informal coalitions

Managing business performance – It’s not a numbers game!

“Making the numbers” is important in business. Whether we’re talking about commercial performance, quality of service provision, compliance with legal and regulatory requirements, or whatever, numbers matter.

At the same time, knowing the numbers gives us little clue as to how best to manage business performance on a continuing basis.
When we’re talking about the complex social dynamics of organization, numbers don’t cut it. To paraphrase Peter Drucker, only the notation is numerical, the decisions are entrepreneurial¹. That is to say, managing business performance is about committing resources today, to deal with a continuously emerging and ultimately unknowable future.

Yet we still appear to be locked-in to a view of business performance management that is rooted in the ‘if you do this, you’ll get that’ logic that properly underpins the management of technical performance.

“You’ve got to treat these people like trained monkeys.”

 

(Essential – if boring – preamble…)

It was autumn 1974. Some twelve months previously, I’d completed my engineering apprenticeship in the then publicly-owned UK power generation industry (CEGB). I was called to a meeting with the head of the maintenance department of the power station in which I was working at the time. He told me that I would be moving into the Work Specification Production Office. There, along with a clutch of other engineers, my job would be to produce documents that would specify in detail the work to be carried out by skilled craftsmen in the Mechanical Maintenance Department, on any and every conceivable maintenance task that they might find themselves working.

A few years previously, the CEGB had embarked on what I considered even then to be an ill-conceived Pay and Productivity Scheme. In it, craftsmen and others were paid according to their ability to carry out their assigned work within the time assessed by specially appointed Work Study Assistants. The Work Specifications, on which the times were based, included excessively elaborate, step-by-step instructions for the craftsmen, together with lists of precisely defined tools for them to use.

(Get on with it, Chris…)

O.K. To help me on my way, the head of department gave me a piece of advice that has shaped my approach to management to this day.  Although not in the way that he had intended.

Remembering "Escrick Man" – Reflections on organization and management

 

Twenty-four years ago today, on Saturday 29 February 1992, I spent several hours in a meeting with my colleagues on Drax Power Station’s Executive Team. We met in the pleasant surroundings of a country hotel in Escrick, some five miles south of York city centre.

The UK’s Electricity Supply Industry had been privatised in January 1991, with Drax becoming part of the largest of the CEGB’s three successor companies, National Power. As the country’s biggest and most modern coal-fired power station, its performance was very much in the spotlight. In meeting at Escrick, our aim was to take stock of the progress achieved in rising to the immediate challenges of privatisation, as well as identifying further steps needed to develop the business commercially.

Unlocking organizational talent

As Business Performance Manager, it had fallen to me to design and orchestrate the station’s change strategy, Transforming Drax. This brought together a diverse range of actions, aimed at moving the business away from its public-sector past to a position of successful, self-confident, and far-sighted leadership in the wider generation industry. Crucially, this “transformation” was couched in terms of broad themes rather than detailed projects and programmes.

Reframing accountability in organizational practice

 

Naomi Stanford is widely-known for her insightful writing on organization design. In a recent LinkedIn post, she has questioned the ways in which accountability is understood and applied in an organizational context. This challenge is long overdue. I strongly agree with her that this taken-for-granted aspect of conventional management practice is in urgent need of a rethink.

At the same time, I would base my argument on a different issue from those that she has identified.

Ready… Blame… Fire!

Too often, the term “accountability” is used as a synonym for blame. It serves as a label to hang around the necks of ‘the guilty’ when things appear to have ‘gone wrong’. This does little to encourage people to comment candidly on their own practice and performance. Or to enable them, individually and collectively, to work to improve what’s going on. Most importantly, though, it completely ignores the complex social reality of organization, through which ‘outcomes’ emerge in practice.

From controlling to enabling business performance

Performance-enabling leaders: 

• Pay attention to what’s actually going on in the business, rather than relying on the supposed indicators of performance that find their way onto “scorecards”, “dashboards”, and the like.
• Recognize that organization is ‘wiggly’ - that is, things don’t happen in the neatly packaged and controllable ways that conventional management wisdom suggests they should.
• Expect surprises - helping people to anticipate and respond creatively to what actually emerges, rather than to those things that might have occurred if the real world had been kind enough to comply with the planning assumptions.
• Maintain high expectations of people’s willingness and ability to contribute.

Performance-enabling leadership? Acting into an unknowable future

As I’ve suggested many times in this blog, it is not credible to acknowledge the socially complex nature of organization and then to claim that a particular concept, tool or technique is certain to deliver the sought-after results.  Despite this, managers are called upon to act with purpose into this unknowable future. That is, their role places them in charge but they are not in control of the outcomes that might emerge from their own and others’ contributions.

So how are they to proceed? What might they use to inform the judgements that they make, as they seek to enable people to perform in organization-enhancing ways?

The starting proposition is that organization is enacted through the myriad conversations and interactions through which people make sense of what’s going on and decide how they will act. And it is through the widespread interplay of these ‘local’ (i.e. small-group and one-to-one) conversations that performance ‘outcomes’ emerge and that "success" and "failure" come to be recognized as such. A sobering thought for managers is that most of these interactions take place in their absence. And yet it is through these conversations that people co-create the meaning of what they are doing and that individual and collective action is mobilized – whether in support of the official agenda or in opposition to it.

So, against this background, how might leaders participate in this ongoing process of conversational interaction, if their intention is to enable people to perform at their best?

Keogh report comes closer to recognizing the complex social dynamics of hospital practice

In my recent paper, Taking Organisational Complexity Seriously, I criticised Sir Robert Francis’s recommendations arising from his inquiry into the Mid-Staffordshire NHS Trust. I argued that these were too focused on “the system” and not enough on the everyday, local interactions between practitioners, patients and others through which outcomes emerge in practice. I suggested, that a better response might have been,

“… to encourage, assist and enable those involved to explore their current experience of their individual and collective practice: the situational specifics and taken-for-granted patterns of thought, feeling and behaviour that are organising that practice and which might tend to undermine the dedication and commitment that has long come to be associated with ‘the caring professions’”.

Thankfully, the subsequent review of practices in a number of other NHS Trusts by Sir Bruce Keogh seems to have adopted just such an approach – at least for the most part.  Most importantly, his recommendations appear to be focused on the specific needs of those staff in each hospital and Trust whose job it is to deliver the necessary quality of “clinical effectiveness, patient experience, and safety”. 

Although the shameful bickering and thinly disguised point-scoring that took place in the House of Commons in the immediate wake of the report’s publication might have suggested otherwise, the language in Keogh’s report is measured. And, pleasingly, his grasp of the complex nature of the dynamics involved in ensuring high-quality care is laid bare in his report:

“… our analysis of these 14 hospitals proves that understanding mortality (and concepts such as excess and avoidable deaths) is much more complex than studying a single hospital-level indicator. There are many different causes of high mortality and no ‘magic bullet’ for preventing it.”

In his covering letter to the Secretary of State for Health, Jeremy Hunt, he further seeks to debunk the idea that such abstract measures as the Summary Hospital-level Mortality Indicator (SHMI) or the Hospital Standardised Mortality Ratio (HSMR) can be used to quantify actual numbers of “avoidable deaths” or to relate these to inadequate levels of care:

“However tempting it may be, it is clinically meaningless and academically reckless to use such statistical measures to quantify actual numbers of avoidable deaths”.

Despite this, of course, this is precisely the use to which such measures have been put by politicians and media commentators alike!

So, at first sight, Keogh’s review offers the hope that more recognition might be given to the complex social reality of everyday hospital life through which care is ultimately provided. At the same time, though, he fails to challenge the need for the plethora of organisations that surround the provision of health-care services ‘on the ground’. In doing so, I feel that more emphasis is still likely to be placed on the checking-up of practitioners’ compliance with generalized rules and standards imposed by these 'arms-length' bodies than on helping them to deal with the specific realities that they face in the midst of ‘live’ practice.

Je ne target rien - Enabling performance in organizations

In the previous post, I endorsed a recent article in the Sunday Times, which pointed to a number of flaws in the widespread practice of linking individuals’ pay to their perceived performance.

In addition to the problems identified in the article, I called into question the fundamental premise on which performance-related pay is based. That is, that direct relationships can readily be established between organizational outcomes and the decisions and actions of specific individuals.  The complex social dynamics of organization make such links impossible to establish.  In other words, it is simply not possible to isolate the effects that the intentions and contributions of a particular individual have on organizational performance.

So the challenge to target setting and performance-based rewards for individuals can be made on two fronts:

• First in relation to the supposed effect that these have on an individual's tendency to work more effectively than he or she might otherwise do (that is, the proposition that targets increase motivation, focus effort, and enhance accountability).
• Secondly, as regards the complex social dynamics of organization that inseparably intertwine the intentions, interactions and contributions of those we are seeking to appraise with the intentions, interactions and contributions  of all other participants – both ‘within’ the formal boundaries of the organization and ‘beyond’. These dynamics render the notion of cause and effect meaningless in relation to the effect that individuals' contributions have on organizational outcomes.

Fundamental flaw in performance-related pay

An article by Carly Chynoweth, in the Appointments section of the latest Sunday Times (5.2.12), includes a refreshing challenge by Warwick Business School professor, Bruno Frey to the notion and practice of performance-related pay. The article was no doubt prompted by the current furore over the size of executive bonus payments and other 'rewards for performance'.

Referring primarily to the pay of CEOs, Frey’s main suggestion is that target-based approaches to bonus payment should be scrapped.  He argues that any such pay should be based instead on an annual, retrospective judgement about the nature and extent of bonus that a CEO’s performance merits.

Several of his points resonate strongly with those I have made in earlier posts, such as Building commitment –v- rewarding performance and Public sector pay review – Off target. At the same time, his notion of an annual appraisal, based on hindsight, still assumes a degree of objective knowledge about the causes of performance outcomes that I don’t believe is credible in the socially complex world of organizations.

Reframing accountability

Discussions of accountability can too often degenerate into the search for a scapegoat. That is, someone who can be blamed for perceived (i.e. headline) failure or underperformance.  This might satisfy the felt need of some people for retribution. Or offer a seemingly clear-cut resolution to an otherwise more complex challenge. But it does little to encourage people to comment candidly on their own performance or to enable them, individually and collectively, to strive for excellence.