Management
The Performance Gapby Thomas Fee
It is a common phenomenom that as companies grow their ability to function effectively deteriorates. The quality of service and accountability that exists in a small entrepreneurial group is unparalleled in performance effectiveness.
But, what is it that happens as organizations grow that causes this to occur? What, if anything,, can be done to prevent it? Can organizations who have lost their performance edge regain it?
The answer, happily, is yes, but there are certain principles that need to be understood to identify when these problems occur and what to do about them. This generally requires a change in thinking for most organizations.
Re-engineering efforts in most companies today are not working. After great expenditure of resources, most companies don’t find any real change in productivity, and, further-more, they wouldn't have a way to measure it if they did. Re-engineering committees become a time waster for those who participate in them and an answer to upper management to those who initiate them. It’s as if forming a committee would solve a problem, but they are so dysfunctional that little ever results from the investment of time and energy.
Such committees tend to re-invent process that already exists in the organization. Furthermore, they lack the influence with upper management and authority to effectively implement change. The interesting thing is that many companies have been successful enough to support this kind of redundancy of effort. Over the long run, however, an organization cannot keep doing the same things wrong and continue to succeed. Sooner or later, organizations must come to grips with the results of their investment of time, people and resources. If all they have managed to produce is a larger and less-efficient organization, that result will eventually affect their bottom line. When this happens, companies tend to eliminate all support activities that are vested in solving their problems in favor of the classic default set of groups that have historically produced revenues. The problem is that with this approach, their game will not improve. They may survive, as Senge says, but will never live up to their potential.
Elements of Change
When an organization begins, there is a great deal of commitment and accountability. This is a very successful behavioral model. Everybody knows that it is up to them to perform or nothing will happen. They do their part and produce results.
The Rise of Bureaucracy
When organizations get to a certain point in size where delegation of responsibility begins to occur, accountability is passed along to those who are delegations’ recipients. When this occurs, there begins to be a pattern of behavior symptomized by the transferring of responsibility to others. As a result, individual accountability begins to dwindle.
People misunderstand bureaucracy. It has nothing to do with the size of an organization. It is a behavioral model. It means that personal accountability has been mitigated by the division of responsibility within the organization. Once an individual reaches a certain level in the organization, the key to their own success is largely a matter of political acceptability by their superiors. Those who report to them are completely expendable, unless they offer some form of political support that is suitable for advancing their own agenda.
Sounds complicated? That’s why modern organizations are more complex than they are productive. Politics has reached an unacceptable level in most organizations. In most organizations it is much more important to one’s success to be politically acceptable than it is to create value for the organization. People who are focused on creating value for their clients and fellow workers, but are not politically acceptable, lead desperate lives in large organizations and usually move on either to a more comfortable environment or give up trying to contribute and“play the game” out of a need for self-preservation. Mavericks are hung out to dry. This is stifling creative thought in modern American organizations.
The Performance Gap
The performance gap exists because bureaucracy replaces actual contact with those who make decisions in the organization. Remember, bureaucracy tends to cause decision making to dissipate. Little by little, performance begins to decline at all levels because the focus of a career moves from performance to positioning oneself within the bureaucracy. Problem is that once an individual gets positioned, they find out that their next task is to reposition themselves at a slightly higher level, and the cycle just continues. Those who formerly took personal accountability for their own results now must become experts at bureaucratic strategies and tactics in order to succeed in the organization. This has little to do with producing results on their own and even less to do with managing others to produce results. The latter are forgotten and the individual, now in the higher position, learns to develop their skills at managing up. The time they have from not actually doing the work now is invested in political competition. The behavioral model that was originally so successful, that of personal accountability, has now been replaced with this bureaucratic model.
When accountability is divided between people in this environment, the result is that nobody ever takes full responsibility for anything. It is assumed that someone elsewhere in the organization has assumed the responsibility for creating value. Each individual is now only concerned with their own self-interest, regardless of the impact on the organization’s ability to serve their clientele.
The problem is default behavior. When individuals get so involved in survival, they tend to ignore what is truly successful behavior and substitute the model that seems to work in that organization. If, for instance, their superiors tend to jump to conclusions and run off half-cocked, those wanting to move up begin to emulate that behavior.
Default behavior is behavior that is consistent and intuitive but continues to take place after the point that it has fulfilled its usefulness. It means that the behavior is no longer productive but continues because that is the way to the top whether it has anything to do with contributing value. In the end, this lack of concern for contributing value, accompanied with the lack of new productive ideas, results in the customer going somewhere else where there is a better solution to their problems.
This is a disturbing trend in Corporate America. It is the reason that so many are forsaking the halls of larger organizations to start small independent businesses. Overall, this will be good for the marketplace, but the cost to existing organizations will be horrendous. The right sizing of the 90’s could turn into huge layoffs as this tendency not to create value for the customer causes larger companies to go under. The pace of entrepreneurial start-ups cannot keep pace with the numbers of people becoming available in the work force.
The good news is that there is help available. Organizations must learn how to learn. Most organizations are just holding their own when it comes to growth. What company doesn’t brag about their compound growth? Those same companies need to be asking, ”Why isn't it greater?” Their problem is that those who would ask that kind of question are considered to be political outsiders or have gone on to greener pastures. This situation will be fatal to many medium and large-sized companies in the 90’s.
Finally, companies complain about the educational system producing people that they have to retrain. But the investment in employee training is the first to get cut in a business downturn. Companies are not anymore devoted to training their employees than the system they condemn.
What Can Be Done?
The challenge is to rebuild successful behavior based on the accountability model that was abandoned for this dysfunctional model of bureaucracy. The essence of much good training is the application of successful models of behavior, whether initially or to replace less-productive behavior.
The first thing that organizations must do to close the performance gap is to commit to the budget necessary to develop their human resource. This means that employees will require an even greater investment in the future. In return, organizations will yield greater results from these employees. This means they must learn to develop realistic tracking systems based on return on investment in their employees. Systems for ROI are readily available. Organizations must now learn to apply them to their people.
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tomfee@procentral.com
