4.2. Understanding and Managing the Organization Level

If executives do not manage performance at the Organization Level, the best they can expect is modest performance improvement. At worst, efforts at other levels will be counterproductive. We have observed a number of companies in which quality improvement is a major thrust. They have embraced Statistical Process Control (SPC) tools, Just-In-Time UIT) techniques, Manufacturing Resource Planning (MRP II) systems, and employee empowerment practice s. They wonder why the quality gains aren't more dramatic. Inevitably, it is because:

• The various quality efforts are not driven by a clear statement of organization strategy. The strategy should define the role of quality in the business, the types of quality that represent the competitive advantage, and the organizationwide, customer-driven measures of quality.

• The organization has not been designed in a way that supports maximum quality. The impact of the noble efforts in training, tools, systems, and procedures is limited by the organization structure and relationships among departments.

• The organization is not managed with quality as the driver. Quality has not been built into tactical goals, performance tracking and feedback, problem solving, or resource allocation. Quality is typically rolled out function by function (there is a design quality program, an engineering quality program, a manufacturing quality program). The tremendous threats and opportunities within the "white space" on the organization chart are ignored.

Each of these shortcomings represents a failure to manage one of the three Performance Variables at the Organization Level. We believe that an organization's managers can "get their act together" (the plea of the customers, suppliers, shareholders, and employees quoted at the beginning of this chapter) only by understanding and pulling the levers of Organization Goals, Organization Design, and Organization Management.

The need to understand the Organization Level is not limited to managers. Analysts (human resource specialists, systems analysts, industrial engineers) also need to understand the nature and dynamics of the Organization Level. With the context that this understanding provides, they are better able to design improvements that have the maximum positive impact on the performance of their organizations.