PGD In Strategic Business Management And Leadership
Strategic performance management is a thorough process in which the performance of an organization is driven by a systematic way. It can be defined more precisely as the process where guiding of the organisation is maintained in a systematic understanding of goal, strategy and objectives of the organization measured by critical success elements and performance indicators in an effort to take precise actions to keep the organisation on course. In the views of the scholar “The strategy has to be translated into business units plans, budgets, and operational action plans at lower organisational levels” (Andre de Waal2007). STRATEGIC PERFORMANCE MANAGEMENT is an essential criterion of an organization to sustain its working efficiency and to maintain its progress.
There is a lesser understanding of STRATEGIC PERFORMANCE MANAGEMENT especially in the small business and local government sectors. The small private firms have always struggled with poor performance management or failed to realize the importance of its proper application. In local government also the lack of proper application has been observed. Due to this the concerned parties have faced either loss or poor deliverance and service to its customers. It has hampered not only the affected parties but also have hindered their progress. Because of the narrow understanding of STRATEGIC PERFORMANCE MANAGEMENT it has also hampered the financial system as a hole as every sector of it is interwoven. For an instance we can look at the example of U.A.E. where Experts have blamed the lack of proper application of strategic performance management which is hampering the steady growth of their economy in 2007. The Dubai government immediately applied necessary SMP skills and work shop to eradicate this problem, which they successfully did by the year end of 2010.
Reasons for lack of understanding strategic performance management:
1. Lack of proper knowledge about performance enhancing and sustainability.
2. Lack of necessary information especially in the small private firms which hinders their understanding of STRATEGIC PERFORMANCE MANAGEMENT.
3. The conventional way of thinking especially in the local government management has caused an encompassing idea about SMP.
4. Traditional way of deliverance and resource management.
5. Lack of research.
6. Faulty research methodology.
7. Lack of proper assessment approach towards performance and efficiency.
The reasons mentioned above are few of the key reasons for a narrow understanding of strategic performance management within companies.
Armstrong’s Performance Management theory:
Armstrong’s theory about performance management quotes that” performance management is a process which is designated to improve organisational, team and individual performance and which is owned and driven by line managers”(M. Armstrong). Armstrong also implied that the performance management should be maintained in a sequential manner. Armstrong sets performance management to three main criteria purpose, capability and result area. Performance management is the process about what has to be done, how to be done and what has been achieved. In the words of Armstrong “Performance agreement defines role requirements objectives and standards of performance knowledge skills and capabilities, performance measures and indicators, corporate core values and requirements (M. Armstrong).
The issues hindering performance management are many; to eradicate those issues we need proper application of STRATEGIC PERFORMANCE MANAGEMENT. The few issue or implications that need to be addressed are given below:
Individual and organizational objectives:
There must be clear set individual and organizational objectives given in order to clarify the goal of the company to the employees and to make aware themselves of their duties. There must be a perfect Alignment in the objectives of the company.
Improving organizational is a key towards achieving a company’s goal.
Individual performance of a company is an important aspect to succeed in the business. Improving it is a must.
Developing performance culture:
Developing a performance culture among the individuals is an important issue in strategic performance management.
The 7-S Framework:
McKinsey’s 7-S Framework is a management model that distinguishes 7 factors to organize a company in a effective and manner. These factors determine the approach in which a company operates. All seven of these approaches are necessary for a manager to efficiently operate his company. The term 7-S Framework was first coined in "The Art of Japanese Management" by Richard Pascale and Anthony Athos in 1981, after they investigated about the success of the Japanese industry. It appeared also in "In Search of Excellence" by Peters and Waterman, and was taken up by the global management consultancy company McKinsey as a business tool.
Meaning of the 7 Ss:
The 7 Ss are as follows:
Shared Values (AKA Super ordinate Goals): The beliefs and strategy of the company
Strategy: Allocation of plans of a firm.
Structure: The procedures and process of the company.
Systems: The way organization relates to its components
Staff: The number and types of employees.
Style: Cultural style of the organization
Skills: Capabilities of the personnel.
The 7Ss can be shown in the following diagram:
(Figure obtained from: http://www.12manage.com/methods_7S.html)
Advantages of the 7-S Model:
Assessment of organizations that is ineffective.
Helpful in making organizational change.
Combination of rational and emotional elements.
Managers must follow all the Ss simultaneously and all Ss are intertwined.
Interpretation of the 7Ss model (a personal Assessment):
Shared Values: The atmosphere of the organization should be a coherent one. Each and everyone should have a shared goal and objective.
Strategy: The strategy part should include allocation plans of farm, scarce resource, over time, reach identified goals. Environment, competition, customers etc.
Structure: The structure of the farm should be the objective oriented; i.e. if the company is an accounting farm then the structure of the company should be accounting oriented.
Systems: The Company should be efficient in the procedures .Measures should be taken in order to reach the goals and objectives in a manner that there would be no scope of any unsoundness about the operation; i.e. For an accounting company there should be adequate supply of accounting software’s and computers to do the job properly.
Staff: The staff should be adequately trained and should be able to follow the rules and regulation of the company in as disciplined manner so that the objective could be achieved in an efficient manner; i.e. if it is an accounting farm then the staff should be well trained in accounting softwares and should be able to handle the cases. There should also be training and monitoring program for the staff.
Style: Management style is an important issue here, the managerial skills should be well adept with the culture and origin of the farm and its staff; i.e. if the company is an Indian farm and the employees are Indian then the atmosphere should suit the culture of the staff.
Skills: The staff should be well trained and have a distinct quality about them. They should be well monitored and well trained; i.e. if it is an accounting farm them the skills of the staff should be sound and adequate.
From the early part of the twentieth century, leadership is playing vital role in the organization. Early leadership theories were basically focused on and about what qualities distinguished between leaders and followers, while subsequent theories were about other variables such as situational factors and skill levels. There are many different leadership theories, most can be classified as one of eight major types:
1. "Great Man" Theories:
Great Man Theories assume that the leadership is inherent .It says that great leaders are born, not made. These theories meant great leaders as heroic, mythic and destined to rise as a leader when needed. At the time, the leadership was thought of as a male quality and in terms of military leadership, so the term “Great Man” used in the theory. (Kendra Cherry, 2011)
2. Trait Theories:
Trait Theories assume that people are inheriting of some certain qualities and traits that make them better suited to leadership. Trait theories can identify a particular personality or characteristics very often which are shared by leaders. (Kendra Cherry, 2011)
The theory also says leaders share a number of common personality traits and characteristics, and that leadership emerges from these traits. And in this theory belive people gain positive qualities and traits that make them better fit for leadership. (Clark2010).
3. Contingency Theories:
Contingency theories of leadership focus on some variables for a situation which is related to that situation and will determine which particular style of leadership is best suited for that situation. According to this theory, there is no style of leadership which is best in all the situations. Success in a situation depends upon a number of variables. (Kendra Cherry, 2011)
4. Situational Theories:
Situational theories say that leaders are chosen not inherit for the best course of action based upon situational variables. Different styles of leadership are need for different types of decision-making.
5. Behavioral Theories:
Behavioral theories of leadership are based upon the belief that great leaders are made, not born. According to this theory, any people can learn to become leaders if properly taught and observed. (Kendra Cherry, 2011)
6. Participative Theories:
Participative leadership theories are based upon that an ideal leadership style in a group is to encourage participation and contributions from the members of a group and help group members feel more relevant and committed to the decision-making process. But, the leader still retains the right to allow the input of others. (Kendra Cherry, 2011)
7. Management Theories:
Management theories, also known as transactional theories, focus on the role of supervision, organization and group performance. These theories base leadership on a system of rewards and punishments. Managerial theories are often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished. (Kendra Cherry, 2011)
This process is summarized into three aspects, first is the contingent reward leadership, which deals with leaders who sets out roles and rewards on each goal; second is the Active management by exception, ‘refers to the active vigilance of the leader, whose goal is to ensure fulfillment of the standards.’ (Zagorsek, 2008); and lastly, passive management by exception occurs when ‘the leader waits to take action until mistakes are brought to his or her attention. the leader fails to intervene until problems become serious.’ (Antonakis, 2003)
8. Relationship Theories:
Relationship theories, which are also known as transformational theories, focus upon the connections or links formed between leaders and followers. Leaders with this style often have high ethical and moral standards. Transformational leaders work is basically to motivate and inspire people by helping group members to see the importance and higher good of the task. These leaders are focused on the performance of group members, but also want that each person fulfills his or her duties potentially. Leaders with this style often have high ethical and moral standards. (Kendra Cherry, 2011)
Team work can be defined as ‘ a distinguishable set of two or more people who interact dynamically, interdependently, and adaptively towards a common valued goal/objective/mission, who have each been assigned specific roles to perform, and who have limited life-span membership. (Salas Et Al., 1992) It also can be said that an Ideal team is the one to which can target and achieve the goal. Achievement will by empowering all team members with a clear definition and understanding of:
Availability of the Resources
Performance of the Team
And efficiency arises by:
Clear understanding of the goal and sharing the vision to achieve it
Practicing team-oriented behaviors
It can be said that team work is better than that on individual effort. If the members of the team contribute equally and collaborate properly toward achieving the goal as the common interest it is more beneficial. Even when, there is the burden; success and failure as a team, all those are shared by team members equally.
For such teams to work, the management and actions should follow some important guidelines governing factors such as leadership skills and execution; relationship of team members with each other and with conflict issues, authority, responsibility etc.
The work of a Good team:
The role of the Team members should be balanced.
The goal and objective should be clarified.
The members should support and trust each other.
There must be regular news and reviews of the work.
If there is problem, it should be solved honestly.
There must be openness in the team.
To be a good team, individual development is also needed.
There must be good communication skill among the team mates.
The most guaranteed way of improving teamwork is to applying the principles of performance management to the group's behavior. This involves these basic steps:
Identifying the behaviors that will lead to better performance of the team,
Assessing which behaviors are currently being used and find the gap between target and current teamwork behaviors
Taking necessary steps to bring current teamwork behaviors closer to the target.
Building a high performing Team is one of the requirements of any form of Management. High performing comes from two distinct elements, high performing individual Team members, and a Team that is moving towards the level of a High Performance Team.
At the Forming Stage the objective of the Team Leader is to focus on three key areas:
a. Aligning the Team to their Company purpose
b. Their Team purpose
c. Their objectives and their goals.
In Storming stage there are cross training and cross team project work. One of the dangers at this stage is the formation of small, tight sub-groups or cliques. At the Forming and early storming stage, the Team Manager uses the Team Meeting as the main Team process.
Norming Stage is the time to coach and mentor the Team towards delegation. Build the business knowledge of the Team. This is the time also to educate the Team more about the nature of the business, the customers and the competitors. Encourage sharing of skills, and the dissemination of knowledge across the Team.
Team Development Plan:
The plans of the development for the teams are:
Improving the relationship between the individuals. This will create a better environment in the group and the members will support each other to reach the goal and avoid the uncertainties.
The roles of the group will be more balance and clarified so that individual conflict can be avoided.
There will be reviews of the work in every day, so that everybody knows what is going on.
There will be shift in member responsibilities so that no mismanagement occurs.
The Three models which should be applicable for my preferred organization for quality/performance management are:
EFQM Excellence Model®
Statistical Process Control
The reasons behind choosing EFQM Excellence Model are:
This EFQM Excellence Model gives a holistic framework which ensures organizational quality issues and also gives attention to impacts through the ‘results’ criteria.
It gives a clear idea about the organization’s activities and is useful for planning as it has the connection or links between what an organization does and the results it achieves. It also shows how the results are achieved.
It gives a good idea about what is going on in the organization. -e.g., an analysis of an organization’s environmental policy in less than a single day as well as providing a framework for a comprehensive review of all the organization’s activities over several months.
This model stresses the importance of consensus in assessing an organization’s strengths and areas to improve.
The reasons behind choosing Statistical Process Control are:
This model provides surveillance and feedback for keeping processes in control
It gives signals when a problem occurs
It characterize the process
It monitors quality the quality of the process
It helps to make changes in the process and track effects of those changes
The reasons behind choosing Balanced Scorecard are:
The Balanced Scorecard is an excellent educational tool to help staff see the creation of financial results and shareholder value.
It is a good holistic performance measuring approach.
It is a good internal scanning and assessment tool.
(Dr. Robert W. Davies, 2010)
The Two models which could be rejected for my preferred organization for quality/performance management are:
ISO 9001 Quality System.
Business Process Re-engineering
The reasons behind rejecting ISO 9001 Quality System are:
Every owner and manager do not have the proper idea or understanding about this certification process so for their lack of understanding or incomplete understanding of the process its requirement sometimes become waste of time and effort.
ISO 9001 can a very costly process, especially for smaller firms.
ISO 9001 emphasis heavily on documents and sometimes it become really hard to get all the documents for the certification.
The length of the process is also quite a long. Sometimes it took 18-20 months or even longer to get the certification with the average of 15 months.
The reasons behind rejecting Business Process Re-engineering are:
Business process re-engineering has found to be inappropriate in complex situations where many other approaches are now considered to be appropriate.
The methods of the process are complicated and also implementation of change is very hard.
(Robin Beaumont, 2000)
Maslow’s theory (Maslow's Hierarchy of Needs):
Maslow’s theory is based on human needs and satisfaction. This theory simple and descriptive and is based on human long experiences of human cravings. The Maslow’s theory was proposed in 1943 by Abraham Maslow. It is based on some human elements which are:
This hierarchy can be shown by the following diagram:
(Diagram obtained from http://hairstyle2011formen.blogspot.com/2011/03/theories-of-motivation.html)
Maslow’s theory in present day:
Though the theory is an old one, still it has an universal appeal. It has an universal implementation as it deals with the basic and practical needs of human entity. It has not faded yet as the hierarchy is still used in management studies even today.
It can be implemented in a modern way by the following ways:
Physiological needs: vacations, breaks for lunch and sufficient wages that are sufficient for purchasing basic needs.
Safety Needs: A safe environment for working, provident funds, job assurance.
Social Needs: organizing social events.
Esteem Needs: Giving away employee of the month and bonus for achieving goals.
Self-Actualization: Give employees challenging work so that they can excel in their own fields.
Limitations of Maslow's Hierarchy:
Though it is a very important and useful theory it has some flaws and anomalies, they are:
Maslow's hierarchy justifies intuitive standpoint, but there is little in its hierarchy.
Many cultures prefer social needs before any others.
Not everyone is driven by the same needs.
Scientific findings fail to reestablish Maslow's hierarchy.
Hertzberg’s theory of motivation (Two-factor theory):
Hertzberg said motivation is based on two factors motivators and hygiene. It was first stated in 1959 by Hertzberg which states “"We can expand ... by stating that the job satisfiers deal with the factors involved in doing the job, whereas the job dissatisfies deal with the factors which define the job context."(1959, Hertzberg). It is also known as the two-factor theory or Hertzberg’s motivation-hygiene theory. The theory first appeared in Frederick Hertzberg’s book 'The Motivation to Work'. In this theory Hertzberg also discussed about salary. According to him “"Viewed within the context of the sequences of events, salary as a factor belongs more in the group that defines the job situation and is primarily a dissatisfier."(Hertzberg).
Hertzberg theory is based upon two criterions; these can be shown in the table below:
Components Affecting Work Attitudes
Leading to Dissatisfaction
Leading to Satisfaction
Relationship with peers
Relationship with boss
The Hertzberg’s theory can be best implied by the diagram below:
(Diagram from: : http://web.njit.edu/~turoff/coursenotes/IS455/vg455/sld215.html)
Limitations of Hertzberg’s theory:
Hertzberg’s theory of motivation has been one of the successful theories ever produced. It has been reproduced and analyzed for decades and there have been few flaws being found. Yet there are some limitation in the theory, they are given below:
Existence of satisfaction and Dissatisfaction in various scales has been ruled out.
Individual difference between different personalities also affects the influence on the employees.
The assumption that happy and satisfied workers produce more is an imperfect assumption.
Estimation that a certain factor will decide a certain outcome is debated.
The results in behavioral terms are debated.
Comparison between Maslow’s and Hertzberg’s theory:
The comparison between Maslow’s and Hertzberg’s theory is given below:
Maslow’s theory of motivation
Hertzberg’s theory of motivation
1. Maslow’s theory is based on human needs and cravings.
2. This theory is based on the hierarchy of human needs.
3. Maslow’s theory is basically simple and is based on long experiences of human needs.
4. It is the most popular and widely used motivational theory.
5. Maslow’s theory is mostly appropriate for the developing and underdeveloped countries.
6. Maslow’s theory is descriptive.
7. According to Maslow any need can act as a motivator..
1. Hertzberg’s theory is based on motivation and achievements.
2. This theory refers to hygiene factors and motivating factors.
3. Hertzberg’s theory is base on real research work made on 200 engineers and accountants..
4. It is an extension of Maslow’s theory. It’s application is narrow.
5. Hertzberg’s theory is most suited for rich countries where money is a less motivational factor.
6. Hertzberg’s theory is prescriptive.
7. According to Hertzberg only higher need act as motivators.
Which one is better between Maslow’s and Hertzberg’s theory:
Maslow’s hierarchical motivation theory and Hertzberg’s motivation theories are closely related. They both share some similar logic and reasons. Yet they mainly differ on one thing. Where Maslow’s theory focuses on the 5 aspects of human needs, Hertzberg mainly focuses on two factors, motivators and hygiene. Though Maslow’s hierarchical system has been the most popular and cited motivational theories, it still lags behind Hertzberg’s theory which had been more successfully applied in job environment. Maslow’s theory though sound very logical which deals primarily with human needs is lesser practical and effective than the Hertzberg’s theory of motivation. A worker is not only satisfied with basic needs, he craves and wand’s more in a work field. And it is best dealt with the Hertzberg’s two factor theory as it takes an approach where the workers felicity is dealt in a more practical manner which can lead to more production.
Therefore the above reasons and the widespread and successful implementation of Hertzberg’s theory in many companies has led me choose Hertzberg’s motivation theory. Though it was a tough choice as Maslow’s theory is closely related and someway similar to Hertzberg’s theory, still Hertzberg’s theory seems more advanced and upgraded.
There are two techniques used in the organisation to measure performance.
To have the organization’s process towards excellence, The EFQM model is one non-prescriptive framework model based on nine important criteria. The EFQM which is also known as EFQM Excellence Model was introduced in 1992 as the framework for assessing organisations for the European Quality Award. Now it has become the most widely used organisational framework in Europe. Organizations can use this model and the process of self-assessment to improve performance. It can be applied to organizations both in the public and private sector regardless of any size and it is flexible.
The EFQM Excellence Model is a practical tool that can be used in a number of different ways:
It can be a tool for Self-Assessment
It can be a way to benchmark with other organisations
It can be a guide to identify areas for Improvement
It can be the basis for a common vocabulary and a way of thinking
It can also be a structure for the organisation's management system
In the EFQM model out of the nice criteria, five are 'Enablers' and four are 'Results'. The 'Enabler' criteria address what organization engage in and the 'Results' criteria cover where organizations reach. 'Enablers' make ‘Results' and 'Enablers' are bettered after getting the feedback from 'Results'.
Policy and Strategy
Partnership and Resources
Key Performance Results
Strength and Weakness of EFQM Model:
Gives an overview of organization
People included in assessment are from both Enablers & Results
Considers complete management system
Not designed as a “process improvement” tool
The Benefits which generated are difficult to measure
Relevance to operational management is not always clear
(Matt Fisher, Monika Chodakowska, Nico Schutte, 2010)
Balance scorecard in another technique that organizations used for measuring their performance. It is a performance management approach which focuses on various overall performance indicators like customer position or view, internal-business processes, learning and growth and financials indicators to monitor progress toward organization's strategic goals. Each major unit throughout the organization often establishes its own scorecard which is integrated with the scorecards of other units to achieve the scorecard of the overall organization. It was introduced by Dr. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework of organizations to have a more 'balanced' view of organizational performance.
(Dr. Robert Kaplan and David Norton, 1996)
Strength and Weakness of Balance Scorecard:
The Balanced Scorecard is an excellent educational tool to help staff see the creation of financial results and shareholder value.
It is a good holistic performance measuring approach.
It is a good internal scanning and assessment tool.
It cannot take provide all the information that an organization should manage for its current and future positions.
(Dr. Robert W. Davies, 2010)
Encourage individual(s) commitment:
To bring a workgroup together it is very important to encourage individuals to commit themselves to the company objective. To do this we may follow the following steps:
Proper selection of team members.
Provide individuals a clear team goal
Motivate the individuals to a competitive approach
Give performance bonuses (a reward system for excellent work)
Listen to employees
For example, for an accounting farm the selection of the right candidates are important who have sound knowledge about the work. There should be a clear representation towards the individuals and the team as a whole about the goal of the company. The individuals should be motivated to compete in a team with a sportsmanship spirit. There should also be a reward system, i.e. if an employee can do his accounting work done in time and have a punctual approach, he should be rewarded with additional incentives. There should be a scope for the employees to have a say.
Evaluation of team performance against agreed objectives:
To evaluate team performance against the company’s objective and goal we can consider the following measures:
Observe company reports
Check error reports
For example if we are running a marketing company, we should check the company’s sales reports. Whether that reflects the company’s desired goal and output objective should be measured. The deadline reports should also be evaluated. The error reports show the efficiency of the company and enable the company to deal with the problems. Client feedback is also reflective of the efficiency of the company, whether the client is satisfied is an important cafeteria of the company’s success. Finally the company’s final output resembles the company’s failure or success of the company.
Improvement of performance against current performance:
To improve performance against current performance we need to take the following measure:
Describe the performance report to the employees
Motivate employees to improve performance
Describe performance Gap to the employees
Find root causes of lacking
For an accounting farm, the performance report should make aware to the employees. To motivate employee’s necessary steps should be taken. Describe performance gaps to the employees. Find root causes of the performance gap and take necessary steps. Also organizing interventions to motivate employees is a valid option.
Influencing and persuading methodologies to gain commitment:
To persuade commitment among team members following steps could be considered:
communicating and influencing employees
give away vacation and work breaks
give presentations on motivation
keep challenging the employees to perform better
announce employee of the moth each year
taking adversities as a challenge
improve focus on objective
If we are trying to gain commitment among the employees we need to improve communication among the employees to improve the work rate and commitment. Presentation on motivations should also be given to the employees. An employee of the moth award could also be given to motivate and improve commitment among the workers. Giving away work breaks and vacations to keep the workers mentally and physically happy is an option. Finally challenging the employees to excel in their fields is also necessary to keep them motivated and engaged.
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