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.
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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.
Applying agility in the workplace has become a trend during the past few years for its wide range of benefits, such as adaptability, faster work speed, and innovation. However, some companies fail to implement it in its correct sense and gain its fruits. This raises several questions: is it because agile is only successful for software companies? Or is it because some companies may have a limited or ambiguous understanding of the concept and its implementation?
What does Agile mean?
Despite the fact that agility is one of the most popular and challenging concepts, there is no one common definition explaining it. A study explained that there are four main factors that most definitions highlight to define agile organizations. The first two are the organization’s ability to act to change in internal or external business environments at the right time and its response to act proactively on and predict change to make the most of it as an opportunity.
The third component involves learning and continuously expanding or accumulating skills, knowledge, and experience. Last but not least, agile organizations have to build a network structure, a people-centered and purpose-driven culture, as well as iterative processes to improve/enhance a product, service, and the like. Taking into consideration those factors, Petermann and Zacher define an agile organization as “a network of self-organized teams in which employees are able to autonomously make decisions and change the course of action”.
How to apply agility in your workplace
Although the rate of organizations applying agility in the workplace is accelerating, not all organizations are applying it in the right manner which might affect the employees’ performance in a negative way. This is not because agility works only in IT or software companies; agility can be implemented in almost all types of organizations. It is because companies are not embedding the concept in the right sense.
There are several building blocks for developing agility in the workplace such as strategy, values, agile team, organizational structure, agile leaders & managers, culture, and processes. These building blocks can be grouped into two categories: organizational level (strategy, organizational structure, culture, and agile leaders) and team and individual levels.
Organizational level
Strategy: For companies to successfully embrace agility, they should create an agile strategy that is aligned with their overall business strategy. This would create a clear roadmap for applying agility in the whole company.
Organizational structure: Having a long hierarchy that does not allow smooth decision-making does not allow for the successful implementation of agility.
Culture: Companies should embed agility and its components into their culture to successfully implement it.
Agile Leaders: In applying agility, leaders are not only knowledge experts or experienced managers anymore; instead, they are supportive leaders that allow decision-making and delegation within their teams.
Reward systems: Ashutosh Muduli (2019) recommends that allowing nontraditional rewards – like skill-based pay systems, improvement-based incentives, and nonmonetary rewards – do help in fostering workplace agility.
Information systems: They are crucial to boosting operational speed and flexibility within the workforce agility. Muduli pointed out that information systems will help in giving access to timely information associated with the customer, accounting, and business performance, as well as management, organizational leaders.
Team and individual levels
a. Team level (definition and characteristics)According to Petermann and Zacher, agile teams are defined as “teams that use agile methods in their daily business”. Despite a wide range of agile methods and practices, most of them involve common characteristics. Those characteristics include self-organization, delegation, a quick exchange of information, rapid and continuous two-way communication, and feedback with the customers as well as within the team.
Based on those factors, agile teams are able to develop high transparency and a method to measure progress. They have the capability to use iterative processes and respond to changes efficiently and successfully. Agile teams will be able to direct their attention on simple designs that reveal incremental steps that are easy to understand for everyone included.
b. Individual Level (definition and characteristics)
There is not one common definition for agile individuals that is accepted by everyone. Petermann and Zacher describe agile individuals as “people who have the abilities, knowledge, and skills to proactively seek opportunities, and are able to quickly adapt to new situations.” They are also characterized as people who have the required skills to predict, apply, and make full use of and derive benefit from changes.
c. Individual characteristics and team formation
Since individual characteristics and team formation are critical for implementing agility, Petermann and Zacher suggest that companies should re-evaluate their recruitment and development practices. Recruiters should highlight agility skills in their job postings in order to attract candidates with an agile mindset and personality. During interviewing and selection phases, HR people should focus on personality characteristics and cognitive abilities that focus on change.
Training and development are also very important to help agile teams adapt rapidly to changing market requirements. Agile teams need to get updated with the latest skills and knowledge to respond successfully to market changes. Leaders should also be provided with training to lead their teams successfully and efficiently.
Moreover, organizations should train their employees about various methods and tools (such as scrum) that could aid them to apply agility in the workplace. However, it has to be noted that not all circumstances are treated with the same amount of agility and not all methods and practices can be applied in all workplaces. Companies need to ensure that the methods they are using do suit their environments.
There is no doubt that implementing agility is not a piece of cake and companies need to understand the concept and its implementation thoroughly. You can find below some ideas on how you can do that:
Start small: It is better to apply agility on a smaller scale. For instance, you can start with the research and development department. When the team members master agility, they can transfer the knowledge and methods to other departments.
Stop and review: During the implementation phase, you should always stop and assess the current situation to make sure that you are applying agility in the right way, whether in decision-making, meetings, processes, or others. This will also help in assessing whether the teams do really understand the concept of agility or not.
Communicate: Always allow for two-way communication and feedback within the team members and from top-down and down-top in the company. This will enable feedback and continuous learning across the organization.
To sum up, agility can be applied in almost all companies and in any industry, however, they need to make sure that it is applied in the right sense to gain its fruits. Moreover, companies need to make sure that they need agility in the first place before they go into the hustle of its implementation rather than just trying to follow a trending concept.
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Editor’s Note: This article was originally published on January 07, 2022 and has been updated as of November 20, 2024.
Organizational culture is the unique environment of an organization that is formed through shared beliefs, values, experiences, specific rituals, behavior, interactions, language, and norms. These elements of the culture are developed over time in both visible and invisible ways, such as the organization’s output, interactions, goals, branding, company policies, reward systems, among others.
It is possible that most of the members of an organization are not aware of the origin of their rituals and why they are expected to behave in a specific way. Or they may know exactly what they are doing for what reason and can explain everything with facts. Which of these contradictory approaches characterize your organizational culture more?
Is it a cargo cult organization or “The Credible Hulk”?
Cargo cult thinking in organizations
Cargo cult refers to the belief that a real achievement can be realized by simply imitating visible behavior. This belief exists even without understanding the correlations between the different steps of a process and the consequences of actions.
The origin of this terminology goes back to the first half of the 20th century, when some remote-island-based tribes saw American cargo planes landing on their island. The tribes tried to recreate the different tools and instruments they saw from the cargo planes without knowing how those goods were manufactured. They made radio from stone and wood but without getting the same effect.
This phenomenon can be observed even in advanced 21st century cultures, particularly in the modern corporate world.
Many organizations are adopting the same practices they observe in other companies, such as workplace habits and the design of an office, without fully knowing their impact on the organization. For instance, some companies would place bean bags in the office even if they are hardly used. Some do not observe the business casual dress code on Fridays. And some have ping pong tables.
The paradox is that it is also a rational strategy to follow organizations or people who seem to know what they are doing. When used responsibly, cargo cult thinking can be really useful when making decisions because it saves management a lot of time.
Oversimplification versus overcomplication
Have you seen the meme “The Credible Hulk”? Inspired by the film and the character “The Incredible Hulk,” “The Credible Hulk” is a monster that backs up anything with facts and documents.
The opposite of cargo cult thinking is supporting new initiatives or practices with facts and research. Organizations with this kind of practice are deemed more credible in terms of their innovation practices.
These companies are the ones that look beyond the surface in order to analyze the successful elements of the other innovative organizations, such as Amazon, Apple, and Netflix. They do not just use transparent glass doors because they look good, but also because they want to promote transparency and improve communication in the organization.
However, such an approach is time and resource consuming. Organizations have to justify everything with research, leaving little to no room for instincts and creative innovations that could drive success in the long run.
Cargo cult thinking cannot be completely eliminated. The only way to exclude it from the organizational culture is to learn and know everything, and that is, apparently, impossible. Therefore, organizations could either find the right balance between the two opposite poles or customize their approach based on their goals, the company size, or the nature of their business.
