Organizational Performance Management -- Evaluating and Improving Organizations

Much of the content of this topic came from this book: Consulting and Organization Development - Book Cover

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

We're used to thinking of ongoing performance management for employees, for example, setting goals, monitoring an employee's achievement of those goals, sharing feedback with the employee, evaluating the employee's performance, rewarding the employee's performance or firing the employee. However, performance management applies to teams and organizations, as well. Organizational performance involves the 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 of them do it far better than others. (It's useful to think of organizational change in the context of organizational performance, rather than change for the sake of change, so the topic of Guidelines, Methods and Resources for Organizational Change Agents will be useful to the reader, as well.)

Sections of This Topic Include

Suggested Previous Readings
Identifying What to Improve in Organizations -- Using Organizational Assessments
--- Organizational Assessments/Evaluations of Businesses (For-Profits)
--- Organizational Assessments/Evaluations of Nonprofits
Interpreting Results of Assessments -- Using Organizational Diagnostic Models
Systematic Methods to Address Assessment Results -- Organizational Performance Management Systems
Managing Change While Implementing Methods -- Managing Organizational Change

Also see
Related Library Topics

Also see
Related Library Topics
Group Performance Management
Employee Performance Management

Also See the Library's Blogs Related to Organizational Performance

In addition to the articles on this current page, also see the following blogs that have posts related to Organizational Performance. Scan down the blog's page to see various posts. Also see the section "Recent Blog Posts" in the sidebar of the blog or click on "next" near the bottom of a post in the blog. The blog also links to numerous free related resources.

Library's Consulting and Organizational Development Blog
Library's Human Resources Blog
Library's Leadership Blog
Library's Project Management Blog
Library's Supervision Blog

Suggested Previous Reading

Before undertaking activities to improve an organization, it's best to have a basic understanding of what an organization is.

Performance Management: An Overview (basic concepts in performance management)
Introduction to Organizations (defines organizations, their basic parts, dimensions, life cycles, etc.)
Guidelines, Methods and Resources for Organizational Change Agents
Organizational Sustainability

Identifying What to Improve in Organizations -- Using 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 comprehensive 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/Evaluations of Businesses (For-Profits)

Selecting from Among Publicly Available Assessments

Read more about online tools that include suggested "best practices" against which to compare results of your assessment.
Organizational Assessment tool for businesses
Organizational Health Survey
Founder's Syndrome -- How Organizations Suffer -- and Can Recover
Business Evaluation Checklist

The following links are to additional assessments, and include information about what should really be measured -- performance.
The Balanced Scorecard and the Small Business
Five Competencies of Entrepreneurs vs. Small Business Owners
Competencies and managerial effectiveness: putting competencies to work

Organizational Assessments/Evaluations of Nonprofits

Selecting from Among Publicly Available Assessments

  1. McKinsey Capacity Assessment Grid
    Helps nonprofits assess their operational capacity and identify strengths and areas for improvement.
  2. 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.
  3. Center for Nonprofit Excellence
    This is a link to the Center's list of nonprofit organizational assessment tools.
  4. United Way Management Indicators Organizational Assessment (includes best practices)
    This is an online questionnaire that was modified from the United Way tool.
  5. Online questionnaire
  6. Assessment for Start-Up Organizations
    The Tool for Assessing Startup Organizations is designed for use by funders assessing a grant
    application from a startup nonprofit.
  7. Self-Assessment Tool for Nonprofit Organizations
    Addresses most common functions in nonprofits and indicates extent of achievement in each.

Also see
Basic Guide to Program Evaluation
Designing Assessment and Evaluation Tools
One Organizational Diagnostic Model (depicts system and subsystems, and which causes issues in others)
About The Role of Strategic Evaluation in Nonprofits

SWOT Analysis (Looking at Strengths, Weaknesses, Opportunities and Threats)

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

Interpreting Results of Assessments -- Using 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
Do You Have a Venture Value Scorecard? | Hot Sauce!

Maximum Performance -- Different Things to Different People
Methods of Strategic / Organizational Analysis

Systematic Methods to Address Assessment Results (Organizational Performance Management Systems)

What's an Organizational Performance System?

Any or all of the approaches listed later on below will improve organizational performance depending on if they are implemented comprehensively and remain focused on organizational results. 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).

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.

For example, a large organization with highly standardized processes (such as a manufacturing company with assembly lines) can carry out numerous and ongoing measurements in a straightforward fashion. It also has extensive resources to conduct the measurements and analyze results. ISO9000 certification is a strong enhancement to a company's image. Therefore, the organization might pursue ISO9000 certification, including through use of continuous improvements in an overall Total Quality Management approach. The organization may establish numerous benchmarks for comparison to other organizations in the industry to get perspective on how well the organization is doing, what results to pursue, etc.

On the other hand, a risk management company specializing in consultation to protect against terrorism, has a bigger challenge to identify and track performance results. Management might believe, for example, that the organization's means for delivery of services are well out-of-date and that the organization is no longer resourced to advise organizations about increasing threats from terrorism that exist today. Therefore, the risk management company may choose to use business process reengineering to completely redesign their organization from the ground up.

Prominent Organizational Performance Improvement Models (Systems)

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

Managing Change While Implementing Methods -- Managing Organizational Change

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 successful change in organizations, see the following topic:
Guidelines, Methods and Resources for Organizational Change Agents

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