PREFACE
The business environment isn't what it used to be:
Fierce global competition is now the norm.
Former bastions of stability—telephone companies, banks, insurance companies—are now hotbeds of competition. Internationally, state-run enterprises are being privatized.
The rate of technological change continues to increase geometrically.
Markets expect new products and services. (Fifty percent of the services offered by major banks today did not exist ten years ago.)
Increasingly assertive customers are demanding exemplary quality in traditional products and services. (For example, airline passengers require not only on-time arrival and speedy, gentle baggage handling but also unlimited carry-on space, window or aisle seats—even in coach class—and generous frequent-flyer bonuses.)
There's a paradoxical employment environment, in which there's less job security and more worker demand for "empowerment."
Managers face an awesome challenge in this competitive and constantly changing environment, and this is not a passing phenomenon. As customer demands, global competition, and deregulation of industries in the United States and Europe have increased, it has become clear that the current instability in our marketplaces is not going away. Change is and will continue to be the only constant.
The call to arms, chronicled in numerous books and articles, is widely understood by American businesspeople. Our concern is not managers' failure to understand the problem; it is their failure to do anything substantive to address it. We wrote this book because we have a framework and a set of tools that can substantively address the problem. There are plenty of books on management and organization behavior. However, we find that most of them fail to present tools (leaving the reader saying, "I'm a believer, but what do I do tomorrow?") or they provide tools that deal with only one aspect of a multidimensional need. In our review of management literature, training courses, and consultant services, we have encountered some very valuable theories, hints, and tools. However, we have not come across a single methodology for the improvement of organization performance that is conceptually sound, practical, experience-based, and comprehensive. We immodestly believe that our approach, based on Three Levels of Performance, meets these criteria and, by doing so, provides a blueprint for managing change.
Our second reason for writing this book is our desire to capture our fifty years of combined experience in improving organization performance. We both started in the field of training (before it became human resource development). Like many other people in our position, we were quick to realize that training is only one variable that affects human performance. During the late 1960s and early 1970s, we began learning about the environmental and managerial variables that influence performance. We then turned our attention to the impact of organization strategy on performance. During the 1980s, we developed a technology for documenting, improving, and managing the business processes that bridge the gap between organization strategy and the individual.
With the evolution of Process Management, and more recently, of "managing organizations as systems," we believe we have a comprehensive approach that addresses the major variables in the system that influence the quality, quantity, and cost of performance. Through the application of Process Management, we have learned that managers (particularly at senior levels) should concentrate as much or more on the flow of products, paper, and information between departments as on the activities within departments. Process Management provides a methodology for managing this white space between the boxes on the organization chart.
Purpose of the Book
The purpose of this book is to explain the underpinnings of our Three Levels framework and to demonstrate the tools through which the framework is applied and by which the white space can be managed. We have written it for performance improvement specialists (who may be professionals in human resource development, industrial engineering, quality, or systems analysis) and for line and staff managers who want to examine a process that can bring about significant performance improvement. We expect that performance improvement specialists will most often constitute the first wave of readers in an organization and that they will recommend all or part of the book to the managers who are their customers. In addition, business and organization behavior professors may find that our approach presents a different perspective.
American management has a tendency to manage by executive summary. A director gets a one-page summary of an issue, a vice president gets a paragraph, and the president gets a three-item list. At a recent conference on improving American manufacturing's ability to compete in the global market, one conferee criticized a session by saying, "If an idea can't be summarized in one page, it doesn't have any merit." We do not see how U.S. companies will ever beat their global competitors with that view of executive information and analysis.
We are opposed to the "get it to one page" school of management. Managers who are successful over the long haul understand their businesses in detail. As a result, the Three Levels approach has a fair amount of rigor. It is practical, involving a series of straightforward questions and steps. The process has been validated, through application to companies and agencies of all kinds, in all parts of the world. It can even be fun, because teams improve the quality of work life as well as improving productivity and the quality of products and services. But often it is not simple because the challenge is not simple. Any manager or performance improvement specialist who is looking for a quick-fix formula or for the latest program to keep employees stimulated is liable to be disappointed by this book.
What Has Changed? What Have We Learned?
While the business environment, the challenge, and the book purpose described above are fundamentally the same as they were five years ago when the first edition of this book was written, a number of significant changes have occurred:
There has been a global recession and a slow recovery.
The Japanese, while still formidable, have turned out to be mortal.
Microsoft and General Electric have emerged as the companies of the '90s.
The latest wave of cost reduction (this time called "downsizing") has come and, for the most part, gone. Enlightened organizations have re-focused on revenue growth.
"Shareholder value" has emerged as a unifying corporate measure.
Total Quality Management (TQM) programs are fading from corporate consciousness and disappearing from budgets.
Most significant to the message in this book, "reengineering" has burst on the scene, capturing the hearts and minds of private and public sector organizations around the world. As this is written, reengineering is at the supernova stage of the life cycle of corporate campaigns. Even though the reengineering fever pitch will not last, its half-life will be longer and its impact more significant than any other trend, with the possible exception of TQM, of the past thirty years.
Our revisions and additions to the book address these changes and reflect some of what we've learned during five additional years of applying our methodology to address the needs of our clients. This learning includes:
How to forge a stronger link between strategy and process (re) design
How to overcome the common pitfalls in process redesign efforts
How to implement the significant changes that usually result from Process Improvement Projects
How to install a top-to-bottom measurement system that provides a foundation for continuous improvement and serves as a catalyst for growth
Although we still have a lot to learn in this area, we are also beginning to understand the role of leadership in the performance improvement journey.
Overview of the Chapters
Chapter One explores the forces driving the need to be more competitive. It suggests that the failure to meet the challenge has been due not to lack of desire or effort but to lack of understanding of the variables that influence organization and individual performance. Chapter Two contrasts the traditional functional view of the organization (as represented by the organization chart) with the more descriptive and useful systems view. We describe the system components that must be managed to establish an organization that is competitive, adaptive (reactively and proactively), and focused on continuous performance improvement.
The third chapter introduces the Three Levels of Performance and presents the Nine Performance Variables that determine the effectiveness and efficiency of an organization. At each of the Three Levels—the Organization Level, the Process Level, and the Job/Performer Level—this chapter describes the three Performance Needs—Goals, Design, and Management—and shows how they can be used by executives, managers, and analysts.
One of the Three Levels of Performance is explored in each of the next three chapters. Chapter Four provides a set of questions for diagnosing the effectiveness of the Goals, Design, and Management at the Organization Level. It illustrates the use of these questions in a sample company and presents the Relationship Map as a tool for understanding and improving performance at this level.
Chapter Five gives the reader tools for understanding and improving the goals, design, and management of the cross-functional processes through which an organization provides products and services to customers. This chapter continues the examination of the company introduced in Chapter Four and presents the Process Map as a methodology for meeting the needs at this Level of Performance.
Chapter Six uses the sample organization from Chapter Four to explore the role of people in improving organization and process performance. It presents the Human Performance System as a tool for understanding and meeting the Performance Needs (Goals, Design, and Management) of individuals and work teams.
The remaining chapters discuss the application of the systems view of the organization and the Three Levels framework to a variety of performance improvement opportunities faced by most North American corporations today. Chapter Seven examines the role of the systems view in ensuring that top management has answered all eleven questions that must be addressed to establish a clear, viable strategy. It goes on to show how the Nine Performance Variables can help in implementing that strategy.
Through four examples, Chapter Eight shows how quality, productivity, cycle time, customer focus, and culture change efforts can fail if they do not address all Three Levels of Performance. It goes on to examine two performance improvement efforts that have benefited from covering all Three Levels.
Chapter Nine provides human resource, industrial engineering, and systems analysts with a comprehensive process for diagnosing organization Performance Needs before prescribing "solutions," such as training, reorganization, and developing management information systems. A case study illustrates each of the fourteen steps in this performance improvement process.
Chapter Ten describes the Process Improvement methodology that companies such as AT&T, GTE, Ford, and Motorola are using to improve quality and customer satisfaction and reduce cycle time and costs. Chapter Eleven describes the traps we have seen that lessen the return organizations realize on their investment in process redesign.
Measuring performance and designing a performance management system is the focus of Chapter Twelve. This chapter addresses the "what," "why," and "how" of establishing a measurement system that encompasses all Three Levels of Performance. Examples illustrate establishing measures, developing a performance tracking system, and using measures as the basis for planning, feedback, performance improvement, and rewards.
Chapter Thirteen describes how to use measurement as the basis for the continuous management of processes, once they have been redesigned. It then shows how to integrate these Process Management efforts into enterprisewide "managing the organization as a system." Readers are given a description of how the systems culture differs from the traditional hierarchical culture and a set of questions for diagnosing the effectiveness of the organization system in which they work.
Chapter Fourteen presents a nine-step process for designing an organization structure that supports—rather than inhibits—the efficient delivery of high-quality products and services that meet customer needs. Using Relationship and Process Maps (introduced in Chapters Four and Five), a viable organization structure is developed for a sample company.
Chapter Fifteen draws on our experience working with human resource development professionals and shows how the Three Levels approach can help these professionals make a more substantial contribution to organization performance. It describes how the Three Levels tools can help in needs analysis, training design, and evaluation, and how they can transform the training operation into the organization's "performance department."
The final chapter describes a three-step process for getting started on a Three Levels project. It also provides examples of how the Three Levels tools have been unbundled and used to address specific issues and to help develop a customer-focused, participative, low-conflict, accountability-based culture.
How Is This Edition Different?
For readers familiar with the first edition of this book:
Chapter Eleven is new.
Chapters Ten, Twelve, Thirteen, Fourteen, and Sixteen have changed significantly.
The remaining chapters have changed only moderately or slightly.
Acknowledgments
We would like to acknowledge the individuals who have made this book possible. First, we thank our clients, who provided us with the real-world crucible in which our technology was developed. While our experience results from interactions with hundreds of people in dozens of organizations, we would like to offer special thanks to Ken Massey of Grupo Industrial ALFA; John Murphy, formerly of GTE; Bill Wiggenhorn of Motorola; Larry McLernon, formerly of LiTel; Duke Schmidt, formerly of Ford; Richard Rummler of Steelcase; Mai Warren, formerly of CVS; and Denny Taylor of Shell.
Second, we thank our professional colleagues, from whom we have learned a great deal about performance: Dale Brethower, Karen Brethower-Schetky, George Geis, Tom Gilbert, Jaime Hermann, George Odiorne, and Carl Semmelroth.
Third, we want to thank our colleagues at The Rummler-Brache Group, whose work with clients served as both input to and validation of the ideas and methodology presented in this book. We would especially like to acknowledge Ron Bullock, Patricia Floyd, Mike Hammer, Paul Heidenreich, John Kittredge, Roger Proulx, Alan Ramias, and Rick Rummler. Special thanks also go to Jim Fisher for his contribution to the chapter on organization design.
Fourth, we thank the office staff of The Rummler-Brache Group, who provided beyond-the-call-of-duty support to us as we pursued two full-time jobs—serving our clients and writing this book. Special thanks go to Sheri Bach, Larry Bataille, Cori Haveson, Traci Hilbert, Susie Boorujy, and Ede Shanahan.
We also thank Leonard and Zeace Nadler, Jossey-Bass consulting editors, who, we hope, have helped us communicate to a wider audience.
Finally, we offer special thanks to our families and friends, who encouraged and supported us throughout this effort.
February 1995
Geary A. Rummler
Tucson, Arizona
Alan P. Brache
Flower Mound, Texas