Organizational Performance Management

Written by Carter McNamara, MBA, PhD, Authenticity Consulting, LLC. Copyright 1997-2008.

We're used to thinking of ongoing performance management for employees, for example, setting goals, monitoring the employee's achievement of those goals, sharing feedback with the employee, evaluating the employee's performance, rewarding performance or firing the employee. Performance management applies to organizations, too, and includes recurring activities to establish organizational goals, monitor progress toward the goals, and make adjustments to achieve those goals more effectively and efficiently. Those recurring activities are much of what leaders and managers inherently do in their organizations -- some do them far better than others.

Sections of This Topic Include:

Suggested Previous Readings

Organizational Assessments (done regularly to measure performance of organizations)
- - - Organizational Assessments (For-Profit)
- - - Organizational Assessments (Nonprofit)

Diagnostic Models (used to analyze results of assessments)

Examples of Organizational Performance Management Systems

Organizational Change and Development Projects to Address Performance Priorities

---

Suggested Previous Reading

Performance Management: An Overview (basic concepts in performance management)
Introduction to Organizations (defines organizations, their basic parts, dimensions, life cycles, etc.)
Clearning Up the Language Regarding Organizational Change and Development

Organizational Assessments

When seeking to improve the performance of an organization, it's very helpful to regularly conduct assessments of the current performance of the organization. Assessments might be planned, systematic and explicit (these often are the best kinds of assessments) or unplanned and implicit. Well-done assessments typically use tools, such as omprehensive questionnaires, SWOT analyses, diagnostic models (we often use these models without recognizing or referring to them as such), etc., along with comparison of results to various "best practices" or industry standards. The following tools might be useful to you.

Organizational Assessments (For-Profits)

Selecting from Among Publicly Available Assesments

Click here for an online tool that includes suggested "best practices" against which to compare results of your assessment.
Organizational Surveys (what they are, their philosophy, history, etc.)
Exploring the Conscious and Unconscious of Your Organization
Is Your Organization a Participatory One?
Organizational Health Survey
Founder's Syndrome -- How Organizations Suffer -- and Can Recover

The following links are to additional assessments, and include information about what should really be measured -- performance.
NZIM MANAGEMENT CAPABILITY INDEX - 2003
Management Standards Centre
NZIM Future Indicators -- Research Starts on Next Capability Index
Management Capability -- What It Really Means
A Study of New Zealand Business Practices and Performance
The Balanced Scorecard and the Small Business
A Framework - Management of Competencies, Skills, and Standards for Small Business Owner/Operator/Entrepreneur
Small Business Owner/Operator Competency Guidelines

Organizational Assessments (Nonprofits)

Selecting from Among Publicly Available Assessments

1. United Way Management Indicators List
   (This is a comprehensive, behaviors-based tool that also includes a suggested "best-practices" standard, as well.)
   Go to http://www.managementhelp.org/org_eval/uw_list.htm
   (There are online, modified versions of this tool available here.)
2. Drucker Five-Question Self-Assessment Tool
   (Guru, Peter Drucker, suggests five, overall, primary questions that must be answered about any organization. There is a detailed workbook that can be bought in order to guide the reader to answer the questions. For now, you might consider the five key questions.)
3. McKinsey Capacity Assessment Grid
   (This is a very comprehensive grid that suggests 7 elements, each with descriptions of four possible levels of performance for each element.)
4. Minnesota Council of Nonprofits "Principles and Practices"
   (This is widely recognize, comprehensive, principles-based assessment tool that suggests principles for effectiveness in many of the major functions in nonprofits.)
5. Maryland Association of Nonprofit Organizations "Standards of Excellence"
   (This is a widely recognized, principles-based assessment tool that suggests principles for effectiveness in many of the major functions in nonprofits.)
6. Understanding Organizational Success: Self-Assessment Tool for Nonprofit Organizations
   (This is a comprehensive, well-designed, tool that nonprofits can use to assess their organizations. Includes directions to apply and analyze the tool.)
7. Assessment for Start-Up Organizations
   From LaPiana Associates, this
8. Fieldstone's Nonprofit Life-Stage Assessment
   (Includes descriptions of the various life cycles of nonprofits, and associates recommendations ("best practices"?) to address each)

Also see:

Capacity Building (nonprofits)
Outcomes-Based Evaluation
Program Evaluation
Designing Assessment and Evaluation Tools
One Organizational Diagnostic Model (depicts system and subsystems, and which causes issues in others)

SWOT Analysis (looking at strengths, weaknesses, opportunities and threats)

Looking at Strength's, Weaknesses, Opportunities and Threats (SWOT)

Organizational Diagnostic Models

Once you've conducted assessments of your organization, whether explicitly or implicitly, it helps to have some basis by which to analyze the results. Diagnostic models can provide that basis. There are differing opinions about diagnostic models. Some people suggest that these models should come without bias or suggested solutions, and should be used to accomplish an objective, unfolding understanding of organizations. Others believe that models should suggest:
1. What types of practices should be occurring in the organization.
2. The order in which those practices should be occurring.
3. Standards of performance for various domains, such as individual positions, teams, projects, processes, functions, programs and the organization.
Thus, a diagnostic model can be useful in an organizational change effort to:
1. Analyze results of data collection.
2. Identify issues that should be addressed by the organizational change effort.
3. Suggest what actions should be taken to address the issues.
4. Evaluate the success of the organizational change effort.
There are numerous organizational diagnostic models available, depending on one's beliefs on what the roles of the models should be. Below are two examples. (NOTE: Many of the systems mentioned later on below can be used as diagnostic tools.)
A Diagnostic Model for For-Profit Organizations
A Diagnostic Model for Nonprofit Organizations

Maximum Performance -- Different Things to Different People

Examples of Organizational Performance Management Systems

There are numerous, major methods and movements to regularly increase the performance of organizations. Each includes regular recurring activities to establish organizational goals, monitor progress toward the goals, and make adjustments to achieve those goals more effectively and efficiently. Typically, these become integrated into the overall recurring management systems in the organization (as opposed to being used primarily in one-time projects for change -- see Organizational Change and Development to Improve Performance later on below).

Any or all of the following approaches will improve organizational performance depending on if they are implemented comprehensively and remain focused on organizational results. Some of the following, e.g., organizational learning and knowledge management, might be interpreted more as movements than organization performance strategies because there are wide interpretations of the concepts, not all of which include focusing on achieving top-level organizational results. However, if these two concepts are instilled across the organization and focus on organizational results, they contribute strongly to organizational performance. On the other hand, the Balanced Scorecard, which is deliberately designed to be comprehensive and focused on organizational results, will not improve performance if not implemented from a strong design.

The following descriptions are general and brief. Follow the link to get more information about each of the approaches.

NOTE: There certainly are other approaches than those listed below for a planned, comprehensive approach to increasing organizational performance. It may very well be that the vast majority of approaches used in organizations are highly customized to the nature of the organizations, and therefore not publicized or formalized in management literature.

Balanced Scorecard: Focuses on four indicators, including customer perspective, internal-business processes, learning and growth and financials, to monitor progress toward organization's strategic goals

Benchmarking: Using standard measurements in a service or industry for comparison to other organizations in order to gain perspective on organizational performance. For example, there are emerging standard benchmarks for universities, hospitals, etc. In and of itself, this is not an overall comprehensive process assured to improve performance, rather the results from benchmark comparisons can be used in more overall processes. Benchmarking is often perceived as a quality initiative.

Business Process Reengineering: Aims to increase performance by radically re-designing the organization's structures and processes, including by starting over from the ground up.

Continuous Improvement: Focuses on improving customer satisfaction through continuous and incremental improvements to processes, including by removing unnecessary activities and variations. Continuous improvement is often perceived as a quality initiative.

Cultural Change: Cultural change is a form of organizational transformation, that is, radical and fundamental form of change. Cultural change involves changing the basic values, norms, beliefs, etc., among members of the organization.

ISO9000: Is an internationally recognized standard of quality, and includes guidelines to accomplish the ISO9000 standard. Organizations can be optionally audited to earn ISO9000 certification. Another major quality standard is the Baldridge Award. ISO9000 is a quality initiative.

Knowledge Management: Focuses on collection and management of critical knowledge in an organization to increase its capacity for achieving results. Knowledge management often includes extensive use of computer technology. In and of itself, this is not an overall comprehensive process assured to improve performance. Its effectiveness toward reaching overall results for the organization depends on how well the enhanced, critical knowledge is applied in the organization.

Learning Organization: Focuses on enhancing organizations systems (including people) to increase an organization's capacity for performance. Includes extensive use of principles of systems theory. In and of itself, this is not an overall comprehensive process assured to improve performance. Its effectiveness toward reaching overall results for the organization depends on how well the enhanced ability to learn is applied in the organization.

Management by Objectives (MBO): Aims to align goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identifying their objectives, time lines for completion, etc. Includes ongoing tracking and feedback in process to reach objectives. MBO's are often perceived as a form of planning.

Outcome-Based Evaluation (particularly for nonprofits): Outcomes-based evaluation is increasingly used, particulary by nonprofit organizations, to assess the impact of their services and products on their target communities. The process includes identifying preferred outcomes to accomplish with a certain target market, associate indicators as measures for each of those outcomes and then carry out the measures to assess the extent of outcomes reached.

Program Evaluation: Program evaluation is used for a wide variety of applications, e.g., to increase efficiencies of program processes and thereby cut costs, to assess if program goals were reached or not, to quality programs for accreditation, etc.

Strategic Planning: Organization-wide process to identify strategic direction, including vision, mission, values and overall goals. Direction is pursued by implementing associated action plans, including multi-level goals, objectives, time lines and responsibilities. Strategic planning is, of course, a form of planning.

Total Quality Management (TQM): Set of management practices throughout the organization to ensure the organization consistently meets or exceeds customer requirements. Strong focus on process measurement and controls as means of continuous improvement. TQM is a quality initiative.

NOTE: There are various other approaches that, if used comprehensively with strong focus on achieving organizational results, can be used to increase organizational performance, e.g., Statistical Process Control, Quality Circles, best practices, etc.

Organizational Change and Development Projects to Address Performance Priorities

This Library topic of organizational performance management gives you a concise overview of the approaches used by leaders and managers to regularly improve the performance of organizations. However, if you want to learn about the approaches used in one-time projects to address issues in organizations, including by accomplishing significant and successfull change in organizations, see the following topic:
Organizational Change and Development

---

---

For the Category of Organizational Development:

Related Library Topics

Recommended Books

Managing Organizational Change

Growing Your Organization

---

Managing Organizational Change

The following books are recommended because of their highly practical nature and often because they include a wide range of information about this Library topic. To get more information about each book, just hover your cursor over the image of the book. A "bubble" of information will be displayed. You can click on the title of the book in that bubble to get more information, too.

---

Growing Your Organization

The following books are recommended because of their highly practical nature and often because they include a wide range of information about this Library topic. To get more information about each book, just hover your cursor over the image of the book. A "bubble" of information will be displayed. You can click on the title of the book in that bubble to get more information, too.

---

Also See

Capacity Building (Nonprofit) -- Recommended Books

---