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Management

A concise introduction

by Richard Pettinger

Chapter 15

Organisational and managerial performance are critical issues. You have to be able to assess and evaluate performance using multiple and often complex criteria. You have to be able to look at performance in terms of
  • overall aims and objectives
  • specific and individual aims and objectives
  • what you set out to achieve overall and whether or not this was feasible and reasonable in the circumstances
  • what else was achieved and what happened as a by-product of your original aims and intentions
  • what was not achieved
  • the full context of everything that was planned and the context of the aims and objectives set.
You have to be able to give reasons and a full justification for all of this. You have then to be able to relate it all to each aspect of the organisation: finance; product and service performance; HR performance; marketing activities; and organisation development and progress overall. You have to be able to relate all of then in turn then to: timescales for evaluation; any milestones and critical positions along the way; and any problems and issues that arise along the way.

You have to have formal means and methods of performance management and appraisal (see also the HR chapter), so that people get clearly identifiable statements of performance, and clear and official statements of what is going well and why, and what is going badly and why. This is then reinforced through continuous discussions of performance which need to take place as a part of daily organisational life.

You should finally note here that because this is so complex and involved, there is a huge human pressure simply to look at the company or organisation annual report and let the figures speak for themselves (it is less trouble than doing the job properly; and it is easier for everyone to understand – even if it is fundamentally wrong).

Additional readings

Key readings here are:
  • R Kaplan and D Norton (1998) The Balanced Scorecard – Harvard
  • R Pettinger (2002) Measuring Business and Managerial Performance – Pearson
  • T Leahy (2011) Management in 10 Words – Random House
All of these sources emphasise the crucial need to take a multiple approach to managing and evaluating performance. They all come from very different perspectives: Terry Leahy is an expert and highly successful practitioner, Richard Pettinger is an adviser and performance analysts, and Kaplan and Norton have produced a substantial evaluation based on evaluating a great range of companies and their managers.

Case studies and examples

Comment on the performance of the following. From what points of view are each successful; failing/failures; by what measures should you be assessing the performance of each; and what improvements are you wanting to see and by when?

Polar Kitchens Ltd, a manufacturer and distributor of kitchen units and appliances,  had a string of customer complaints from people who had purchased the kitchen units that they supplied. The doors of the units kept falling off. The company attitude immediately was:
  • how many complaints;
  • would they get sued if they did nothing about them;
  • what about bad press?
Virgin produced a top quality cola drink with which it hoped to rival Coca Cola and Pepsi. Virgin Cola came out best in blind product testing. Without knowing who had made it, and tested against Pepsi, Coca Cola and supermarket brands, Virgin Cola was rated the highest for taste by those involved in the blind tasting process. Accordingly, the Virgin group announced a major move into cola products. The venture failed however.

HSBC In line with many other banks and finance companies, HSBC outsourced many of its technology and customer service functions to specialist companies, based in Ireland, India and Poland. The move led to a universal downturn in the company’s customer service ratings. When asked to justify why they had done it, HSBC stated that it reduced costs. Subsequent research and analysis showed that in fact costs had risen sharply. HSBC nevertheless persisted (and persist) with this approach.

Ford motors introduced the Zetec range of cars in 1999. It was a brand new design and a pioneer in mid-range car production and delivery. Very quickly it became clear however that there were problems with the tyres. The wheels were a brand new and unique dimension also, and so Ford had had to commission new tyres. They went to an unknown high volume supplier of cheap tyres. It then became clear that the tyres could not support extensive usage by the vehicle, and that in particular they blew out when used for extended periods of long distance travel and motoring. The question arose: how to manage the performance of a popular new model without destroying confidence and reputation?

The Shard is the tallest building in London. It has office facilities and is located at a convenient and increasingly prestigious address near London Bridge near the riverside in central London. It also has a viewers’ gallery at its pinnacle, for which it charges £20 per visit.

Discussion questions

Why do managers and many others simply use finances as their main means of measuring performance? What are the consequences of this and why?

How would you measure the performance of:
  • Manchester United FC
  • Walsall FC
  • NASA
  • Virgin Atlantic
  • Apple
on a daily, weekly, monthly and annual basis? What measures are you going to use and why? Who is going to apply them and why? Which of these measures is the most influential and why?

Why do so many people who are bullies get moved on within large organisations rather than dismissed? What does this say about corporate attitudes to performance?

The singer Mariah Carey lost her contract with Sony/Columbia records because one of her albums only sold 33 million copies. What does this say about the approach to performance assessment of both Mariah Carey and Sony/Columbia?

Web links to other examples, materials and sources

There is an excellent range of material available on the balanced scorecard website, which was established by Kaplan and Norton after the publication of their work as above. This is at
www.balancedscorecard.com

Additionally, you should also look at how companies and organisations measure their own efforts in terms of how they write things up in their annual reports.

You can also look at websites like Opta
www.opta.com
Opta is a sports statistics website which gives data and statistics on players, teams, clubs and national sides in a variety of games, including football, cricket, rugby and tennis. The purpose of getting you to look at this (whether or not you are interested in sport), is to show you the vast amount of data that can quite easily be gathered and analysed in order to support judgements and opinions about how someone or something is performing.