Managing Business Performance: The Science and The Art

PRAISE FOR MANAGING BUSINESS PERFORMANCE

"This is a great book for anyone focused on improving performance within an organisation. Whilst some publications appear complex and difficult to apply, Umit shares his work with a beautiful simplicity, making the content easy to understand and readily applicable. The whole book is orientated towards helping people understand their organisation better, develop insights around what to focus on, and providing some tools and approaches to help manage performance. His concept of developing capabilities within people who operate processes to raise performance is relevant to all the businesses that I have worked for."
Ian Laird, Managing Director, Moorebrook Textiles, UK

"At last a management book that describes the equal role, and necessary balance, of robust processes and an open culture in the success of a modern business. The material is made accessible thanks to Umit′s easy writing style and use of anecdotes from his own extensive experience working with high performance organisations. I′d say Managing Business Performance is essential reading for anyone in a management role trying to embed a culture of continuous improvement in a team or company."
Gilad Tiefenbrun, Managing Director, Linn Products Limited, UK

"This book is a must read for management consultants or business advisors. It helps the reader understand that social controls are just as important as the more traditional technical controls. Its insights along with real experiences makes it an easy read for anyone interested in continuous improvement. The book doesn′t just lay out the background to performance management but also provides a practical approach to implementation."
William Cahill, Project Management and Supply Chain Consultant, Ireland.

"This book offers a pragmatic insight for leaders in industry who wish to make change happen in their organisations. In an engaging way it leads the reader through a logical process to help managers and managed get to grips with the human side of improving performance in their business. By acknowledging people are at the heart of the organisation it links performance measures with performance management in a way that potentially removes many of the barriers business bureaucracy can put in the way of success. Well worth a read if you want to make a change in your business."
Helen Mackenzie, Six Sigma Champion, DuPont Teijin Films, UK.

"Umit′s book is an extremely useful consolidation of what produces better performance and it also captures the absolute necessity to maintain a principled balance and fairness in the workplace that genuinely respects all those involved and takes an ethical and humane approach to internal and external dealings. As such it has much to say to those in the Public Sector and much to say in support of John Seddon′s Vanguard approach that is transforming the performance and the customer–outcomes of those delivering services in the public, private and voluntary sectors."
Jim Mather, Former Scottish Government Minister and Chairman of Homes for Scotland.

Preface xiii

Acknowledgements xv

About the Author xix

PART ONE Introduction

CHAPTER 1 Prologue 3

1.1 Background to this book 4

1.2 Motivation and principles 10

1.3 Who is this book for? 11

1.4 Structure of the book 12

References 13

CHAPTER 2 A Short History of Performance Measurement and Management 15

2.1 Beginnings 16

2.2 Performance measurement revolution 19

2.3 Performance measurement from different perspectives 24

2.4 Performance management 26

2.5 Balancing the science with the art 27

2.6 Future challenges 29

References 33

PART TWO The Science

CHAPTER 3 What Are We Managing? 37

3.1 Everyone has a different view 38

3.2 How do companies compete? 42

3.3 Value streams focused business units that create value 46

3.4 Business processes the universal building blocks 53

3.5 Managerial processes thinking about the future 57

3.6 Support processes serving to create value 58

3.7 Anatomy of an organisation the universal competitive structure 59

3.8 Summary 60

References 62

CHAPTER 4 Understanding and Managing Business Processes 63

4.1 Purpose and flow 64

4.2 What flows through the process? 66

4.3 Anatomy of a process 67

4.4 Understanding what affects flow 68

4.5 Measuring process performance 72

4.6 Summary 76

Reference 78

CHAPTER 5 Measuring Performance 79

5.1 Do we need measures? 80

5.2 Developing a performance measurement system 82

5.3 Communicating with measures 82

5.4 Scorecards, cockpits, dashboards and war–rooms 91

5.5 Creating effective visual performance measurement and management systems 101

5.6 Reviewing performance 108

5.7 Summary 110

Reference 112

CHAPTER 6 Summary: The Science of Managing Business Performance 113

PART THREE The Art

CHAPTER 7 Drivers of Performance 119

7.1 Measures of business performance 120

7.2 Managing performance for the short–term (up to 2 years) 121

7.3 Managing performance for the medium–term (2 to 5 years) 124

7.4 Managing performance for the long–term (5+ years) 129

7.5 Summary 131

References 131

CHAPTER 8 Capabilities, Culture and Performance 133

8.1 Understanding organisational capabilities 135

8.2 How do organisational capabilities develop? 137

8.3 Learning to learn 139

8.4 Managing organisational capabilities and culture 145

8.5 Summary 149

Reference 150

CHAPTER 9 The People Component 151

9.1 What kind of organisation would you like to work in? 153

9.2 The people component 155

9.3 What motivates people? 156

9.4 What needs to change? 160

9.5 Summary 166

References 166

CHAPTER 10 Balancing Organisational Controls 169

10.1 What is the right balance? 170

10.2 What happens when we get the balance wrong? 172

10.3 Understanding the interplay between performance measurement and performance management 180

10.4 Balancing organisational controls: Do s and don ts 186

10.5 Summary 190

References 190

CHAPTER 11 Summary: The Art of Managing Business Performance 191

PART FOUR Effective Interventions

CHAPTER 12 Designing Effective Interventions 197

12.1 A systems approach 198

12.2 The organisation as a system 200

12.3 Who will decide what needs to change and how? 203

12.4 Technical vs. social intervention 205

12.5 What to change? 209

12.6 Finding the trim–tab 213

12.7 Summary 218

References 220

CHAPTER 13 Delivering Effective Interventions 221

13.1 Balancing short–term results with drivers of long–term sustainable performance 222

13.2 Planning and monitoring interventions 227

13.3 Joined–up thinking 230

13.4 Milestones: One big step at a time 232

13.5 Making improvement part of the day job 232

13.6 Summary 235

References 236

CHAPTER 14 Epilogue 237

14.1 It s all about balance and harmony 238

14.2 Learning the right balance 239

14.3 Where do we start? 240

Reference 240

CHAPTER 15 The Book in a Nutshell 241

15.1 Part One Introduction 242

15.2 Part Two The Science 242

15.3 Part Three The Art 244

15.4 Part Four Effective Interventions 246

15.5 Conclusions 249

APPENDICES

APPENDIX A Overview of Popular Performance Measurement Models and Frameworks 253

A.1 DuPont model 254

A.2 The Performance Measurement Matrix (PMM) 254

A.3 The Performance Measurement Questionnaire (PMQ) 255

A.4 The Results and Determinants Framework 255

A.5 The Strategic Measurement Analysis and Reporting Technique (SMART) 256

A.6 The Cambridge Performance Measurement Design Process 257

A.7 The Pyramid of Organisational Development 258

A.8 Integrated Performance Measurement System (IPMS) reference model 258

A.9 The Business Excellence model of the European Foundation for Quality Management (EFQM) 259

A.10 The Performance Prism 261

References 262

APPENDIX B Common Performance Measures 263

B.1 Financially focused measures 264

B.2 Customer–focused measures 264

B.3 Internal process–focused measures 265

B.4 Learning and growth–focused measures 267

B.5 Advanced Performance Institute and Bernard Marr s 25 measures that every manager should know 268

B.6 Oliver Wight International and the ABCD checklist for business excellence 269

B.7 Supply Chain Operations Reference (SCOR) model 270

References 271

Index 273

UMIT S. BITITCI is the Professor of Business Performance at Heriot Watt University, Edinburgh, Scotland. Previously he was the Director of Strathclyde Institute for Operations Management and the Professor of Technology and Enterprise Management at the University of Strathclyde in Glasgow. He is also a member of the Scottish Manufacturing Advisory Board.