Building High-Performance Organisations

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ACKNOWLEDGEMENT

This article was published in the New Straits Times on October 23, 2004
as a CIMA Business Talk article.

Reproduced here with permission from
The Chartered Institute of Management Accountants (CIMA Malaysia).
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Jean-Francois Manzoni from international business school INSEAD has developed a refreshing set of theories on how to drive performance. After working with many leading organisations on the MBA programme at business school INSEAD, Manzoni has defined his own set of drivers for improving performance. They make a refreshing change from the usual empirical view taken by researchers about what drives better performing organisations.

Manzoni, who heads the INSEAD-PricewaterhouseCoopers research initiative on high-performance organisations, makes it clear that the most important catalyst for change is people and their attitude and behaviour. Many of the key issues raised will strike a chord but most would agree that identifying problem areas is always easier than putting them right.

In judging the performance of an organisation, Manzoni first considers.whether the “whole” (the management team) is as great as the sum of its parts. He cites companies where individual executives are competent, often extremely so, but where as a team they do not spark, or pull in the same direction. He then looks at how much effort it takes to get things done. Are processes and systems helping or does running the company feel like pulling a heavy load uphill?

Next he considers the boundary of the firm. Many managers feel it is easier to control and coordinate resources when they are within the firm. The common assumption is that, if an activity is undertaken within an organisation, it must be easier than outsourcing – this is often ill-founded.

Finally, he looks at what he terms the “ideas cost”. How well does an organisation exploit its capabilities and resources, particularly the knowledge and experience of its staff? Building on these observations, the following are key aspects of a framework for organisational excellence:

• A healthy dissatisfaction with the status quo (DSQ). In high-performing organisations, people want to improve, learn and do things better. There is an aggressive culture towards competitors and this drives the DSQ.

• “We can and we will do it” – strong employee self-confidence is important, but must be backed up by a top management team pulling in the same direction and sharing a common understanding of the business model. To give people enough time to focus on important activities, companies must be disciplined in removing work that doesn't add value and that focuses neither on the customer nor on the employees. Many organisations are too lenient over this: there needs to be a constant drive to maximise return on time invested in initiatives. Companies should also consider and influence all the drivers of behaviour – performance measures / rewards, technology, structure, people skills, culture and process, to facilitate work that adds value.

• Change should lead to opportunities. So many organisations recruit good people, train and support them and then offer jobs to external candidates. This makes many employees feel helpless and that they cannot make an impact on problems and issues. A programme aimed at addressing problems with performance can help people to feel empowered and capable of tackling issues.

• A strong sense of “us” in improving performance. Clarity on mission, vision, strategy and values is vital so that all employees understand the basics of an organisation's strategy. Again, this is not possible unless there is a coherent view of strategy at the top. Top management needs to be both distinctive and realistic: distinctive in their strategic choices and realistic in terms of delivery and the culture of the organisation. The business and cultural model has to be enforced. Microsoft, for example, have directors of culture and people who are focused on achieving this.

• A desire to succeed and avoid failure – for many, confronting under-performance feels uncomfortable. Addressing these high-level issues requires multi-disciplinary skills. Management accounting and the advanced management accounting tools that include techniques such as shareholder value management, activity-based management and the balanced scorecard, can help deal with some of the issues raised. But management accounting techniques cannot work alone: it is leadership and the right human resource strategies that will support learning, encourage autonomy and create an environment for success.

Written by Stathis Gould. The writer is head of technical issues at the Chartered Institute of Management Accountants (CIMA), United Kingdom. This article first appeared in Insight – CIMA's online newsletter for accountants in business. Insight is accessible at www.cimaglobal.com/newsletters. For more information, please contact The Chartered Institute of Management Accountants (CIMA), Malaysia at Tel: +603 – 7723 0230 or e-mail: kualalumpur@cimaglobal.com Website: http://www.cimaglobal.com