Relationship between Performance Measurement, Culture, and Change Management - Assignment Example

MSc Total Quality and Performance Management 2006/07 UB: 05016251 Management in Context (MAN4254M) 2006/2007 Word count: (2034) Without references and cover page Table of Contents 1. Introduction Performance measurement 3 Culture 3 Change management 3 Objective of study 4 2. Back ground of Marriott Hotels 4 3. Relationship between performance measurements, culture and change management 4 4. Factors that require performance measure 4 5. Power Culture 5 6. Quality Circle Program 5 7. Conclusion 6 Performance measurement and management results in organizational excellence 8. Performance Measurement system 7 9. Organizational culture and Performance measurement system 7 10. Barriers to measurement of performance 8 11. Managing critical factors 8 12. Conclusion 9 13. Summary 10 14. References 11 Discuss the relationships between performance measurement, organizational culture and change management in a company/organization of your choice demonstrating how performance measurement and management ultimately impacts on the company’s/organizations excellence. Introduction Performance measurement, organizational culture and change management are all measures to enhance the efficiency and performance of an organization. Most organizations experiment with their strategies to improve performance. It is accepted that businesses perform better if they are managed through formalized, balanced and integrated performance measures (Bititci, Mendibil, Nudurupati, Turner & Garengo, 2004). This requires regular monitoring of organizational success and measuring performance. Internationalization and globalization has increased the importance of rethinking of the performance measurement system. Edgar Schein defines culture as a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way you perceive, think, and feel in relation to those problems (cited by Nellen, n.d.). Schein further emphasizes that organizational culture is the key to organizational excellence... and the function of leadership is the creation and management of culture. Culture differentiates one organization from another and provides a sense of identity. Change according to the ancient Greeks was tampering with the basic character of things and was a sure path to disaster. Modern western culture, however, thinks change is a means to bend fate to ones ends (Kanter et al., 1992 cited by Appelbaum et al., 1998). Globalization, internationalization and the challenge to meet international needs have made change a standard business practice to meet long term organizational goals. This paper will discuss the relationship between performance measurement, organizational culture and change management at Marriott Hotels. It will further demonstrate how performance measurement and management ultimately impacts the organizational excellence. Back ground of Marriott Hotels Marriott International has always been known as an employee-oriented family atmosphere organization. As service expectation of the existing customers and potential customers have gone up, and as total quality management (TQM) is a management philosophy based on continuous improvement, Marriott felt the need to consider TQM in their company to be able to deliver quality service and to sustain their image in the competitive market. The philosophy of the founder of Marriott was “Take care of Marriott people and they will take care of Marriott guests” (Cannon, 2002). They were in essence attempting to satisfy both their internal and external customers by the TQM approach. They believe that “Hands-on managers” are absolutely vital to continuing the Marriott culture. The managers need to possess the people skills in being able to support, inspire, encourage, lead and listen to associates. Employees leave the organization or form unions when they are dissatisfied with the management. With the changed business environment, emphasis is now on soft skills like conflict resolution and stress management instead of technicalities. Relationship between performance measurement, culture and change management Marriott decided that quality would be their new culture which would be well integrated into their business plan. Culture has a significant impact on perception, problem-solving and cognition and often leads to differences in satisfaction levels on the same product between global customers. Expectations differ. Levels of literacy differ and so do performance evaluation standards (Pizam & Eliss, 1999). Factors that require performance measure The five different functions at Marriott include finance, people, product and service, sales and marketing, and development (Dodwell & Simmons, 1994). Each of these functions individually and collectively contributes to quality. All the elements had to be integrated into a quality manner so that the jigsaw picture fits easily into a larger picture – that of the outside world. This implies that the strategy for quality had to fit into the demands of the competitive market place. Power culture In line with their employee-oriented philosophy, the middle managers at Marriott were given the responsibility to involve and empower the staff, encourage participation, give them authority to do things they could never think of doing. This according to Handy (1993) is power culture where power in any organization is usually concentrated in a few pairs of hands. Power culture control radiates from the centre like a web and reaches the staff through the rays. The group takes calculated risks and being cohesive, they react promptly to internal or external threats. Power culture did not work well with Marriott and led to the frustration among the middle managers who felt lost and neglected. They were confused about their position in the new structure. The change in management, change in strategy and change in culture adversely affected the performance. The organization then realized that before they could have a bottom-up culture, they needed to have a top-down education and learning process in place. They needed to look back and take stock of what had been achieved, they needed to identify the problem areas, and they needed to rethink their approach, without losing momentum. They needed to measure performance and bring about changes. Quality Circle Program Subsequently Marriott started a quality circle program and appointed a quality support manager. They then selected circle leaders and put them under a two-day training program. A quality circle facilitator for each property was also appointed who was also put under two-day facilitator training course. Marriott thus had 65 circles operating in 11 hotels within three months. This led to high motivation, involvement and participation. In this climate of change, to sustain the change and continue to provide quality service, managing people is most vital. Factors that increase the morale also serve to demoralize and de-motivate when it is absent (Donnelly, 1994). Need for job security and certainty affects the motivation and morale of the employees. An employee needs to be valued both by the employer and the customer. Within six months obstacles started to appear and issues were being raised. The middle management was uncooperative and the managers could not attend hotel meetings due to preoccupation with business. The managers, who could previously tackle the problems on their own, ignored the problems and the attitude was that staff had been empowered to take decisions. The top management at Marriott had assumed that the managers would accept the new idea without even questioning the facts. This amounts to weak culture as there was no alignment with corporate values (Handy). Conclusion The situation at Marriott amply demonstrates how organizational culture and any change can affect the performance of the organization. When they tried to give power to the middle managers, they became frustrated. They could not sustain the change when the quality circle facilitator was appointed. None of the changes could bring about positive results due to weak culture. Their new culture was not well integrated into the business plan. Performance measurement and management results in organizational excellence Performance Measurement system Performance measurement system is a management improvement system as well as a management control system. Shortcomings in the traditional performance measurement systems compelled the organizations to overhaul the existing system to ensure that they reflect organization’s competitive circumstances. Organizations invested large sums of money to design and implementation of new performance measurement systems. Kennerley and Neely (2003) state that despite the time and effort spent on redesigning the system, companies do not manage their measurement systems to ensure that they reflect the organizational context as the context changes. They stick to the old system and as a result are drowning in data. Failure to effectively manage will cause the new measurement system to lose their relevance. Organizational culture and Performance measurement system Bititci et al., contend that organizational cultures and management styles have an impact on how performance measurement systems are implemented and used thus affecting its success or failure. At the same time, performance measurement systems can affect the management styles and to a certain extent the organizational culture. Research suggests that if the performance management system is properly designed, implemented and used, it would result in more dynamic and pro-active management style resulting in enhancement of business performance. Two drivers and four blockers have been identified as the key forces that affect success or failure of performance measurement implementations (Table I). Source: Bititci et al., (2004). Barriers to measurement of performance Another study by Kennerley and Neely demonstrated that each organization had a range of barriers that prevented the evolution of the performance management systems but these barriers can be overcome as the measurement system is underpinned by factors which include people, process, system and culture. These factors enable evolution of the performance measurement system. The performance measurement system should be used to manage business so that the importance of the measures is recognized by the organization and the people. For effective evolution there should be constant reflection on the existing system to identify where it is no longer applicable and accordingly make enhancements and modifications. Individual measures should be able to quantify the efficiency and effectiveness of actions. A supporting infrastructure is also essential so that data can be collected, collated, sorted, analyzed, interpreted and disseminated. There should also be a set of measures to assess the performance of the organization as a whole. The next step is to manage each of these elements. Managing critical factors Corporate culture is a critical factor that supports the use of strategic performance measurement. The culture should be such that supports team-working, ownership and entrepreneurship but at Marriott there was no cohesiveness. The organization had power culture and they realized that the heads of departments had no training themselves and there was a lack of commitment (Dodwell & Simmons). They understood that everyone in the organization had to personally manage and systematically improve their own processes. They adopted the support culture which has participative management and workers enjoy the work (Bititci et al.,). They also respect the values and needs of others. This change provided direction to the management and the knowledge how to proceed. As they begun to identify people in the management team, Marriott realized that they had three types of people and to manage this they required tough TQ education program (Dodwell & Simmons). Finn and Porter (1994) confirm that improving an organization’s effectiveness, efficiency, motivation and responsiveness can be achieved only by the active involvement of people and process improvement. Quality comes from the improvement of company’s work processes. Quality management has to be an on-going never ending process (Kruger, 2001). Communication is the most essential element in interdepartmental relationships. Interpersonal relations in the hospitality industry affect both the internal and external service encounters. The right service culture minimizes the interdepartmental conflicts (Paraskevas, 2001). They have come a long way and Marriott now uses associate opinion survey to monitor how their employees perceive their organization. This organizational climate questionnaire provides the local and corporate management at Marriott with a great deal of useful information (Davidson, 2003). This is now used as one of the benchmarks of management performance. Employees are not separate entities and their well being ultimately is the organizational efficiency. Table II demonstrates how organizational culture leads to enhancement of service quality and ultimately organizational performance. Source: Davidson (2003) Conclusion Marriott then started making progress as a result of measuring their performance and taking action. They communicated the results of the progress to everybody in the hotel. They realized the importance of benchmarking and how to use it which enabled to set targets. Targets helped them to compare themselves with the best in the field and move ahead. Marriott strongly believes that people and specially the middle managers are the most important people in the organization and the culture also lives or dies through them. Summary Performance measurement is critical to the success of an organization because it helps determine the change in attitude or organizational culture that may be necessary to enhance performance and sustain competition. Change is inevitable in the changed scenario. There should be continuous improvement and change in attitude and change in culture with the change in the business environment. The performance measurement system is related to the organizational culture and the change in management. Performance measurement systems have a considerable contribution to the management of performance of organizations. To make this effective, the measurement system should be relevant and constantly update through regular reflection of all the factors. The measurement system should be relevant to the environment and the strategies of the organization. Marriott realized that people, process, system and culture capabilities are necessary to manage a measurement system over time. These capabilities did not exist initially but constant evaluation and measurement did help them to build the capabilities. References: Applebaum, S. H. St-Pierre, N, & Glavas, W. (1998), Strategic organizational change: the role of leadership, learning, motivation and productivity, Management Decision, Vol. 36 No. 5, 1998, pp. 289–301 Bititci, U. M., Mendibil, K., Nudurupati, S., Turner, T., & Garengo, P., (2004), The interplay between performance measurement, organizational culture and management styles, Measuring Business Excellence, Vol. 8 No. 3 pp. 28-41 Cannon, D. F., (2002), Managing Service Quality Volume 12 Number 2 2002 pp. 87-99 Davidson, M. C. G., (2003), Does organizational culture add to service quality in hotels? International Journal of Contemporary Hospitality Management, Volume 15 Nos. 4, 2003, pp. 206-213 Dodwell, S., & Simmons, P., (1994), Trials and Tribulations in the Pursuit of Quality Improvement, International Journal of Contemporary Hospitality Management, Volume 6 Nos. 1/2, 1994, pp. 14-18 Donnelly, M. (1994), Managing People and Quality in a Climate of Change, Managing Service Quality, Vol. 4 No. 4, 1994, pp. 41-44 Finn, M., & Porter, L. J., (1994), The TQM Magazine Volume 6 Number 4 1994 pp. 56-61 Handy C (1993), 07 March 2007 Hope, C. A. & Mühlemann, A. O. (2001), The impact of culture on best practice production/operations management, International Journal of Management Reviews, Vol. 3 No. 3 pp. 199-217 Kennerley, M., & Neely, A., (2003), Measuring Performance in a changing business environment, International Journal of Operation and Production Management, Vol. 23 No. 2 pp.213-229 Kruger, V., (2001), Main schools of TQM: ``the big five, The TQM Magazine Volume 13 . Number 3 . 2001. pp. 146-155 Nellen, T., (n.d.), Organizational Culture & Leadership, 07 March 2007 Paraskevas, A., (2001), Internal Service Encounters in Hotels, International Journal of Contemporary Hospitality Management, 13/6 2001 pp. 285-292 Pizam, A. & Eliss, T. (1999), Customer satisfaction and its measurement in hospitality enterprises, International Journal of Contemporary Hospitality Management, 11/7 [1999] 326-339 References words: 305 Read More