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Performance, Leadership and Culture
Professor Mike Bourne Director
Centre for Business Performance
© Cranfield University 2014
Improve
Performance
Executive
Teaching
Rigorous Research
Practical
Collaboration
THOUGHT
LEADERSHIP
The Centre for Business
Performance
2 © Cranfield University 2014
Corporations & organizations
© Cranfield University 2014 3
Agenda
Performance Management
Case studies and examples of good practice
Quantitative findings, practices that deliver performance
Success Mapping – an approach to clarifying and communicating strategy
© Cranfield University 2014 4
Performance management
Performance
Opportunity
Set
Clear
Goals
Provide
Experience
Develop
Innate
Skills
Provide
Good
Tools
Remove
Constraints
Engaged
People
Motivation Ability
© Cranfield University 2014 5
Agenda
Performance Management
Case studies and examples of good practice
Quantitative findings, practices that deliver performance
Success Mapping – an approach to clarifying and communicating strategy
© Cranfield University 2014 6
The case companies
Small Medium Large
Champion L, accounting
practice S, manufacturer N, financial services
Accredited A, manufacturing
company T, building company
NH, inspection and
insurance
New X, Performance
consultants AT, Housing trust
Not accredited P, Software B, Repair services
7 © Cranfield University 2014
Key practices believed to impact
performance
Strategy deployment and goal setting
Communication and feedback
Appraisal – one to one system
Recognition & reward
Values
Resource management
Training, or willingness to train
© Cranfield University 2014 8
Incentive system
The incentive system is therefore explicitly designed to build on this
team approach and includes:
An annual management profit bonus shared by management
An annual customer satisfaction bonus shared by all employees
Twice yearly management performance bonus
A staff attendance bonus
A weekly and monthly operations bonus based on weekly
achievement of five different indicators paid to all shop floor staff
© Cranfield University 2014 9
Recognition system
Recognition was deemed to be important, so the recognition
system included:
formal reward system incentives,
regular recognition days,
awards,
star of the month,
client nominations,
business excellence,
service excellence,
employee of the month, year …
© Cranfield University 2014 10
Management system
This is not formally recognised but:
Managers lead by example
Visible MD
Good man management skills widely distributed across the company
Social activity as a reward for effort
Individual tailored rewards for effort
Personal touch
© Cranfield University 2014 11
Communications
An annual “state of the nation” address by the MD to all employees
KPIs and simple objectives cascaded to each department
Appraisals for all employees
An employee survey
Financial performance information distributed to all by Monday morning
Weekly feedback on operational goal achievement in team leader meetings
Information regularly displayed on the notice board
A regular employee newsletter
Return to work interviews
Monthly welfare committee meetings feeding back issue, with minutes reported each month
Twice annual skills appraisals
© Cranfield University 2014 12
Key practices believed to impact
performance
Strategy deployment and goal setting
Communication and feedback
Appraisal – one to one system
Recognition & reward
Values
Resource management
Training, or willingness to train
© Cranfield University 2014 13
Agenda
Performance Management
Case studies and examples of good practice
Quantitative findings, practices that deliver performance
Success Mapping – an approach to clarifying and communicating strategy
© Cranfield University 2014 14
The Cranfield study
The impact of the Investors in People Standard
15
Perceived Non-
financial Performance
Quality of products &
services; attraction &
retention; relationships;
customer satisfaction
Employees turnover
Innovation
CONTROL VARIABLES Firm size
Industry
Based on Arthur & Boyles (2007), Evans & Davis (2005) and Becker & Huselid (2006),
Collins & Smith (2006), Bhattacharya et al (2005)
Selection
Rewards
Training &
development
HR policies
IIP
Accreditation
People Management
indicators
Maturity
IIP implementation
Turnover; profitability;
growth in sales;
market share
Perceived
Financial
Performance
Turnover
ROA
Profit Margin
Financial
Performance
(FAME)
Trust
Cooperation
Commitment
Human
capital
flexibility
Skills flexibility
Employees’
behaviour flexibility
HR practices
flexibility
Org. social
climate
© Cranfield University 2014
IIP key variables
IIP Accreditation
Companies that currently hold IIP accreditation compared to companies that
do not hold IIP accreditation
People management indicators
Strategy is clear & understood
Learning & development aligned with objectives
Equality of opportunity in development
Leadership capabilities clear & understood
Managers are effective at leading/managing/developing
People’s contribution is recognised and valued
Involvement in decision making
People learn & develop effectively
Investment in people
Continuous improvement in HR practices
© Cranfield University 2014 16
The Cranfield study
The impact of IIP on financial performance (cont.)
© Cranfield University 2014 17
Key finding: Companies who have rated high in IIP implementation satisfaction have higher
levels of perceived non-financial and financial performance compared with their
competitors.
Perceived Non-
financial Performance
Quality of products &
services; attraction &
retention; relationships;
customer satisfaction
Innovation
IIP
Implementation Turnover; profitability;
growth in sales;
market share
Perceived
Financial
Performance
+ +
Turnover
ROA
Financial
Performance
(FAME )
(unable to calculate due to lack of data)
+
Regression analyses (controlling for industry and company size)
+
The Cranfield study
The impact of IIP on financial performance (cont.)
Key finding: Companies who have rated high on their direction communication practices have
higher levels of performance (perceive financial and non-financial and real financial)
Perceived Non-
financial Performance
Quality of products &
services; attraction &
retention; relationships;
customer satisfaction
Innovation
Turnover; profitability;
growth in sales;
market share
Perceived
Financial
Performance
+ + Profit Margin
Financial
Performance
(FAME)
+ Communicating
Direction
+
+ Regression analyses (controlling for industry and company size)
© Cranfield University 2014 18
Two requirements
Low People Engagement High
High
Direction
Setting
Low
© Cranfield University 2014 19
Agenda
Performance Management
Case studies and examples of good practice
Quantitative findings, practices that deliver performance
Success Mapping – an approach to clarifying and communicating strategy
© Cranfield University 2014 20
The cockpit analogy
© Cranfield University 2014 21
Customer Perspective
- How do our customers
see us
Innovation and learning
Perspective
- How can we continue to
improve?
Internal Business
Perspective
- What must we excel at?
Financial Perspective
- How do we look to our
shareholders
Kaplan, R.S. and Norton, D.P. (2000) “The Strategy-Focused
Organization”, Harvard Business School Press, Boston, Mass.
The balanced scorecard
© Cranfield University 2014 22
Improve delivery reliability
Increase product range
Ideas from employees
Educate sales force
Develop new products
Improve stock control
Reduce lead times
Cross sell products
Improve returns
Improve operating efficiency
Broaden revenue mix
So what is the strategy?
© Cranfield University 2014 23
Improve Returns
Financial
Perspective
Broaden Revenue
Mix
Improve Operating Efficiency
Customer
Perspective
Increase Product Range
Improve Delivery
Reliability
Internal
Perspective
Develop New
Products
Cross Sell Product
Line
Improve Stock
Control
Reduce Lead Times
Learning
Perspective Ideas from Employees
Educate Salesforce
Success maps
© Cranfield University 2014 24
Conclusion
HR practices are important for creating a
High Performing Organisation
Communicating Direction is important for
creating a High Performing Organisation
But in combination there is a synergistic
benefit
© Cranfield University 2014 25
Prof Mike Bourne
Centre for Business Performance
Cranfield School of Management
Cranfield
Bedfordshire
England
MK43 0AL
+44 (0)1234 754514
www.cranfield.ac.uk/som/cbp
Contact information
© Cranfield University 2014 26
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