Like a captain steering a ship through a stormy sea, leadership plays a crucial role in shaping the organizational climate, which in turn affects the individual’s level of commitment to the organization, job satisfaction, and productivity. Creating a positive organizational climate requires management to focus on promoting autonomy, freedom, and support. Organizations can use internal environment scanning methods such as employee surveys, focus groups, and organizational culture analysis to gain insights into how leadership affects the work environment—knowledge that can then be used to create a positive climate to enhance employee knowledge, behavior, and effectiveness.
Critical factors such as interaction with team members, behavioral patterns, and the quality of the leader’s information—which covers updates, decisions, and strategic plans that they need to communicate to their team—all shape the organizational climate. Leadership behavior can significantly influence employee attitude and behavior. Studies have shown that managers who acknowledge their team members’ accomplishments can improve the perception of the organizational climate and leadership quality.
Conducting an internal environment scan can help assess the current state of the organizational climate and identify opportunities for improvement. Theorganizational culture analysis, a method of internal environment scanning, involves reviewing the values, beliefs, and behaviors of employees and aims to gain insights into how leadership is perceived and how it is influencing the culture of the organization.
One company that values itsorganizational culture and recognizes the significant role of leadership in shaping the work environment is Netflix. The company empowers employee decision-making by widely sharing internal documents, such as memos on title performance, strategy decisions, and product features.
Additionally, Netflix prioritizes open and direct communication by investing in coaching and modeling behaviors. To promote good decision-making, the company emphasizes the need for highly effective people and fewer management layers. The company encourages a “context not control” culture where leaders are expected to coach, set context, and provide feedback instead of micromanaging while employees make their own decisions. To foster this culture, Netflix values certain behaviors and skills in its employees, such as good judgment, selflessness, courage, communication, inclusion, integrity, passion, innovation, and curiosity.
The company employs a feedback system that includes surveys and focus groups to continuously improve its operations. A recentinitiative to promote work-life balance involved the implementation of an unlimited vacation policy, which was contingent on fulfilling job responsibilities and goals. To set a precedent, leaders take vacations themselves and urge their teams to do likewise.
As we can clearly see from Netflix’s example, leadership has a significant impact on the organizational climate. This highlights the importance of internal environment scanning to identify opportunities for improvement.
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Traditional quality management and business excellence practices are proving to be ineffective when used in the context of complex processes. Additionally, these initiatives are defamed for generating a lot of papers or soft documents without any analytical or added value in respect to automation and productivity. Due to that, the focus must now shift towards a quality movement that will make industries ready to fully utilize the advantages of the digital economy.
End-to-end digital integration leveraging newer technological innovations, like big data, the Internet of Things (IoT), cloud computing, simulation, and Cyber-Physical Systems are helping in virtual space connecting with physical systems and in making real-time decisions and strategic planning. Industry 4.0 refers to the reform, transform, and perform industry with the help of IoT, especially AI and ML. This use of advanced information and communication technology (ICT) for industrial growth is now often called the ‘fourth industrial revolution.’
The concept of BSC was developed decades back when technology was just at its nascent stage. Currently, the concept needs to be revisited else it will only become a subject of academic interest. The performance measurement model should be such to evaluate the quality aspects of an organization in the context of Industry 4.0. The framework used should develop virtual tools to assess weaknesses in the current systems.
The impact of Industry 4.0 can help in enhanced customer value proposition through a better understanding of customer needs, data-driven product development, automated manufacturing, and continued product usage data monitoring. These will have benefits like better CRM, new strategic partnerships, expansion of the geographical reach of products and services through digital channels, as well as the development of new client bases and better retention of old clients. Hence, any performance scorecard should help customers in terms of availing of superior-quality products at low prices and better service.
The perspectives of BSC, especially internal processes and learning and growth, should evaluate the quality aspects of an organization in Industry 4.0. It should ensure that strategy formulation, strategy execution, and performance measurement system are aligned to new technologies so as to reap the following benefits:
Improve Productivity:enabling to do more with fewer means, such as in production; faster production in a cost-effective manner with given resources can give more and should help in less downtime and improve Overall Equipment Effectiveness.
Flexibility and Agility: for instance, it should help in easier scale up or down output as a smart factory, making it supposedly easier to introduce new products or processes.
Regulation: complying with regulations in industries should not be a manual process; instead, Industry 4.0 technologies need to be leveraged to automate compliance, including tracking, quality inspections, serialization, data logging, and more.
Customer Experience: Industry 4.0 should be used to quickly resolve customer issues and offer them more choices.
A traditional approach of BSC leads to fixed or orthodox KPIs which are not relevant in today’s technological scenario. The concept should revolve around improving processes using the latest IT; this includes having new KPIs. The main hurdle emanates from the harsh reality that the BSC concept owners are traditionally performance management consultants and they are not fully aware of Industry 4.0’s percept and concept, barring a few jargon. This eventually restricts their vision to old and proven approaches which are not helping in providing that competitive edge to the industry. The present winning strategy is flexibility and response to the fast-changing and uncertain ecosystem which can be achieved through Industry 4.0 technology.
There is a need to develop a scorecard or maturity level assessment tool that evaluates an organization and its adoption of the benefits from Industry 4.0 while taking the given budget and deliverables into consideration. This can happen only when we involve tech specialists in developing and keeping the tools themselves dynamic so that these may undergo revision after around every 12 months to keep abreast of the advancements in technology.
Read more articles that discuss the Balanced Scorecard and other interrelated concepts here.
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Editor’s Note: This article has been updated as of September 17, 2024
People have been working from home even before the pandemic, but their number significantly increased when the health crisis led to lockdowns and travel restrictions. Companies were forced to send their employees home to work remotely to comply with social distancing measures and keep the workforce healthy. Statista shows that before the pandemic, only 17% of US employees worked remotely for five days or more weekly. However, the number grew to 44% during the outbreak in 2020.
When the pandemic subsided and governments eased travel restrictions, some companies asked their workforce to return to the office while others offered the hybrid set-up. However, most employees still prefer remote work.
A poll conducted by Pew Research Center with 5,889 workers in America in January 2022 found that 61% of those who work from home said they avoid going to work by choice and 38% claim their office is closed. It represents a shift from October 2020, when 64% of people worked from home because their office was closed and 36% did so voluntarily.
In spite of that, 50% of leaders in information worker roles want to pursue getting employees back to the office full-time next year, based on Microsoft’s Work Trend Index 2022 report. Still, 52% of respondents say they highly consider becoming remote or hybrid in the year ahead and 80% claim that since remote or hybrid work arrangements were implemented, their productivity has increased.
According to the popular job site Flexjobs, one of the benefits of working from home is it increases “productivity and performance” as employees encounter fewer interruptions, have a quieter work environment, and have increased workplace comfort, resulting in more focused time.
In a research conducted in Latin America, they explored the relationship between remote work, work stress, and work-life during pandemic times. Researchers found out that by having flexible work schedules, the employees’ engagement and productivity levels increased because they could work at their most productive time. Privacy also plays a big role in employees’ efficiency. However, the productivity level is negatively affected when the worker is constantly interrupted by children or adults that need assistance.
A case study published in the Journal of Occupational and Environmental Medicine investigated the impact of family-work conflict, social isolation, distracting environment, job autonomy, and self-leadership on employees’ productiveness, work engagement, and stress experienced when working from home during the pandemic. The authors discovered that excellent self-leadership skills and autonomy positively impact the time assessment in a WFH scenario.
Results from a qualitative study by Danielle Tinneveld of Radboud University also show that productivity tracking facilitates the identification of process bottlenecks. The affected staff gets less anxious and annoyed when these difficulties are resolved, and overall production efficiency improves.
How Employees Can Track Their Productivity at Home
On a remote workday, people have to manage work and non-work-related tasks. To be productive, they have to master the art of time planning. Effective time management involves planning each activity in a time frame, considering priorities such as urgent work tasks and eating breaks. Individuals should fit their activities into 16 hours to get 8 hours of sleep each day to achieve great productivity. By monitoring the duration of their tasks, they can observe which actions can be improved.
To see if their time management strategy is effective, remote workers can use key performance indicators (KPIs). Some KPIs they can consider are:
By monitoring the percentage of tasks performed as planned, individuals can see if they reached their target or not. By knowing the percentage of time spent working, people have insights into the free time left for non-work-related tasks, such as going on a walk, relaxing, cooking, eating, and other housework activities (washing clothes and dishes, drying clothes, cleaning floors).
It’s a different story for employees whose companies have return-to-office schemes. Their organizations should rethink their performance management system to consider the new ways of working that employees gained during the pandemic. Evaluating the relevance of KPIs has become important now more than ever. To better understand KPIs, its nature, characteristics, and implementation, enroll now to The KPI Institute’s Certified KPI Professional and Practitioner course.
The world is moving towards a more sustainable business practice. Investors, advocacy groups, and academics have asked corporations to take on added purpose beyond the traditional pursuit of shareholder value. Even the business leaders from Business Roundtable stated that major companies are investing in their employees and communities because they realize it is the only way to achieve long-term success.
The fundamental concept behind this shift is the Triple Bottom Line (TBL), where companies must measure not only their financial performance but also their environmental and societal performance as well. The TBL concept is not new; the term had been coined by John Elkington in the 1990s. Later in 2003, Amanco pioneered in measuring the impact of its TBL strategy, building on the idea of Balanced Scorecard (BSC) from Kaplan and Norton. The new sustainability BSC included environmental and social dimensions in addition to the basic dimensions of the initial BSC.
In a recent article, Kaplan stated that the demands for sustainability today are even higher. In summary, there are three different perspectives from three main stakeholders categories:
Customers: The customers’ preferences in every product category shifted towards more sustainable products. Over the past five years, there is a 71% rise in online searches for sustainable goods globally in countries with either developed or emerging economies.
Employee: Reports of unsafe working conditions at Amazon warehouses caused many criticisms. Their employees protested for fair pay and COVID protection. This example reflects the importance of social and ethical issues. Fulfilled workers are more loyal and likely to stay compared to those who only work for a weekly paycheck. Worse, incidents like this would probably affect consumers’ perception badly and hurt the company’s brand image.
Environment and social: As more consumers demand transparency and accountability, companies must consider the environmental and social aspects in every decision they make. For example, major fashion brands are beginning to pay attention to the demand for more sustainable practices.
The stakeholders have always played an important role in the business ecosystem. But in today’s post-pandemic era, the stakeholders expect even more from companies in terms of environment (e.g., sustainability, health) and social (e.g., inclusive, ethics, social welfare) aspects. As with any crisis, there are chances to learn and make a positive difference.
This article aims to remind companies of the criticality of environment and social dimensions. Taking note of its importance, this might be the opportunity to revisit the idea of sustainability BSC. The sustainability BSC can be used as a groundwork for a future BSC that is environmentally, socially, and ethically responsible. For more on utilizing the Balanced Scorecard, The KPI Institute has developed the Certified Balanced Scorecard Management System Professional to help organizations maximize the tools’ potential.
Curious about more applications of the Balanced Scorecard? Click here.
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.
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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.
