What truly drives organizational success is not just a brilliant strategy or a cutting-edge technology. It also lies in the collective talent and potential of employees. To optimize organizational performance, organizations can develop and enhance human capital through capacity building. The University of California, Davis defines capacity building as “the process by which people and organizations obtain, improve and retain the skills, knowledge, tools, equipment and other resources needed to do their jobs successfully.”
Today, one concrete sign of the growing recognition for nurturing human capital is the increased attention to wellness programs. A powerful connection exists between capacity building, employee well-being, and organizational performance, fueled by both theoretical frameworks and empirical evidence. Two main theories provide a foundation for understanding this relationship:
Human Capital Theory: This theory posits that employees are a treasure trove of skills and knowledge, waiting to be unleashed and nurtured to increase organizational productivity and success. By investing in capacity-building, organizations enhance their human capital, leading to improved performance.
Organizational Support Theory: This theory proposes that when employees perceive their organization as supportive, their commitment to their jobs increases, their performance improves, and their stress and strain are reduced.
From the empirical perspective, a robust body of research supports the link between capacity building and organizational performance. One study demonstrated strong evidence that implementing capacity-building programs positively impacts talent development, employee resilience, and career development, leading to improvement in overall organizational performance. Further reinforcing this connection, another study examined the responses of 710 manufacturing small and midsize enterprise (SME) owners and found that organizational learning is crucial for both performance and success.
Extending this research to a specific context, in the United Arab Emirates (UAE), a study revealed that investing in employee training is crucial for sustainable success. However, talent attraction and retention alone do not significantly impact organizational performance. This connection underscores that while having skilled employees is important, the true driver of long-term success lies in the continuous development of those employees through effective training programs rather than merely focusing on hiring and keeping talent.
Finally, a case study of Metropolitan International University revealed that capacity-building programs have significant positive links with critical performance outcomes such as innovation, customer satisfaction, productivity, and retention.
The positive correlation between capacity-building initiatives and organizational performance is supported by compelling data.
Training programs play a crucial role in enhancing workplace dynamics, significantly impacting productivity, job satisfaction, and employee retention. Research from eLearning provider TalentLMS indicates that 80% of employees believe training directly boosts their productivity, while 75% find it beneficial for their engagement and overall job satisfaction. Furthermore, the retention power of training is evident, as 76% of employees are more likely to remain with a company that prioritizes continuous training. This sentiment is echoed by 86% of HR managers, who recognize training as a vital factor in fostering employee retention. Collectively, these insights underscore the importance of investing in training initiatives to cultivate a motivated and committed workforce.
In addition, training fosters performance enhancement among employees. Fifty-one percent believe it increases their confidence and 41% assert that it improves their time management skills. Beyond individual performance, training also strengthens employees’ connection to their organization and reinforces their sense of purpose. Notably, LinkedIn’s Workplace Learning Report 2024 shows that 80% of employees find learning experiences fulfilling and meaningful in their roles, while 70% feel a deeper connection to their company through the availability of training opportunities.
Implementing Effective Capacity-Building Programs
Effective capacity-building programs demand thorough planning and execution. This is exemplified by the U.S. Centers for Disease Control and Prevention (CDC). Their implementation shows that before initiating capacity-building efforts, it is essential to assess existing skills, structures, and resources to ensure a solid foundation for development. Once this assessment is complete, connecting relevant partners with expertise in the program can help identify capacity gaps, informing future development and potential partnerships. Building qualities such as trust, mutual respect, and commitment among all members of the organization is crucial for fostering a collaborative environment.
CDC’s roadmap for state program planning also shows that implementing a variety of engaging multimodal learning programs—including lectures, discussions, simulations, and case studies—can cater to diverse learning styles. Additionally, integrating technology through online learning platforms and interactive simulations can facilitate more dynamic engagement. Finally, it is important to monitor the impact of these training initiatives on specific goals, using key performance indicators (KPIs) such as productivity, quality, and employee engagement to evaluate effectiveness and drive continuous improvement.
Indeed, capacity building is essential for organizations to thrive in today’s global market. By investing in it, companies can enhance performance, achieve goals, and gain a competitive edge. Research consistently demonstrates a strong correlation between capacity building and organizational success, as evidenced by improved employee engagement, productivity, and overall performance.
The case below explores the implementation of a standardized Operational Deployment System (ODS) at Corewell Health West, a healthcare system in West Michigan. The goal of the system was to align operational processes and improve efficiency across physician and non-physician stakeholders. By implementing ODS, the organization aimed to enhance quality, increase patient satisfaction, optimize operational efficiency, and reduce costs while ensuring staff and physician satisfaction.
Background
Corewell Health West is a complex large healthcare system in West Michigan with 31,000 employees (4600 providers). Due to its large footprint in West Michigan, it aims for transformation to improve quality, increase patient satisfaction, deliver operational efficiency, and reduce costs. Foundational to all this work is staff and physician satisfaction. There was a need for shared language to communicate critical goals in a way that allowed us to be efficient while creating a standard approach to work. To move such a large team in one coordinated direction, Corewell Health needed to engage in focused efforts in a way that was respectful to its teams and leaders.
The ODS was designed to help leaders clarify what is most important and align the right resources to meet the goals set. This system, composed of best practices from individual project management and process improvement methodologies, was implemented to provide clarity, cascade goals appropriately, and help prevent employee burnout by creating a system of intentional alignment.
ODS Implementation Process
Implementing the Operational Deployment System begins with an annual goal-setting process led by the executive team and subject matter experts in the areas of cost, quality, people, and value. There is then a multi-week process of cascading these goals from the executive team through various levels of physician and operational leadership to front-line staff. Subsequent conversations called “catch-ball” follow in which each level of leadership discusses and eventually finalizes goals in each of the four categories. This process culminates with executive sign-off, confirming the roll-up of goals at each level to ultimately achieve the system goals. These goals are captured in a document called an Operational A3 (see sample). Each level of leadership, starting at the director level, has an OA3 that outlines the annual goal in each category and provides space for monthly data updates and explanations.
The manager level of leadership does not have an OA3 but instead utilizes a reporting tool called a gate chart (see sample). Each goal has a separate gate chart featuring a leading metric (the metric that aligns with the director OA3), a lagging metric, and specific tactics and timelines for impacting performance.
Following this goal-setting process and after populating the OA3 and gate charts, weekly report-outs begin each week focused on one of the four priority areas. Report-outs take place in a virtual meeting with managers reviewing the gate chart performance with front-line staff. This is followed by managers reporting their gate chart update to directors, who then provide a similar report to Physician and Operations Vice Presidents (VPs), and so on. Each of these report-outs follows the TAPE methodology, which stands for Target (what was the goal), Actual (what is the actual performance metric), and Please Explain (what were the actions or factors that contributed to that month’s performance).
Change Management
The ODS process inherently supports change management surrounding efforts to meet annual goals by engaging the front-line staff and every level of physician and operational leadership in goal setting, action plan development, and performance tracking. A key component of successful implementation is training leaders and teams in the ODS process. Training sessions for all levels of leaders included a review of the principles of ODS, the OA3 and gate chart templates, and the TAPE reporting format, and included time for discussion and questions. Implementing operational goals, management for daily improvement and cascade reporting, and communication were key areas of discussion during these training sessions.
Stakeholder Experience
To gauge the stakeholder experience, VPs and Director-level physician and operational leaders were surveyed about their experience with ODS. Among the 54 respondents, 61% agreed or strongly agreed that ODS has allowed them and their upline to focus on key areas for operational success. Moreover, 69% agreed or strongly agreed that ODS effectively aligns operational tactics with system strategy.
Lessons Learned and Next Steps
The ODS at Corewell Health initially faced challenges as leaders at all levels adjusted to this new form of tracking and presenting metrics. As the process matured, these perceived notions morphed into support, engagement, and eagerness to introduce new ideas.
Survey results indicate that the leaders perceive improved focus in key operational areas due to ODS. The system has been adopted outside of service lines as well. Hospital medical staff leadership embraces value in aligned goals and now reports on the executive dashboard. Independent physicians are looking at ways to use ODS to improve their private practice structure and function.
Implementing an Operational Deployment System at Corewell Health has been thought-provoking, enlightening, and rewarding. Previously top-down leadership in this space has moved to shared decision-making. As ODS progresses through year three, physician and operations leaders will build on lessons learned and broaden skills to make ODS an even richer process and a model for other organizations to follow.
********
Editor’s Note: The authors are Aiesha Ahmed MD, MBA (VP, Population Health, and Chief of Neuroscience); Rashelle Ludolph (Operations Director, Medical Specialty Services); Cheryl Wolfe MD, MBA (VP, Chief of Women’s Health), and Sonja Beute (Director of Strategic & Operational Deployment).
This article has been updated as of September 17, 2024.
All performance frameworks—whether it is the Balanced Scorecard (BSC), Objectives and Key Results (OKRs), Management by Objectives (MBO) or the Performance Prism—have a shared DNA and purpose: to create synergy in the organization to optimize key results. However, two important questions need to be asked: which performance framework should a company implement and what should one consider when selecting a performance framework?
A well-defined performance framework enables the organization to achieve its desired goals, and having various performance frameworks in hand can make it a bit tricky to choose the right one. Thus, one might be tempted to try implementing what big companies such as Google have implemented and attempt to do the same within their own organization without contextualizing the company culture, size, and business nature.
This article will illustrate the four things to consider when selecting a performance framework for the organization.
It would be silly to start furnishing an empty room without first understanding its intended purpose. Is it going to be for dining or a personal workspace? The same thing can be said when selecting a performance framework. Understanding the company’s goals and objectives is crucial as it will give you a sense of direction. For example, if the company’s goal is to have a disruptive, innovative product or achieve fast growth, then you might consider the OKRs framework as it will enable you to set challenging objectives and provide flexibility to support innovation. On the other hand, if the company’s objectives gravitate toward stability and sustaining the current market share with modest growth, then the BSC is more suitable for this type of environment as it will assist in cascading the objectives from the top down and preserve company status quo while supporting growth at the same time.
Consider the company size and structure.
When we talk about company size, we are not only talking about its capital and asset value, but we are also talking about its workforce size and how they are structured into various functions. If the company has a huge hierarchical structure where each employee is expected to perform a very specific and specialized task that is repetitive and operational, then selecting a framework that exhibits this nature of work will enable the company to create clarity and focus for the employees. A framework to consider for this purpose is MBO, which is defined by The KPI Institute as “clearly setting and defining objectives agreed by both management and their employees.”
Involve internal stakeholders in the selection process.
Highly engaged employees produce substantially better outcomes, are more likely to stay at their organization, and experience less burnout, according to analytics and advisory firm Gallup, Unfortunately, employees can’t reach that level unless they feel that their day-to-day tasks are linked to the company’s purpose and that they have an impact on the results. A good performance framework should be able to convey this to the employees. Asking employees what they value the most and involving them in the decision-making process will result in a highly engaged organization and limit the silo work environment. A performance framework should not be imposed but rather tailored to serve the company’s goals and its human capabilities.
Review and assess the performance framework.
Just like a strategy review, a performance framework needs to be reviewed regularly and not ossified and treated as set in stone within the organization. As the company’s strategy, size, and market grow and change, the performance framework needs to be updated and changed as well.
In conclusion, selecting a performance framework is only the first step. It is a tool for enablement, not a purpose. All performance frameworks can be customized to fit the company’s needs—these are not off-the-shelf products that must be implemented as-is. Nevertheless, other factors play a huge role in executing performance frameworks, such as employee engagement, company structure, and business processes. All these factors influence and impact which framework to select.
Click here for more articles on Corporate Performance.
********
This article was written and submitted by Ms. Wedad Alsubaie, who works at the Strategy Management Office of the National Unified Procurement Company in Saudi Arabia.
Performance measurement has been a topic of discussion in the last decades for both academicians and practitioners. In the 1990s, performance measurement suffered a huge transformation soon after some movements from academia and corporations commenced analyzing the existing lack of an effective way to measure performance, pushing for a new approach to evaluate organizational achievements.
The Supply Chain in the ’90s
Since then, academics and practitioners have managed to develop better performance measurement methods, which brought a relevant revolution for performance measurement theory and practice.
Among these, the stand out was the Balanced Scorecard (BSC), a strategic performance measurement system that allowed you to link strategic objectives with their respective measurements by way of four main perspectives—Learning & Growth, Business Process, Customers, and Financial—creating a clear rationale for a bottom-up cause-and-effect relationship.
In the same vein as the growth of networking for businesses in the 1990s, when the concept of developed supply chains emerged, companies had to start measuring not only their exclusive threshold operations, but also their extensive downstream and upstream processes, including those with suppliers, retailers, and final customers.
In order to fulfill this objective, new approaches of performance measurement systems for supply chains began being discussed and implemented, which also included updating those already used for organizational performance measurements.
Modern-Day Supply Chain Challenges
As it is now widely-known, the COVID-19 pandemic has had a massive impact on supply chains. Disruptions have occurred in several industries, from healthcare and manufacturing, to finances and services. This has painfully highlighted that our supply chains were not resilient enough to avoid such disruptions.
Many factors may have influenced these supply chains’ vulnerabilities, including the supply chain strategy design and its planning and control. It is more than likely that performance measurement systems in these cases were not able to provide sufficient visibility on how deficient the supply chains’ strategies were in terms of their reaction time resilience to the threats generated by the pandemic’s effects.
Despite the visibility and transparency that the digital technologies of the Industry 4.0 age (e.g. Internet of Things, Blockchain) may bring to supply chain processes – technologies that focus on managing large amounts of data (i.e. the use of Big Data Analytics approach), Performance Measurement must nonetheless undergo a breakthrough transformation, as the environment around it has experienced sudden and significant changes.
The post-pandemic period requires new ways of measuring performance in supply chains. Digital technologies may certainly offer assistance, effectively supporting this transformation, but beyond that, performance measurement must be redesigned with a strategic risk-based approach that fundamentally transforms all of the measurement perspectives that supply chains have.
It must provide a clear view of how resilient a supply chain is in the face of an imminent threat, being able to highlight the pre-, current, and post-disruption trend status.
Moreover, it should be able to successfully support a supply chain’s decision-makers when they want to enact contingency actions, especially those concerning the main supply chain processes, such as sourcing, manufacturing, and delivery.
For instance, the performance measurement system must contain lead and lag indicators, depicting how a supplier’s base and retailers are at the moment of imminent disruption and how they will be able to jointly respond to the disruption’s effects.
Key Performance Indicators (KPIs), such as inventory levels in the downstream, upstream supply chain flows, readiness and effectiveness of joint contingency plans with suppliers and retailers, and level of disruption in supply chain entities may be useful indicators to effectively measure supply chain response in unexpected situations.
Furthermore, manufacturing and distribution processes must be measured in terms of their responsiveness to emergency situations (e.g. # Time to deliver unplanned orders, flexibility of mix and volume production to sudden demand variations, flexibility of goods delivery route changes).
In that sense, demand has to be properly evaluated and understood, considering aspects of current and upcoming customers’ behaviors amid the potentially rupturing event (e.g. KPIs as % Demand variation, $ Estimated demand).
The measurement of financial capacity is also paramount to evaluating not only how capable the organization is in terms of managing cash-flow and investments to keep its supply chain going, but also how performant its supply chain is in terms of operational costs and revenue contribution.
In order to evaluate the financial impact of disruptive situations to the supply chain, KPIs such as # Cash-to-cash cycle time and $ Value-added margin during the critical period, % Return on investments made for contingency initiatives and $ Extra operational costs may help supply chain specialists develop a better decision-making process.
With all things considered, I believe that ultimately, the most important aspect, beyond simply adopting KPIs, is the supply chain leadership’s willingness to consider adopting a robust framework around which they can structure their performance measurement system during an exceptional period.
It has to come from a strategic point of view, with a clear cause-and-effect relationship outlined. For this purpose, the well-known frameworks such as the BSC and Performance Prism may be considered, with the due adaptations required for the new business environment.
The reality of it all is that this pandemic has generated an unprecedented level of deliberation and consideration amongst academics & practitioners alike. Performance measurement is no longer just “nice-to-have”. It must be a topic of deep consideration for the supply chain audience, in order to pursue a more effective management style that can withstand sudden and impactful events, such as 2020’s COVID-19.
**********
About the Author
Guilherme F. Frederico is a Professor of Operations, Supply Chain and Project Management at the Federal University of Paraná – UFPR – School of Management, Curitiba, Brazil. He is also Professor and Researcher at Information Management MSc, Ph.D. programs, and a Master’s Program in Business Administration in this same university.
He holds a Ph.D. in Industrial Engineering from the Federal University of São Carlos – UFSCar. His B.Eng (Civil Engineering) and MSc in Industrial Engineering were obtained from São Paulo State University – UNESP. Prof. Frederico has been working in collaboration with the Centre for Supply Chain Improvement from the University of Derby – UK as a Visiting Professor and affiliated Researcher.
The Council of Logistics Management defines logistics as “The process of planning implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.” Reverse Logistics, on the other hand, is the process that includes all the above-mentioned activities, only performed in reverse order. More precisely, reverse logistics refers to the procedure of moving goods from their typical final destination back to their origins. This operation is meant to recapture value from products or to properly dispose of them.
The objectives of reverse logistics include, among others:
improve the quality of products and services by returning defective products and equipment
reduce costs related to packaging and auxiliary materials
be actively involved in protecting the environment
Thus, reverse logistics provides a wide range of opportunities for improvement, ranging from customer service and returns processing, to supplier management and unexpected revenue sources.
The implementation of reverse logistics activities stimulate several key areas that influence performance and which, in the end, have a positive impact on revenue.
Reverse logistics activities are typically processes an organization performs to collect products which are either used, unwanted, damaged or outdated. Packaging and shipping materials returned from the end-user or reseller are also included in this process. Once a product was returned, the organization has many disposal options from which it can choose.
The figure below shows how the recovery value is increased by implementing such activities:
Figure 1. Recovery Value Improvements
Following the completion of a reverse logistics process, the products returned may be sold again but only after being reconditioned, repaired or re-manufactured. However, such products can never be sold as new ones.
When the product cannot be brought back into working order under any circumstances, either because of its poor condition, legal or environmental repercussions, the organization will try to dispose of it with the smallest amount of cost implications.
The organization will retain any materials that still hold value and which can be reclaimed. Other materials that the organization can recycle are removed from the product before finally sending what remains of it to an authorized center, to be properly disposed of.
Usually, packaging materials returned to an organization can be reused. For example, shipping containers or pallets can be reused many times before their disposal. Damaged containers or pallets can often be refurbished and then utilized for the remainder of their life-cycle. The work required to recycle such a product for future uses can be made in-house or with the help of an outside company specialized in repairing shipping containers or pallets.
At the end of the product’s life-cycle, when no more repairs can be made, the reusable materials left of the transportation packaging are salvaged while the rest are sent to an authorized disposal center. In some cases, however, another purpose is given to those materials.
European laws oblige companies to take back the transportation packaging used for their products. Therefore, to reduce their costs, European organizations try to reuse these materials as much as possible.
Strategic variables are not only business elements with a long-term bottom line impact. Organizations should manage their strategic variables for the sustainability of the company. Solutions such as reverse logistics are more than just tactical or operational answers to a problem.
