, the
consumer would be pissed off about having to wait so long -- and would be gone before
those decisions even got made" (Hammonds, 2000, p. 138). Entrepreneurs cannot be
successful unless they are willing to take very large risks and this premise carries through
to established corporations. Fear will lead only to failure. Of course, so will excessive
risk-taking. Still, the manager must be able to stand up and say, "Why not?" (Hammonds,
2000, ). In other words, why not try this or that?
As an example, Nancy Gioia is a chief program engineer at Ford and she heads a
team of engineers, designers, marketers, and purchasing managers (Hammonds, 2000).
Gioia says she wants the people to stretch, to always be pushing themselves to learn
more and to think more creatively (Hammonds, 2000). And, change is at the heart of risk-
taking. Every change inherently includes risk but without change, the organization
becomes static and does not grow and improve.
Organizations are integrated vertically and/or horizontally. Vertical integration
promotes and fosters cooperation within the department or division (McMaster, 1995).
Horizontal integration attempts to promote and foster cooperation between departments
(McMaster, 1995). Vertical integration is typically observed in all companies and agencies
and it is successful. Horizontal integration is far more difficult to achieve because it
requires communication and cooperation between and among diverse departments, each
working on different aspects and components within the organization. An example of
needed horizontal integration would be the cooperation and communication needed
between the human resource department and the financial department or between
marketing and product development.
To achieve successful horizontal integration, the company needs to establish a
management system that includes interconnected processes that promote cooperation in
both directions – vertically and horizontally (McMaster, 1995).
Horizontal integration is more in line with a systems perspective than vertical
integration. In the traditional analysis of a company, the company was separated into its
various and diverse component parts (Aronson, 1998). Under the systems perspective,
however, an analysis considers how one thing interacts with the other elements or
components of the organization (Aronson, 1998). In other words, it is based on all the
elements and how they interact to result in performance (Aronson, 1998). Aronson
explains the systems perspective like this: "instead of isolating smaller and smaller parts of
the system being studied, systems thinking works by expanding its view to take into
account larger and larger numbers of interactions as an issue is being studied. This results
in sometimes strikingly different conclusions than those generated by traditional forms of
analysis, especially when what is being studied is dynamically complex or has a great deal
of feedback from other sources, internal or external" (Aronson, 1998).
Systems thinking has proven itself effective and successful in such areas as:
Recurring problems or those that have been made worse by past attempts to fix them
Complex problems that involve helping many actors see the "big picture" and not just their
part of it (Aronson, 1998).
Problems whose solutions are not obvious (Aronson, 1998).
Issues where an action either affects or is affected by the environment surrounding the
issue, either the natural environment or the competitive environment (Aronson, 1998).
In other words, a systems perspective is a better approach to use when companies
are faced with complex problems that involve multiple departments and people (Aronson,
1998). This perspective raises the level of thinking and enhances creativity so as to lead to
more successful business results (Aronson, 1998).
Aronson, Daniel. (1998). Introduction to Systems Thinking. Retrieved February 7, 2002,
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McMaster, Michael. (1995). Organizational integration. Retrieved February 7, 2002, The
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