1 Chapter 11 Performance Excellence and Organizational Change.

11

Chapter 11Chapter 11Chapter 11Chapter 11

Performance Performance Excellence and Excellence and Organizational ChangeOrganizational Change

Organizational Change Organizational Change RealitiesRealities

Organizations contemplating change must answer some tough questions, such as, Why is the change necessary? What will it do to my organization (department, job)? What problems will I encounter in making the change? and perhaps the most important one — What’s in it for me?

Strategic vs. Process Strategic vs. Process ChangeChange Strategic change is broad in scope and

stems from strategic objectives, which are generally externally focused and relate to significant customer, market, product/service, or technological opportunities and challenges.

Process change is narrow in scope and deals with the operations of an organization. An accumulation of continuously improving process changes can lead to a positive and sustainable culture change.

Strategic vs. Process Strategic vs. Process ChangeChange

Cultural ChangeCultural Change

CultureCulture – – the set of beliefs and values shared by the people in an organization.

Cultural values often seen in mission and vision statements

Firms pursuing TQ often need cultural change

Elements of a Performance Elements of a Performance Excellence CultureExcellence Culture

Visionary leadership

Customer Driven Organizational and

personal learning Valuing employees

and partners Agility

Focus on the future Managing for

innovation Management by fact Social responsibility Focus on results and

creating value Systems perspective

77

Why Adopt a Why Adopt a Performance Excellence Performance Excellence Philosophy?Philosophy? Reaction to competitive threat Reaction to competitive threat

to profitable survivalto profitable survival An opportunity to improveAn opportunity to improve

Requirements for Building Requirements for Building and Sustaining Performance and Sustaining Performance ExcellenceExcellence Readiness for changeReadiness for change Sound practices and Sound practices and

implementation strategiesimplementation strategies Effective organizationEffective organization

Perspectives on Cultural Perspectives on Cultural ChangeChange

Change can be accomplished, but it is Change can be accomplished, but it is difficultdifficult

Imposed change will be resistedImposed change will be resisted Full cooperation, commitment, and Full cooperation, commitment, and

participation by all levels of management participation by all levels of management is essentialis essential

Change takes timeChange takes time You might not get positive results at firstYou might not get positive results at first Change might go in unintended directionsChange might go in unintended directions

1010

People Roles in People Roles in Organizational ChangeOrganizational Change

Senior managementSenior management Middle managementMiddle management WorkforceWorkforce

Transforming Middle Transforming Middle Managers to Change Managers to Change AgentsAgents EmpowerEmpower Create a common vision of Create a common vision of

excellenceexcellence Create new organizational rulesCreate new organizational rules Implement continuous Implement continuous

improvementimprovement Develop and retain peak Develop and retain peak

performersperformers

1212

Common Mistakes in Common Mistakes in Implementation Implementation (1 of 3)(1 of 3)

Change is regarded as a short-term Change is regarded as a short-term “program”“program”

Compelling results are not obtained quicklyCompelling results are not obtained quickly Process not driven by focus on customer, Process not driven by focus on customer,

connection to strategic business issues, and connection to strategic business issues, and support from senior managementsupport from senior management

Structural elements block changeStructural elements block change Goals set too lowGoals set too low ““Command and control” organizational Command and control” organizational

cultureculture

1313

Common Mistakes in Common Mistakes in Implementation Implementation (2 of 3)(2 of 3)

Training not properly addressedTraining not properly addressed Focus on products, not processesFocus on products, not processes Little real empowerment is givenLittle real empowerment is given Organization too successful and Organization too successful and

complacentcomplacent Organization fails to address Organization fails to address

fundamental questionsfundamental questions Senior management not personally and Senior management not personally and

visibly committedvisibly committed

1414

Common Mistakes in Common Mistakes in Implementation Implementation (3 of 3)(3 of 3)

Overemphasis on teams for cross-Overemphasis on teams for cross-functional problemsfunctional problems

Employees operate under belief that Employees operate under belief that more data are always desirablemore data are always desirable

Management fails to recognize that Management fails to recognize that quality improvement is personal quality improvement is personal responsibilityresponsibility

Organization does not see itself as Organization does not see itself as collection of interrelated processescollection of interrelated processes

Building on Best Building on Best PracticesPractices

Universal best practicesUniversal best practices– Cycle time analysisCycle time analysis– Process value analysisProcess value analysis– Process simplificationProcess simplification– Strategic planningStrategic planning– Formal supplier certification Formal supplier certification

programsprograms

1616

Best Practices: Best Practices: Infrastructure Design Infrastructure Design (1 of 3)(1 of 3)

Low performersLow performers– process management process management

fundamentalsfundamentals– customer responsecustomer response– training and teamworktraining and teamwork– benchmarking competitorsbenchmarking competitors– cost reductioncost reduction– rewards for teamwork and qualityrewards for teamwork and quality

1717

Best Practices: Best Practices: Infrastructure Design Infrastructure Design (2 of 3)(2 of 3)

Medium performersMedium performers– use customer input and market use customer input and market

researchresearch– select suppliers by qualityselect suppliers by quality– flexibility and cycle time flexibility and cycle time

reductionreduction– compensation tied to quality and compensation tied to quality and

teamworkteamwork

1818

Best Practices: Best Practices: Infrastructure Design Infrastructure Design (3 of 3)(3 of 3)

High performersHigh performers– self-managed and cross-functional self-managed and cross-functional

teamsteams– strategic partnershipsstrategic partnerships– benchmarking world-class benchmarking world-class

companiescompanies– senior management senior management

compensation tied to qualitycompensation tied to quality– rapid responserapid response

Quality Engines of Quality Engines of Baldrige WinnersBaldrige Winners

Self Assessment: Basic Self Assessment: Basic ElementsElements

Management involvement and Management involvement and leadershipleadership

Product and process designProduct and process design Product controlProduct control Customer and supplier communicationsCustomer and supplier communications Quality improvementQuality improvement Employee participationEmployee participation Education and trainingEducation and training Quality informationQuality information

Importance of Follow-Up Importance of Follow-Up of Self-Assessment of Self-Assessment ResultsResults Many organizations derive little benefit Many organizations derive little benefit

from conducting self-assessment and from conducting self-assessment and achieve few of the process achieve few of the process improvements suggested by self-studyimprovements suggested by self-study

Reasons:Reasons:– Managers do not sense a problemManagers do not sense a problem– Managers react negatively or by denialManagers react negatively or by denial– Managers don’t know what to do with the Managers don’t know what to do with the

informationinformation

Leveraging Self-Leveraging Self-Assessment FindingsAssessment Findings

Prepare to be humbledPrepare to be humbled Talk through the findingsTalk through the findings Recognize institutional influencesRecognize institutional influences Grind out the follow-upGrind out the follow-up

Knowledge ManagementKnowledge Management

The process of identifying, capturing, organizing, and using knowledge assets to create and sustain competitive advantage.

Knowledge assets refer to the accumulated intellectual resources that an organization possesses, including information, ideas, learning, understanding, memory, insights, cognitive and technical skills, and capabilities.

Types of KnowledgeTypes of Knowledge

Explicit knowledge includes information stored in documents or other forms of media.

Tacit knowledge is information that is formed around intangible factors resulting from an individual’s experience, and is personal and content-specific.

Organizational LearningOrganizational Learning

Create a “learning organization”Create a “learning organization”– PlanningPlanning– Execution of plansExecution of plans– Assessment of progressAssessment of progress– Revision of plans based on Revision of plans based on

assessment findingsassessment findings

Key Activities of Key Activities of Learning OrganizationsLearning Organizations Systematic problem solving Experimentation with new approaches Learning from their own experiences

and history Learning from the experiences and

best practices of others Transferring knowledge quickly and

efficiently throughout the organization

Internal BenchmarkingInternal Benchmarking

The ability to identify and transfer best practices within the organization

Process: – Identify and collect internal knowledge

and best practices– Share and understand those practices– Adapt and apply them to new situations

and bringing them up to best-practice performance levels.

Organizational Change Organizational Change for Six Sigmafor Six Sigma Committed leadershipCommitted leadership Integration with existing initiatives, business Integration with existing initiatives, business

strategy, and performance measurementstrategy, and performance measurement Process thinkingProcess thinking Disciplined customer and market Disciplined customer and market

intelligence gatheringintelligence gathering A bottom line orientationA bottom line orientation Leadership in the trenchesLeadership in the trenches TrainingTraining Continuous reinforcement and rewardsContinuous reinforcement and rewards

Organizational Change, Organizational Change, Learning, and Learning, and Organizational TheoryOrganizational Theory Reason for changeReason for change

– Traditional: productivity or job satisfactionTraditional: productivity or job satisfaction– TQ: customer satisfactionTQ: customer satisfaction

Source of changeSource of change– Both: top managementBoth: top management

Types of changeTypes of change– Traditional: limited in scope and durationTraditional: limited in scope and duration– TQ: continuous improvement over a long TQ: continuous improvement over a long

period of timeperiod of time

Principles for Managing Principles for Managing ChangeChange

Unfreeze attitudes and behaviorUnfreeze attitudes and behavior Have effective leadershipHave effective leadership Manage interdependenceManage interdependence Involve the peopleInvolve the people Refreeze to make gains Refreeze to make gains

permanentpermanent