If You’re Using These Management Methods, You’re Wasting Both Time and Money!
Organizations that aim to earn the label HPO, or “High Performance Organization,” can draw upon literally hundreds of management methods, techniques and activities to help them reach this enviable stature. Most of these management methods seem perfectly reasonable things to do except for one “minor” detail: in most cases, there is absolutely no proof whatsoever that any of these management methods will actually improve performance in the short term, let alone in the long term, let alone at all!
It is difficult to figure out which of these management methods are genuinely important for an organization to embark upon in its quest for HPO status. That’s why in my extensive global research of 290 HPO studies, I attempted to resolve this dilemma by identifying 189 characteristics in the various descriptive literature, then evaluating and comparing them all to 35 tried-and-true HPO characteristics. Below is a partial list of what I found out NOT to do.
Caveat: the many HPO studies I reviewed do not definitively state that the techniques, management methods and activities listed below are not important in any sense. Some of them in fact are important, e.g., every organization does need a strategy because without one it would be rudderless and could easily go adrift. However, simply having a strategy will not make an organization an HPO because its competitors will also have strategies! So merely having a strategy is not enough. Instead, HPO research shows a strategy must be unique.
Similarly, the following management methods, techniques and activities will, on their own, constitute a waste of time and money.
- Organizational Design or Structure: It turns out that no specific organizational design or structure shows a correlation with achieving high performance status. It makes no difference at all (neither positive nor negative) whether management chooses a functional design, a process design or a matrix design for its organizational structure. Consequently, launching a reorganization to boost a firm’s performance cannot be recommended. In fact, my research kept finding that most reorganizations failed to yield any long-term performance improvement.
- Employee Autonomy: It’s been fashionable in recent years to grant more and more empowerment to employees but this does not necessarily contribute to high performance either. My research results showed me that a high level of autonomy in fact can have a negative correlation on competitive performance. Too much freedom for employees can lead to an internal disorder and confusion unless backed up with sufficient means of coordination. Without coordination, employee autonomy can even seriously damage an organization. People want clarity about goals, what is and isn’t allowed, and what is expected from them. If they know these then they will not need further empowerment.
- Strategy: With regard to the strategy, it turns out that it’s not so much the chosen strategy that’s important— but the uniqueness of a strategy compared to competitors in the same industry. All characteristics concerning cost leadership, product differentiation and customer intimacy strategies must be distinguishing characteristics. Adopting merely a “me-too” strategy is thus not enough to become an HPO.
- Technology/ICT: Many organizations spend a lot of time and resources on implementing new information and communication (ICT) systems. Sadly, this too will not necessarily transform them into a HPO. Although several HPO characteristics such as “continuous improvement and renewal,” cannot be improved without ICT systems, a standalone implementation of new systems and technology does nothing to help the organization perform any better for a sustained period of time as implementation has to support at least one of the principle HPO factors.
- Bench-marking: My study results show that bench-marking is much less effective than everyone assumes. When an organization embarks on a bench-marking project, it usually aims to identify best practices, emulate these and attain if possible the same level as the industry’s best. True HPOs, however, have a completely different view on best practices, regarding their competitors’ best performance benchmark merely as the baseline for their own performance, i.e., a starting point from which the HPO distances itself as much as possible.
- Communication: In many organizations, top management can often be heard to comment: “We have to communicate more! If we do, they will understand.” However, it turns out that employees are typically not concerned about understanding what management has to say, but rather about whether or not management is listening to what they have to say. Thus ‘communication,” defined as one–way traffic from manager to employee, is not what’s critical, instead dialogue is critical. In a dialogue there is two-way communication with both sides listening and hearing and exchanging ideas and working towards mutual understanding. In other words, HPOs spend less effort on “soap-box speeches” and on town hall meetings and more on roundtables and back-and-forth discussions.
- Bonuses & Reward Systems: There remains a continuous interest in the topic of bonuses and reward systems but he HPO research reveals that these are not distinguishing factors for creating and sustaining HPO status. Instead, they are mere “hygiene” factors. An organization needs to have an appropriate reward system (whether or not this includes bonuses) and one that is considered by employees to be fair and equitable. If such a reward system is not in place, the organization will run into trouble and opposition with its employees, making HPO status virtually impossible.
If a fair and equitable system is in place–and note that it does not seem to really matter what type of reward system this is as long as it’s appropriate for the organization in question– then employees will consider it acceptable and will be content. At that point, the organization can start legitimately thinking about how to turn itself into a genuine HPO.
In my new book What Makes a High Performance Organization: Validated Factors of Competitive Advantage that Apply Worldwide, I give many examples of management methods which will make your organization a true HPO!
André de Waal
For instance, Blenko et al. (2010) found that fewer than one-third of reorganizations produced meaningful improvements in performance.
The fact that ICT is not a decisisve factor for creating an HPO has also been found by Carr (2003) and Axson (2010).
In the past years there have been quite a few authors, such as Pfeffer and Sutton (2006), Hubbard et al. (2007) and McLaughlin (2010), who warn against the indiscriminate use of benchmarking while trying to improve the organization’s result as this generally leads to copycat behavior.