Operation Management: Challenges in Performance Improvement - Research Paper Example

?Operations Management Organisational performance and sustenance is closely related to continuous performance improvement; performance improvement isthus one of the core functions and focus of management. However, brining about performance improvement has its own challenges. A variety of practices, programs and approaches have been developed by various people and companies in order to achieve performance improvement at various levels and in different sectors. Some of the most successful and widely used practices include the Total Quality Management (TQM), Lean, Six Sigma methodology, the Balanced Score Card etc. The root to performance management lies in its measurement (Halachmi, 2002). All the practices identify different ways to measure performance. However, these methods are specific to situations and their applicability strongly depends upon objectives. Effectiveness of their applicability also depends upon the nature of challenges or hindrances. This paper identifies some of these barriers to performance improvement initiatives, and identifies possible resolutions based on some proven evidences. Performance improvement is driven by various initiatives that focus on achieving certain level of outcomes of productivity and quality; or eliminate certain unwanted aspects of work activities; or implement appropriate performance measurement methods. Performance measurement is a useful tool in achieving desired results at every level in an organisation (Harbour, 1997). However, considering the current changing circumstances, performance measurement becomes extremely complex and unreliable, mainly because of unclear objectives. Moreover, translating human desires and interactions into measurements is irrational and sometimes impractical (McNamara, n.d). McNamara’s (n.d) viewpoint considers performance measurement as merely accomplishment of desired targets in terms of numbers and no work behaviour. This is a dysfunction of performance measurement, which needs to be considered while implementing any performance management initiative. Thus, ignoring human behaviour itself can become a barrier to achieving desired performance improvement, because implementation of performance improvement initiatives largely depends upon their motivation and attitude. Ignoring human behaviour would mean not recognizing the efforts of employees, which will affect motivation and commitment. Employee motivation towards performance improvement can also be affected by workload, stress, low pay, and work environment (Kim, 2005). Secondly, in an organisation or business, there will be multiple stakeholders, and the business outcomes are also results of all stakeholders’ efforts in some way or other, most important being employees, management team, and other business partners like suppliers, vendors etc. Therefore, it becomes important that all stakeholders provide required levels of commitment towards performance improvement (LaBonte, 2001); secondly, specific knowledge and skills would be required for implementing performance improvement initiatives (Nave,2002); thirdly, organisational practices can cause significant hindrance when implementing performance improvement initiatives (Micheli & Pavlov, 2008). Employee resistance to change is a well-known phenomenon in organisations (Geoff, 2001). This aspect can be handled only with effective leadership and change management approach (Aladwani, 2001). Resistance could be the result of lack of awareness, skills and knowledge, misunderstanding and misinterpretation, lack of communication, and unclear goals. For instance, using analytics for gaining competitive advantage requires relevant knowledge and expertise, management support, data-oriented culture, tools and technology (Kiron & Shockley, 2011). Employee motivation is another crucial factor for performance improvement, and also in implementing performance improvement initiatives. And, employee motivation towards performance improvement can be enhanced through effective leadership and guidance, rewards and appreciation, effective and timely feedback, remuneration and pay, job satisfaction, learning and development (Daft & Marcic, 2006). Continuous performance improvement is a derivative of strong performance management system, and involves the process of linking organisational goals to expected outcomes that are influenced by external and internal factors (Wilton, 2010). Micheli and Pavlov (2008) assert that performance culture is essential to promote performance measurement, which in turn requires accurate data, sophisticated statistics, and shared understanding. Effective communication between employees, customers and other stakeholders is a crucial requirement to achieve high performance (Amaratunga & Baldry, 2002). From performance management perspective, effective communication entails role and goal clarity for every employee, which are extremely important in order to achieve desired level of performance as well as desired improvement. Moreover, every function/department should have clear goals that can be measured for effectiveness and efficiency of the outcomes produced by employees. Implementing any performance improvement initiative also requires effective communication between the leadership team and workforce for accomplishing various tasks such as clarifying goals, coaching/training, monitoring and feedback, as well as rewarding. Lack of communication in any of these tasks can hinder the improvement process significantly. Lastly, lack of communication can become the toughest barrier to implementation of performance improvement initiatives. Inaccessibility to data and information not only hinders work but can also lead to incorrect approaches and wrong results. Besides communicating goals and objectives, constant feedback and guidance are also required for performance improvement. Information and data required for performing different work-related activities should be accessible by all relevant employees. Performance improvement initiatives require specific knowledge and skills besides commitment and attitude. These knowledge and skills need to be instilled through effective training and mentoring. Assigning measurable performance metrics to all objectives is a challenge because these objectives should be appropriately translated to measurable activities and key performance indices must be assigned (Hatry, 2006). The barriers to effective performance improvement can also be overcome by adopting specific approaches and practices. Considering Hatry’s point that performance improvement requires effective performance metrics, Kaplan and Norton’s (1992) balanced score card system provides a strong framework that highlights four important perspectives: customer, internal, innovation and learning, and financial perspectives. This system proposes that each and every objective needs to be measured from these four perspectives to truly assess the effectiveness of a function/department. Balanced score card system facilitates in delivering continuous and measurable improvement in the performance or outcomes. This system adds value, or rather decides the value added by each function within an organisation in comparison with the goals and objectives of the respective functions. This system not only communicates goals but also identifies critical aspects such as costs and profits with respect to agreed targets. The best known example of employing the BSC is by General Electric, which used this system to measure performance of its decentralized units based on one financial and seven nonfinancial metrics, instead of four perspectives (Kaplan, 2010). McClelland (1995) asserted that most of the initiatives require greater employee involvement and empowerment in order to be successfully implemented. Here, organisational culture, leadership and HRM practices that are not conducive with performance management can act as barriers to achieving desired performance outcomes. General Electric is also known for its adoption of six sigma and lean systems to improve performance (Devane, 2004). Nave (2002) explains that Six Sigma involves five-step process that focuses on reducing variation in activities/outcomes; steps include Define, Measure, Analyse, Improve and Control (in short, DMAIC). However, costs involved in implementation to bring about continuous improvement cannot be ignored (Nave, 2002). On the other hand, lean systems adopt various tools and techniques to identify activities that are of less/no value and to eliminate them in order to save time, costs, labour, and resources. Nave (2002) argues that while these methodologies are used for specific process improvements, they do not consider various other management elements, and thus cannot guarantee a continuous performance improvement. Yet, these methods have been driving process improvements successfully. These approaches require involvement and commitment of all employees, and empowerment of employees to make critical decisions can add to their motivation and commitment. Moreover, these practices require high levels of knowledge and skills related to statistical data and approaches, quality evaluation, and technical expertise to some extent. Moreover, these practices can foster strong team work and interpersonal relationship through effective leadership. In summation, efforts to bring about performance improvement can be ineffective if performance measurement approaches are inappropriate. Most importantly, goals need to be translated in measurable objectives and monitored regularly. Performance measurement method if inappropriate can have negative consequences on outcomes. Right guidance and effective feedback are also crucial for achieving desired outcomes. Secondly, commitment, skills and expertise are crucial for performance improvement. Thirdly, employee resistance is another barrier to implementing performance improvement initiatives, which can be overcome by educating employees about the need for change; creating involvement; and by equipping them with necessary skills and expertise. For performance improvement initiatives to be successful, favourable organisational culture that encourages learning, involvement, leadership, and empowerment would be required. Communication is the most critical factor that can promote or hinder performance improvement. Dividing organisational goals into individual objectives is crucial for achieving desired performance, which can be accomplished using the balanced score card system. Other initiatives to improve performance include implementing lean and six sigma methodologies, both of which use specific tools and techniques to improve productivity and quality and/or reduce time, wastage, and thereby improve profits. 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