How can Performance Improvement be achieved?

According to Swanson (1999:6), organizations are the host systems for most performance improvement activity. “These organizations function in a dynamic political, cultural and economic context. Each organization has its own mission and strategy, structure, technology and human resource mix. And each has core processes related to producing its goods and services”. It is generally expected that performance improvement efforts will logically lead to positive gains in performance for the host organization. However, Wittkuhn (2016) argues that performance is not a variable that is part of the system that can be directly influenced as with other parts of the system. He

observes that it emerges when the variables work and interact together in an appropriate way, which entails that it must be reproduced continuously. According to Wittkuhn (2016:16), “performance improvement is the process of influencing the working together of all relevant variables in such a way that performance emerges”.

Swanson agrees that performance cannot be described or improved without specifying its determinants and making some judgments about whether it has actually improved. Performance improvement can only be manifested through outputs. Thus, performance improvement is a concept that can be systematically operationalised in any organization when it sets out from the beginning to demonstrate whether or not performance has improved.

An organization is not a closed system. It depends on and interacts with its environment. Whatever their reach, organizations will always be influenced by societal factors such as legal, political, educational, availability of resources, transportation, technology, etc. In addition, an organization has a structure that establishes its way of setting strategy and goals, communicating, decision making, reporting and managing. In looking at the whole organization or its sub-units, some sort of structure will always be found. Grumberg (2004) suggests that to be able to improve performance effectively, it is important to identify those factors of performance that should be particularly addressed, either because they are key to success or because they identify under- performance.

According to Addison (2004), typical areas of performance improvement opportunities are culture, confidence and competence which are three domains that reflect the human characteristics of an organisation. Culture is defined in this context as the way people solve problems and interact with time, each other, and the environment. It is the waywe do things around here. Research shows that culture and economic performance seem to have a strong correlation. Addison (2004) citing Kotter and Haskett (1992) suggests that corporate culture can have a significant impact on a firm’s long term economic performance. Firms with strong values that are shared by employees tend to achieve

higher performance. In this regard a careful analysis of the firm’s cultural values can help an organization in its quest for aligning the three performance levels because cultural values provide employees with a guiding framework for their daily work. Confidence comprises the organization’s ability to sustain and manage its employees, capacities for accomplishing the desired work, display constructive behavior, and maintain positive attitudes, and the willingness to contribute to success. An organisation’s competence is the employees’ skills, knowledge and abilities.

Some researchers have proposed that benchmarking can be used as an effective strategy for improving organizational performance. Gavrea (2011) citing Allan (1997) defines benchmarking as the process by which companies look at the “best” in the industry and try to imitate their styles and processes. This helps companies to determine what they could be doing better. By identifying the “best” practices, organizations know where they stand in relation to other companies. The other companies can be used as evidence of problem areas, and provide possible solutions for each area. Benchmarking also allows organizations to understand their own administrative operations better, and marks target areas for improvement. It is an ideal way to learn from other companies who are more successful in certain areas. Additionally, benchmarking can eliminate waste and help to improve a company’s market share.

According to Fuller et al. (2002), benchmarking brings an external focus on internal activities, functions, or operations in order to achieve continuous improvement. Starting from an analysis of existing activities and practices within the firm, the objective is to understand existing processes or activities and then to identify an external point of reference or standard by which that activity can be measured or judged. The ultimate goal is to be better than the best and to attain a competitive edge. It is the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders. Benchmarking is therefore becoming increasingly popular as a tool for continuous improvement.

McKinsey & Company (2011) however caution on the use of benchmarking as a continuous improvement strategy. They argue that one of the great fallacies of management is that you can improve performance by copying best practices from other organizations. They assert that though it may work in some operational areas, it can be a recipe for disaster in organizational health. This is because organizational health is systemic, and best practices from one system can turn bad when transposed to another system. To achieve and sustain excellence therefore, leaders need to take deliberate steps to manage both performance and the health of their organization where health is defined as the ability to align, execute and renew itself faster than competitors so that it can sustain exceptional performance over time.

Gavrea et al. (2011) developed a model from a detailed literature review in order to identify the factors that have an impact on the performance of an organization. It includes business strategy, company structure, performance measurement, information technology, leadership, innovation and development, management decisions, aligning the objectives of the top levels, with the internal processes, quality of corporate governance, customer orientation, the ability to establish a high level of trust and cooperation with suppliers, and a low level of uncertainty.