The College of Business

Performance Management Landscape

A Need for Greater Academic Leadership

Dr. Curt W. Reimann

The last 20 years or so have brought major changes in organizational and performance management, as organizations have sought to gain or hold advantage in the face of increasingly tough competition. Numerous concepts, tools, techniques, management systems and structures have emerged to help organizations to perform better. For example, reengineering, total quality management, ISO 9000, six sigma, learning organizations, lean manufacturing, outsourcing, virtual organizations, and organizational flattening have come into wide use, mostly in business, but in other organizations as well. I will refer to these performance management approaches— for brevity, as performance initiatives. Often, these initiatives gain wide acceptance and spread rapidly—achieving what some call “fad” status. Usually, the results of these initiatives are mixed—some companies enjoy great success, while others experience no gain commensurate with the financial and emotional investments they make.

The rapid spread of performance initiatives often creates several problems:

  1. consultants “climb on the bandwagon” of “hot” initiatives, even though their personal expertise may be in other areas. Less experienced consultants often approach firms with a “tool” orientation, defining or “seeing” the firm’s needs in terms of the tools they know;
  2. numerous hybrid initiatives emerge, confusing initiative focus and brand identities, often with the implication that “one size fits all”;
  3. adopting companies perceive potential benefit, but do not know, or lose sight of, their true priority needs; and
  4. even when an initiative does address a company’s main needs, the rush to adoption, coupled with unrealistic expectations, may lead to poor deployment, misapplication, or premature abandonment.

Numerous articles and books have appeared highlighting problems with management fads. Justifiably, many business leaders have become skeptical and confused with the choices and conflicting claims and have grown wary of the initiatives marketplace. With little time and resources to investigate alternatives, many business leaders tend to “tune out” the mixed messages. Critics of business leadership argue that many business executives are gullible and adopt fads and strategies without data, analysis, or basic understanding of their overall business needs and/or status. For example, business performance assessments and comprehensive measurement systems are still not common, despite tough competitive pressures that demand high performance. Nevertheless, initiatives often rely upon both measurement and assessment for companies which have little or no previous experience with either. [In our Spring 1998 Mayberry Newsletter, we emphasized the need “to develop the capability to perform integrated, strategy-based assessments and analysis of overall performance.”]

The phenomenon described above—performance initiatives and related fads—is largely practitioner-driven. That is, it occurs mainly in business and is fueled heavily by business consultants. Business schools, for the most part, have not been central players. Why is this so? I suggest several factors here:

  1. the pace of marketplace development and adoption of initiatives is fast compared with curricular, textbook, and case study development and revision;
  2. initiatives tend not to fit a single course offering or match the expertise of individual faculty;
  3. claims, counterclaims, and brand name variants and combinations make it hard to “make sense” out of what is happening; and
  4. initiative success depends upon properly integrating technical/quantitative skills, human/qualitative skills, and systems thinking, posing problems of scope, definition, and complexity for academic use.

These factors (and perhaps others) present serious challenges for both teaching and research.

Some argue that business schools should not play much of a role in the performance initiative arena, especially not for their mainstream student offerings. Others argue that business schools are perhaps the only broadly-based community of wide influence that has the independence, balance, and rigor to provide the scholarship that is needed to interpret what is happening in the “real” marketplace.

Those who do see a larger role for business schools face daunting challenges. Among these are:

  1. inserting performance management into an already crowded curriculum;
  2. shaping offerings to address business behaviors where the basic educational discipline is not well-defined, still immature, and changing rapidly; and
  3. inclusion might occur in many ways—for example, via new courses and case studies or via integration into one or more existing courses.

Whatever the choice, one further problem arises here: coverage early in students’ business education would likely do little good—broad perspective is needed before the business concepts, contexts, and competitive requirements are understood, building on students’ earlier exposure to the basic business disciplines. It appears, then, that the need would have to be addressed via capstone courses, experiences, or projects. Even here, such new offerings would compete with other critical capstone requirements, such as strategy and business policy.

My own view is that, despite formidable obstacles, all sectors of the economy and business schools themselves would benefit from much greater business school involvement in the performance management arena. The marketplace, disorderly though it might be, has already produced some enormous gains in performance in a wide range of organizations which have successfully used initiatives of the types mentioned above. Such gains were measured using meaningful performance indicators—quality, productivity, response time, cash flow, safety, waste, and cost savings, for example. There are great benefits to the U.S. economy not only through the direct gains of performance leaders but also through the diffusion of their successful practices. However, as beneficial and rapid as such diffusion might now appear compared with the 1980’s, the pace needs to further accelerate. This is because the gaps between the performance of the relatively small number of high performance firms and the large number of typical firms is wider than ever. This means that even some excellently performing firms are held back by the much weaker performance of their supply chains, at a time when supply chains are becoming much more important. Moreover, organizations in other sectors of the economy—health, education, government, and non-profits, for example—for the most part, lag the leading firms. A major implication for business schools is that these “non-business” organizations, which employ significant numbers of business graduates, are in the early stages of a slow transition toward greater understanding and use of performance initiatives and business management models to achieve their mission goals. Increasingly, they need to understand and to focus better on beneficial outcomes and impacts which they must link to practices via a measurement system that enables assessment and charting of improvement trends.

The Malcolm Baldrige National Quality Award and related state awards are helping to accelerate the pace of diffusion of performance initiatives and sharing of practices by thousands of performance leaders. Perhaps more important, through their creation and use of non-prescriptive frameworks, which accommodate to all organizational types and performance initiatives, these awards are also helping to promote better initiative selection and focus as well on multiple-initiative integration. Using a balanced composite of strategy-specific results indicators, these frameworks maintain a “neutral” position with respect to “name” initiatives and tools. Also, these awards are advancing the state of the art and use of assessment and integrated measurement systems—key building blocks in almost any performance management concept. Finally, these awards have led to a new type of case study, covering a wide array of organizations, large and small, and addressing all key aspects of management practices.

Texts incorporating award frameworks and case studies are now available to enrich academic offerings. These developments represent a promising starting platform for business schools to improve and extend the intellectual foundations of performance management and to create new research and modified offerings. Such work would not only further accelerate the pace of performance improvement among the millions of organizations in the U.S., but also would strengthen the focus and relevance of business education.

There are those who argue that when the initiative marketplace matures and settles, clearer educational direction and an accepted discipline will emerge which will then be included in mainstream business education. However, much of the maturing that needs to take place is unlikely to occur rapidly in the practitioner marketplace, despite the fact that this marketplace is a vast and rich “learning laboratory.” Business schools need to move more aggressively toward “action learning”—being key players in helping to shape the performance management discipline as it is unfolding and to promote its more effective exploitation.