Sunday, March 14, 2010

Developing competencies during the economic downturn (Part II)

In this blog I present two examples of countries that have successfully created what the ILO describes as a “virtuous cycle”, which consists of developing competencies around an articulated business strategy to achieve high levels of productivity and high levels of employment. These countries are China and India, two very different countries in terms of their socio-political characteristics, but very similar for effectively aligning the development of competencies with broader employment strategies that allowed them to become two of the fastest growing economies of the world.

What are the main lessons learned?

The analysis of China and India provides important lessons to practitioners on how to implement competency-based programs to meet talent demands of key occupational sectors. These lessons are easily transferred to other countries and organizations interested in achieving higher levels of productivity for people, employability in the formal economy, and improved economic and social conditions for all.

Despite the precarious economic and social conditions lived by these countries, they made a series of programmatic actions that positively transformed their economies, including the following:

  1. Implemented macroeconomic reforms to attract foreign investment and increase employment levels.

  2. Aligned policies and incentives to foster employment in key occupational sectors.

  3. Implemented cost-effective learning actions to achieve radical improvements of productivity levels. These actions included reforms to their educational systems, partnerships with private sector organizations, and incentives to make training available to the poor.

  4. Built a solid infrastructure, with roads, ports, and airports to properly manage the distribution of manufactured products and services.

The series of actions implemented, demonstrate that the “secret formula” relies on alignment of key elements around a compelling business strategy, commitment of stakeholders, and continuity of actions.

The economic growth of China: programmatic change with a clear objective: improve productivity levels and employment

In 1976, when Mao-Tse Tung died, China was one of the poorest countries on earth. Deng Xioping the new leader of China initiated a new administration with radical macroeconomic reforms. At the outset, Deng Xioping focused his reforms on rural China. These reforms had an immediate impact on productivity levels, raising the annual income of Chinese peasants 15% on average (Meredith, 2007).

After the initial success, Xioping created special zones across the border where foreign companies could manufacture products to be sold in other countries. Companies benefited with low taxes and low salaries, and the strategy generated employment for millions of people. As a result, China dramatically increased exports of manufactured products. From 1996 to 2000 the Asian country grew auto parts exports from $1.3 billion to $9 billion. In 2001, China exported $20 billion in computers, cell phones, CD players, and other products. By 2004, China exported $180 billion more than any other country in the world (Meredith, 2007).

China built a modern infrastructure of roads, airports, railroads, and ports to distribute all merchandises manufactured in the country. According to Meredith (2007), the most remarkable growth in infrastructure has been in their roads and highway system:

“In 1989 China had only 168 miles of expressways; by 2004, they had built 21,500 miles. By 2010 it plans to have 40,000 miles and by 2020 nearly 55,000 miles equal to the total length of the American highway system” (p. 28).

China taught us a powerful lesson on how to make a seamless integration of unskilled people into the labor market. Peasants coming from rural China were trained to work in the special manufacturing zones. The development of a competent Chinese workforce was not easy. Rural workers and workers that came from bureaucratic government jobs required time consuming training to develop needed competencies. The training was part of the agreements negotiated by the Chinese government with foreign companies. These companies, attracted by low salaries and low taxes, trained Chinese workers in the latest manufacturing methods and technology.

The economic success of China was a combination of proper macroeconomic policies to attract foreign investment, the creation of employment in key occupational sectors, important investments in infrastructure, and the development of a competent and flexible workforce.

If China could improve their economy in such a dramatic way, other countries can initiate a virtuous cycle too. Still China has important disparities to solve; there is a big difference in salaries from people in rural areas to those working in the special manufacturing zones. The environment is another area of concern, especially in important cities that suffer from high pollution levels of the air and water. But maybe the most critical area for improvement for China is the creation a more democratic system. Today China enjoys economic freedom, but not political freedom.

Here comes a more elaborated question: how can we implement a virtuous cycle with consistent growth in the social, economic, and environmental areas?

The rise of India and its transformation to the prime global IT center

India obtained his independence from Britain in 1947. After that, India remained in self imposed economic exile for decades as a result of their social leaders’ views Gandhi and Nehru who dreamt of India as a self sufficient country. During decades India’s kept many companies state-own and protected from outside competition. The antimonopoly laws caused inefficiency and bureaucracy. In addition, the Indian government approved generous laws for employees (Meredith, 2007).

In 1991, India faced a dramatic economic and political crisis. To get out of the crisis, the International Monetary Fund (IMF) provided a $2 billion recovery loan conditioned to the implementation of a series of macroeconomic reforms. The government initiated a series of actions that included the devaluation of the Rupee by 20 percent to improve exports, the increase of interest rates to 11 percent to attract deposits, and the abolition of export subsidies.

The Indian government continued the initial reforms during the following years, allowing foreign investment in the state-own companies, eliminating antimonopoly laws for big companies, lowering income taxes, and allowing mutual funds and foreign investors to buy shares of Indian companies on the Bombay stock market.

As a result of the economic measures the economy grew fast, unemployment levels started to decrease, and inflation dropped to single digits. The debt was paid down and foreign exchange reserves built back up.

India’s rapid growth was accompanied by the development of a competent workforce in the modern services sector, including transport, communications and manufacturing. Still, the nation has a challenge to supply with qualified people the demands required to back up the country’s development plans. The Planning Commission’s strategy included specific objectives to expand and improve the quality of training to address the nation’s skills gap. These objectives focus on making education and training efforts relevant to the labor market needs and to improve the access of poor and vulnerable people to skills development opportunities (ILO, 2008).

India’s Prime Minister Manmohan Singh declared at the Indian Labor Conference the need to create an adequate infrastructure for skill training and certification.

“The challenge … is to increase the skilled workforce from 5 per cent at present to about 50 per cent. To make our working people employable, we must create adequate infrastructure for skill training and certification and for imparting training. Industrial Training Institutes must keep pace with the technological demands of modern industry and the expanding universe of technical knowledge” (April 2007, New Delhi).

Developing competencies during the economic downturn

The development of a competent workforce increases productivity levels and attracts employment. The impulse to the economy benefits the economic and social conditions of people, raising education levels and improving their future employability in the formal economy. Yash Gupta, the Dean of Johns Hopkins Carey Business School, revealed the sustained increase of college education in China and India (2009).

"As is often the case these days, we must consider the impact of China, where the number of college classroom seats rose from about 6 million in 1999 to 18 million in 2004. China has continued to add 2.5 million seats each year. During the same five-year period the number of places in Indian universities climbed from 9 to 12 million” (p. 3).

The rise of China and India has been effectively supported by the development of skills and competencies required to meet current and future needs. Those countries have properly aligned skills and competencies with macroeconomic policies and broader employment and development strategies that fostered productivity levels and increased their competitiveness in a globalized business context.

The development of competencies requires a customized approach to respond to labor markets needs

The development of competencies around an articulated business strategy requires a customized approach, targeted to the characteristics and challenges of the different labor markets. The ILO report (2008) summarizes training needs and challenges faced by countries.

  1. European countries with a strong tradition of vocational training need to restructure their training and educational systems to better respond to needs presented by the globalized business economy.

  2. Developing countries face a dichotomy. The majority of workforce are low skilled and work in the informal economy, while some people that work in key sectors, enjoy high productivity and high employment levels. These countries face a challenge to recognize skills acquired informally, and to integrate trained people in the formal economy. In addition, training programs should focus on developing entrepreneurship skills to foster the formalization of small enterprises.

  3. Least developed countries are trapped in a vicious cycle caused by inadequate education, low skills, and low productivity. Their challenge is to reform education and training systems to develop skills needed in the formal economy, and making it available to the poor. In addition, these countries need to create partnerships with private sector organizations, using apprenticeship training, and leveraging training acquired in organizations with training acquired in educational institutions.

The creation of a “virtuous cycle”

The ILO reinforced in its International Labor Conference (2008) the importance to invest in developing skills to promote and sustain economic development. Furthermore, the ILO emphasizes the responsibilities of governments and social partners to develop a “Virtuous Cycle” and defined a framework with five areas:

“(1) to boost skills development at the workplace and along value chains; (2) to help manage global drivers of change; (3) to allow early identification of current and future skills needs to feed national and sector development strategies; (4) to link education, skills development, labor market entry and lifelong learning; and (5) to promote social inclusion by extending access to education and training for those who are disadvantaged in society”. (p. vi)

Governments, institutions and individuals have an important role to play to accomplish three main objectives: matching supply to current demand for skills, effectively adapt to change, and developing skills required in the future. Furthermore, as emphasized by the ILO, employment policies should also promote respect for employee rights, safety standards, social inclusion and equality, and the development of a sustainable business environment.


International Labor Conference, 2008, Report V, Skills for improved productivity, employment growth and development. International Labor Office, Geneva, ISBN 978-92-2-119489-7 ISSN 0074-6681, First edition 2008

Johns Hopkins Carey Business School (2009). ONE: One world, one future, one school

Meredith R. (2007). The elephant and the dragon: the rise of India and China and what it means for all of us, W.W. Norton and Company, NY.

Sunday, January 24, 2010

Developing competencies during the economic downturn (Part I)

According to a report prepared by the International Labor Organization -ILO (2008), the development of competencies initiates a virtuous cycle that generates productivity improvements, better profits for organizations and better salaries for employees, the creation of more jobs, and the improvement of economic and social conditions for all.

The ILO revealed that countries that have properly aligned the development of competencies with key occupational sectors have achieved higher levels of productivity and higher levels of employment growth.

From the list of developing countries, Asia achieved the highest productivity levels. Asian countries (including China and India) increased their productivity by 40% from 1995 to 2005. Latin America and Caribbean countries raised their productivity by 6% from 1997 to 2007. During the same ten year period, Middle East countries have slightly decreased their productivity by 2%, while North Africa countries increased their productivity levels by 14%.

Productivity is defined as a relationship between inputs and outputs. When fewer inputs are required to produce an output there is an increase in productivity. Productivity can also be measured in economic terms, when the price of a product increases and production costs are maintained or reduced. The basis for measuring productivity utilized by the ILO was labor productivity, defined as output per unit of labor in terms of number of persons employed. To make a meaningful comparison between countries, GDP figures (in US dollars) were converted into comparable terms on the basis of purchasing power parity, which take into account differences in the price of a standard set of goods and services in different countries.

Focusing training efforts to improve productivity levels

Many organizations cut their investment on training during economic crisis. Although cost reduction measures have a positive short-term impact, in the long term these savings generate structural deficiencies difficult to solve. According to the Corporate Executive Board (2008), best organizations do not cut their G&A budgets. They improve cost discipline of their operational areas, protect learning investments, and make critical talent plays to emerge successful from difficult periods.

Competency-based learning interventions are an interesting option to develop critical skills during economic crisis because they are cost-effective, and focused “to deliver the best knowledge to the right person at the right time”. By including periods of instruction and periods of practical application, followed by individual and group reflection, individuals assimilate and internalize new learning and enhance their performance.

The competency approach shifts the importance to measuring outcomes rather than measuring the learning process involved. This approach recognizes that competencies can be acquired by different ways, and that competencies are applicable to other functions of similar nature, contributing to improve people’s future employability.

Competency-based learning interventions integrate the principles of the three classical learning theories: i) behaviorism which supports that the acquisition of new behavior is originated by external conditioning, ii) cognitivism which explains how brain-based learning processes occur through memory and prior knowledge, and iii) constructivism which emphasizes that learning involves constructing one’s knowledge from one’s experiences.

What are competencies?

Simply described, competencies are the combination of knowledge, skills, and abilities that when effectively applied, produce a successful performance in a defined function or activity. Competencies are observable, measurable, and can be developed to reinforce competitive advantages and future performance.

Dubois, D. & Rothwell, W. (2004) define competencies as the multi-dimensional characteristics linked to the desired level of performance “Competencies…. are the characteristics that individuals have and use in appropriate, consistent ways in order to achieve desired performance. These characteristics include knowledge, skills, aspects of self-image, social motives, traits, though patterns, mind-sets, and ways of thinking, feeling, and acting”. (p.16).

The competency approach allows portability and transferability. Competent employees are able to work in functions of similar nature. For example, a person who is competent to manage IT projects is able to work in a wide variety of jobs whose functions require managing resources to complete a task or deliver a service within defined parameters of time, cost, and quality --not only in the IT industry. In addition, if the person is certified by a trusted source, the person increases his/her future employability and career development opportunities.

A competency-based approach should be focused to the business

An effective competency based approach, is directly aligned with business needs, requiring business units to be not only participating, but guiding the identification and profiling process. Generic and off-the-shelve competency solutions do not provide the promised benefits, because they are not linked with the organization’s key business processes, and may become an additional administrative burden.

Origin and evolution of competencies

The origins of the competency movement can be traced back to the 1960’s when the USA, worried about the capacity of the Soviet Union to launch satellites into space, tried to improve its national education and training standards. Later in 1973, David McClelland published his seminal paper: “Testing for competence rather than for "intelligence" and started to spread the competency movement in organizations in the USA, the UK and other industrialized nations. McClelland supported that a person’s self motivation, results orientation, and self image have a bigger impact on performance than his/her intelligence level.

In the UK, Gilbert Jessup led the introduction of the vocational competency-based system. In the 1980’s, the UK government was worried that their training and development programs were lagging behind the changed job market, and established a national framework to oversee, rationalize and standardize the whole training and professional development sector in a competence- based format. Gilbert Jessup was appointed head of Curriculum design at the newly established National Centre for Vocational Training (NCVQ).

In the US a similar effort started in 1994, when both the United States Congress and the US President established the National Skill Standards Board (NSSB) under the National Skill Standards Act. The NSSB was created in response to many requests by business leaders to close the skills gap in the US workforce. The NSSB was tasked for building a national skills standards framework that included skill standards for key occupational sectors, assessments, and certifications. These skills were going to be identified by industry in full partnership with labor, civil rights groups, and community-based organizations. The standards would be based on high performance work and portable across industry sectors. Unfortunately, the effort was discontinued years later.

Nowadays competencies are commonly utilized in organizations. A study conducted by Hewitt Associates (2005) revealed that 73% of the 373 participating companies used competencies in their HR management processes. What is even more interesting was the positive correlation of competencies with financial results: organizations with better financial performance have effectively integrated competencies within their various HR management processes, including selection and recruitment, training and development, compensation, and talent management and leadership development.

How can organizations improve productivity levels with an integrated competency-based approach?

In organizations, when competencies are properly aligned with the mission, vision and key business processes, competencies become a powerful tool for enhancing the organization’s competitiveness. Particularly I would suggest the following five actions:

1. Map key business processes and identify critical indicators.
Analyze your mission and vision, and identify competencies required to perform key functions. Your competency model should be directly aligned with your key business processes and business priorities.

2. Profile functional and behavioral competencies for those key functions and critical indicators.
Profiling competencies and associated performance criteria/behaviors is a critical task. I suggest combining the functionalist and behavioral approaches. The functional analysis technique is used to identify functional competencies. These competencies describe what is required to successfully perform in a particular function (see example).
Behavioral competencies help to improve interpersonal relationships and individual effectiveness. Behavioral competencies complement functional competencies but do not substitute them (would you have surgery with a surgeon that effectively listens, builds bonds, and works in teams but that is not competent to perform critical surgery tasks?) (behavioral competencies examples).
When profiling competency behaviors, try to do it at a proper altitude level to provide direction of required performance but be careful not being too specific because your model may be limiting creativity.

3. Involve key staff in the identification and profiling of competencies.
These employees have been there for a long time and they know how to do the work. Furthermore, they will be natural change agents that will help to reinforce the implementation of competencies.

4. Use competencies in your learning plans.
Expand the traditional cognitive training events and develop meaningful learning interventions that take into account key learning principles from the behaviorist, cognitive and constructivist learning theories. Use a variety of learning resources to maximize learning retention and application. Integrate periods of instruction with periods of application ensuring individual and group internalization. Use competency-based case studies, on-the-job training, coaching and mentoring. Take advantage of experienced staff and assign them with key mentoring roles.

5. Develop a competency inventory of your staff and take advantage of your most competent staff.
Give your most competent employees challenging work, and assign them responsibilities for developing others. Provide them with special rewards and incentives.

Competencies open roads to productivity, employability, and sustainable development. The ability to identify needed competencies and the ability to develop those competencies will be key differentiators for future success of organizations, and future employability for individuals and communities.


· Dubois, D. & Rothwell, W. (2004). Competency-Based Human Resources Management. Palo Alto, CA: Davies Black Publishing.
· Green, P. (1999). Building Robust Competencies: Linking human resource systems to organizational strategies. San Francisco: Jossey-Bass.
· Hewitt Associates (2005). Research Highlights: How the Top 20 Companies Grow Great Leaders. Downloaded Feb 2006 from
· International Labor Conference. (2008). Report V, Skills for improved productivity, employment growth and development. International Labor Office, Geneva, ISBN 978-92-2-119489-7 ISSN 0074-6681, First edition 2008
· Corporate Executive Board. (2008). Executive Guidance for 2009, “What the Best Companies Do”

Thursday, December 24, 2009

Leadershift: Five Leadership Lessons

The analysis of leadership is a topic of interest for countries, organizations and individuals. Largely discussed whether a leader is born or made, contemporary authors have analyzed the topic under a practical perspective, offering advice, and lessons learned to develop key leadership skills.

The following blog extracts five key leadership lessons from “Leadershift” a video produced by Joel Baker.

If you are interested to use a learning video to increase leadership skills in your organization, you should explore this learning resource. Below is a summary of the video.

Leadership lesson 1: Focus on the future

Joel Baker introduces the importance for 21st century leaders to focus on the future: “leaders build bridges between today and the future”. Baker explains that the difference between a leader and a follower is the breadth of responsibility to focus on the future. While a leader spend most of their time on the future, followers focus on day to day activities. According to Baker, effective 21st century leaders dedicate a significant time creating new scenarios, helping people to see links and connections with a strategy, and building bridges that connect the present with the future. Baker considers that “a leader is someone that you chose to follow to a place you would not go by yourself”. This leadership lesson challenges us to avoid routine work, and to dedicate a significant amount of our time to build future states, anticipating the unexpected and creating new conditions. By practicing this lesson, we will develop a powerful habit, and the ability to create bridges that connect the present with the future. As Baker states it, the rule is simple: if you can not see, you can not lead.

Leadership lesson 2: Understand the nature of change

21st century leaders must be open to new paradigm shifts. The video presents two cases where new ideas, brought new changes and broke existing paradigms.
The first case shows as an example the invention of the Internet. In the 80’s the Internet did not have the success that it has nowadays. It took nearly a decade to massively utilized the Internet, due business leaders did not see its potential –including Bill Gates.
The second case was the creation of solar energy by Leslie Danzinger of Lightpath Technologies of Albuquerque, new Mexico. Leslie integrated a team, and built something that was considered impossible: create a lens that had the capacity to capture solar energy in a small cell.
These two examples help us to better understand the nature of paradigm shifts. In both cases, changes are brought by people with little or no credibility, and they come before they were actually needed or expected.
Another element to consider is the need to break comfort zones. Current success may affect the possibility to see new opportunities. Multiple changes occur every day, requiring us to be open to new ideas. These changes may seem crazy in the beginning, and may be challenging comfort zones, but they may also represent our future success.

Leadership lesson 3: Appreciate complex systems and how they work

The video help us to analyze the impact of our decisions on the system as a whole. The two examples presented in the video are a bridge that collapses and the millennium bug.
These examples showed that small actions have a major, and sometimes unexpected impact. For example, in the 70’s when computers started, programmers decided to use only two digits to represent the year. The decision was made to save precious processing memory, nevertheless, no one thought on the major impact of that small decision will have in the year 2000. Computers would read 2000 as 1900 representing a major risk for organizations worldwide. Fortunately, organizations prepared emergent strategies and properly managed the issue without major consequences, nevertheless, the economic impact, and attention dedicated was significant. This lessons reveals that leaders have to think systemically; make decisions and actions with a clear understanding of the system as a whole.
Other authors also reinforce the importance of systemic thinking, Peter Senge (1990) for example, considers systems thinking as one of the five disciplines of a learning organization. He urges to see the forest and the trees “systems thinking encompasses a large and fairly amorphous body of methods, tools, and principles, all oriented to looking at the interrelatedness of forces and seeing them as part of a common process”. (p. 89).
Leaders must develop critical skills to analyze complex systems, and make informed decisions. Additionally, leaders have to anticipate, prevent and mitigate non-desired effects or consequences.

Leadership lesson 4: Leaders have a profound impact on productivity based on his/her style of leadership
What is the impact of a charismatic leader on productivity? According to Joel Baker a charismatic leader can increase their people’s productivity by more than twenty times.
The video shows what charismatic leaders do to create positive and productive work environments. Successful leaders exercise the following six strategies: enthusiasm, positive control, excitement, setting high standards, expecting the very best from their people, and sharing the decision making process.
The analysis of own leadership style is required to increase awareness of oneself and to identify the impact oo our actions on others. Furthermore, as Ken Blanchard and Paul Hersey recommend with their Situational Leadership theory developed in the late 1960’s, leaders have to analyze situations, and adopt the most convenient leadership style -directing, coaching, supporting, or delegating, depending on the level of maturity of their people.

Leadership lesson 5: Leaders create a shared vision of the future
The fifth leadership lesson presented by Joel Baker reinforces the importance of a shared vision. The video presents two cases where a powerful vision helped to achieve outstanding results. The first case is the story of Delancy Street in San Francisco in 1971, where people –ex cons, create a visionary future, applying business work ethics and human values to lead a rehabilitation program and make “winners” out of a “loser” society.
The second example, is applied to the world business environment. Jim Collins and Jerry Porras in their book Build to Last examine how visionary companies obtain six times higher returns than their nonvisionary competitors. Additionally, visionary companies obtain fifteen times higher returns than the overall companies from the stock market.
A shared vision is developed collectively, and nurtures the team to achieve outstanding results. The role of a leader is create the conditions to unleash the potential, and focus staff on a collectively desired future.
A good reflection for us is to analyze how much time do we dedicate to develop a shared vision for the future. The answer will define if we are leaders or managers.

Baker, Joel. Leadershift: Five Lessons for Leaders in the 21st Century.

Senge P. (1990). The fifth discipline: the art and practice of the learning organization. New York: Currency Doubleday.

The Blanchard and Hershey Model. Retrieved on April 11, 2006 from:

Sunday, September 27, 2009

The effective implementation of multi-source feedback processes (360-degree reviews)

Multi-source feedback (360-degree review) is a useful mechanism to give feedback to an employee from multiple sources, including subordinates, peers, supervisors, as well as a self-assessment, and in some cases customers and suppliers.

Giving feedback consists of providing information about the impact of staff behavior on other people and / or the completion of a task. The importance of timely and accurate feedback is critical to increase staff performance. A quantitative study conducted by the Corporate Leadership Council (2002) revealed that fairness and accuracy of informal feedback increase staff performance by 39.1%. The same study revealed that the presence of 360-degree review (multi-source feedback) increases individual performance by 8.1%.

Multi-source feedback was initially instrumented for development purposes to increase the cognitive process of self-reflection among participants, and increase self-awareness. As multi-source feedback evolved, it has been linked to performance.

Bracken, Timmreck, & Church (2001) traced back the origins of multi-source feedback processes to the beginning of the 20 century when psychologists started exploring new methods for measuring performance and selecting employees. In the foreword of the textbook, David Campbell explains how MSF processes were implemented in organizations. The following paragraphs provide a brief synopsis.

In 1922 Walter Dill Scott, the director of the Committee on Classification of Personnel in the US Army, invented the man-to-man comparative scale to replace the traditional seniority system with a merit-based system. He started using the man-to-man comparison scale to measure and reward individual performance. Further improvements to this method included the use of “behaviorgrams” to better anchor evaluation scales.

Years later, the evaluations for supervisors included new dimensions such as personality, originality, leadership, organizational ability, cooperativeness, ability to develop workers, and technical ability. After the war, the application of standardized tests was commonly used by organizations to measure intelligence, mathematical and mechanical abilities, personal inventories and career surveys. These tests were scored by hand and results were only provided to organizations, never to individuals.

A study conducted with Marine officers in 1947 revealed that peer ratings were more accurate that several objective tests. Furthermore, peer ratings were more valid predictors of future performance than supervisor ratings. The critical incident technique developed by Flanagan was particularly useful because described examples of effective and ineffective job performance

In the 1960’s the National Computer Systems (NCS) automated the processing of psychological assessments. Despite the increased use of psychological assessments with the automation process, people’s resistance also increased because the tests included discriminating questions and were continuing being used unilaterally by organizations.

The Peace Corps, a government initiative created by President John F. Kennedy implemented the use of psychological tests, based on the premise that a better understanding of themselves would help individuals adapt to cultural change. This was the first time that results were provided to individuals.

In 1970 Robert Dorn who worked in the Peace Corps leadership training joined the Center for Creative Leadership (CCL) and introduced the practice of providing results of the assessment to the individual. Years later, Robert Bailey an economist that worked for Dorn, had the idea of including others in the assessment process and initiated the multi-source assessment process.

Multi-source feedback: Current trends
Research conducted by the Corporate Leadership Council (2006) revealed that over 80% of their member organizations use multi-source feedback. Moreover, 90% of Fortune 1000 companies use multi-source feedback. The frequency reported by organizations varies: nearly two-thirds of 56 surveyed organizations conduct once a year reviews or every two years, 31 percent of organizations apply multi-source feedback as needed, and 25 percent of organizations offer these reviews every other year.

Common applications
Most of organizations use multi-source feedback for development purposes mainly, however, some organizations use them for measuring performance as well. Most common applications are the following:
* Upward Feedback. Some organizations use multi-source feedback to assess their leaders’ strengths and identify development opportunities. Additionally, the process can detect organization-wide problems, and measure the alignment of leaders with key organizational priorities. The CLC reinforces the importance of using 360-degree reviews for leaders. CLC’s research “Voice of the Leader” (2001) reveals that companies with stronger leadership benches are four times more likely to outperform their industry peers in revenue growth over a 36-month period.
­* Development of staff. According to the CLC (2006) nearly 70% of organizations use multi-source feedback for development purposes only. The CLC suggests to concentrate on qualitative feedback on competencies and behavioral attributes.
* Succession planning. Some organizations use 360-degree reviews to identify employees with the necessary attributes to fulfill future leadership roles (high potential employees). In addition, these organizations target leadership development programs around their key talent to prepare them for future leadership positions.
­* Review staff performance. The review of staff performance should concentrate in at least two elements: the measurement of tangible results in terms of outputs and outcomes, and the actions that led to those results measured with multi-source feedback. The use of competencies with behaviors provides clarity of required performance criteria, allowing a consistent and transparent evaluation process.
* Compensation. Literature research indicates that few organizations use multi-source feedback for compensation decisions (salary increases and bonuses) because of potentially biased ratings. Additionally, when multi-source feedback is linked to compensation decisions, feedback provided loses its power as a developmental tool.

Multi-source feedback provides a comprehensive insight into facets of employee performance and behavior by compiling feedback from multiple perspectives, and enhancing individuals’ understanding of how their colleagues perceive them and their work. Among the most important benefits are the following:
* Align performance with strategy. Competencies should be aligned with the organization’s mission and priorities. Furthermore defined behaviours should focus staff on specific results required for achieving current and future organizational goals.
* Increase transparency in the review process. The use of multiple feedback sources increases validity and acceptance from staff on the findings of the evaluation process. Additionally, the information includes valuable and complementary perspectives, for example, supervisors tend to base feedback on bottom line results and technical competence, while direct reports value factors such as their supervisor’s commitment to their development, and peers tend to focus on technical competence, teamwork, and collaboration.
* Reinforce desirable behaviors. The standardization of behaviors and competencies throughout the organization brings all employees to the same standard and allows them to focus on developing only essential skills.
* Identify and develop key talent. Multi-source feedback provides a transparent mechanism to identify staff with attributes and competencies necessary to fulfill key positions. In addition, the information helps to articulate targeted training and development programs to increase staff’s strengths.

Key Success Factors for Implementation
Many organizations fail to administer multi-source feedback effectively because they ignore essential supportive components such as proper alignment with strategy, linking feedback to training, and being aware of the influence of rater bias.

The effective implementation of multi-source feedback requires a proper alignment with the organizational goals, preparatory actions and follow-up support. The following four actions should be taken into consideration:

1) Increase alignment with the organizational priorities and objectives: Competencies and behaviors measured with multi-source feedback processes must be linked to business objectives, facilitate organizational strategy, and/or cultivate leadership characteristics
2) Eliminate biases by selecting raters that are familiar with the employee
3) Ensure a shared understanding of rating standards and criteria to prevent confusion among raters and prevent error. Raters should receive preparatory training to ensure a proper understanding of competencies, rating criteria and typical rating errors
4) Support employees during and after the process with coaching or mentoring activities to facilitate full understanding of the process, deal with strong emotions that may occur, and prioritize learning actions.

Bracken, D., Timmreck, C., and Church, A. (2001) emphasized the importance of enhancing rating ability and motivation to improve rating performance. The authors included a list of seventeen specific recommendations grouped in three categories: planning and development, implementation, and rater training.

The value of multi-source feedback is accurate feedback, therefore the 17 listed recommendations are a valuable checklist. Among other, the actions included a 2-3 hours of preparatory training to ensure a proper understanding of the multi-source feedback process, its objectives, competencies and behaviors, rating criteria, number and selection of raters, management commitments and allocated resources to improve on specific areas. Preparatory training is critical to help raters understand and avoid typical rating errors, such as leniency, harshness, central tendency, and halo error, ensuring a consistent criteria between raters.

Multi-Rater Feedback Processes in Development Institutions

In March 2007 an online survey was sent to 21 international organizations to identify multi-source feedback experiences and best practices. 10 organizations (48%) submitted responses. 7 of the 10 organizations reported using multi-rater feedback processes. Key findings are summarized below:
Surveyed organizations reported strengthening supervisory skills as the main objective for their multi-source feedback process. The second most common application reported was staff development/training.
* Managers and supervisors are the most frequent recipients.
­* Most organizations conduct multi-rater feedback processes on an as-needed basis.
* The majority of the organizations rely on customized multi-rater feedback processes.
­* Six of the seven organizations that reported using multi-source feedback incorporate competencies, typically 6-10 competencies.
­* All the organizations that reported using competencies include leadership competencies. They reported that the best sources of feedback for assessing leadership competencies are supervisors and subordinates.
­* Five of the six organizations (83%) that use competencies utilize interpersonal competencies. Survey results revealed that subordinates and supervisors are the best sources of feedback for interpersonal competencies.
­* Three of the six organizations (50%) using competencies include technical competencies. They reported that the best source for feedback are supervisors, followed by internal and/or external clients.

Activities reported to ensure an effective implementation
* The international organizations surveyed reported three activities to support the implementation of multi-source feedback processes: 1) the involvement of the employee’s supervisor, 2) training and learning resources, and 3) the use of external consultants as coaches.
* In addition, most of these organizations provide training sessions to explain the results to feedback recipients, following the application of a multi-source feedback process.
* Most organizations reported that targeted communication/training was critical to increase understanding and acceptance.
* To ensure an effective implementation, organizations reported starting the implementation with a top-down strategy. Additionally, organizations reported the need to assign a dedicated group to manage the implementation. The organizations also rely on technology providers to facilitate information gathering and report generation.

* Bracken, D., Timmreck, C., and Church, A. (2001). The handbook of Multisource Feedback: The comprehensive resource for designing and implementing MSF processes”, San Francisco, CA: Jossey-Bass Inc.
* Corporate Leadership Council. (2006). Considerations for implementing 360-degree reviews: secondary research findings, Washington, DC: Corporate Executive Board.
* Corporate Leadership Council. (2003). Trends in 360-degree reviews: literature key findings, Washington, DC: Corporate Executive Board.
* Corporate Leadership Council. (2001). “Voice of the Leader”, Washington, DC: Corporate Executive Board.
* Corporate Leadership Council. (2002). “Building the High-Performance Workforce: A Quantitative analysis of the Effectiveness of Performance Management Strategies”, Washington, DC: Corporate Executive Board.

Wednesday, July 29, 2009

Learning from Einstein: Teachable lessons using the constructivism learning theory

Albert Einstein is synonymous with creativity and genius. His research opened ground to new discoveries in physics, overthrowing classical Newtonian concepts and providing solid basis for the understanding of space, time, energy, matter, and light. Einstein is considered the most important scientific person of the 21st century. He received the Nobel Prize in Physics in 1921. Einstein died at the age of 76 in April 18, 1955 in Princeton, New Jersey, USA.

Einstein’s personal life

Albert Einstein was born in March 14, 1879 in Ulm, Germany. He was the son of Hermann Einstein and Pauline Koch. Einstein had a sister named Maja, who eventually became his most intimate soul mate. Since early childhood, Einstein demonstrated his uniqueness personality. He started talking late –at about 3 years old. His parents were concerned of a possible deficiency. He was a shy boy that preferred to play alone; he was trying to find answers to his never ending questions. He enjoyed solving puzzles and building large buildings with cards. Thanks to his mother -who played the piano, Einstein received violin classes. This may have increased his mathematical skills. When he was 16, he imagined traveling along with a beam of light; later this vision helped him articulate his famous theory of relativity.

Einstein was a non- conformant individual who challenged authority and eventually became an authority himself

Albert Einstein was non-conformant individual who challenged authority, conventional wisdom, and all types of dogmas. When he was studying at the Zurich Polytechnic in Switzerland had trouble relating with his professors because, despite his superior abilities in physics, his teachers never approved his unconventional approaches. As a consequence, he did not get a job as assistant professor, although he was constantly looking to get one. Those years were not easy for Einstein; he was making very few money and was desperate –he survived by teaching private classes of physics and math. He even thought of drastic measures -such as quitting his scientific career and getting a “practical” job in a company. Thanks to one of his few, long-life friends -Marcel Grossman, whose father extended a recommendation, Einstein got a job as a third class examiner in a patent office.

A genius working with inventors

The work at the patent office fitted his personality; he analyzed inventions and selected those with potential for commercialization. Einstein saw how these brilliant people were incapable to describe their products. Einstein helped them writing the characteristics of their inventions and at the same time, was honing his abilities to simplify things. The years at the patent office were the most productive for Albert Einstein, he produced four papers considered the most important work of his life: - on the photoelectric effect, Brownian motion, the special theory of relativity, and equivalence of matter and energy (E=mc2). In addition he obtained his Ph.D., an accomplishment that helped him get a promotion from a third grade to a second grade patent examiner.

In his years at the University, Einstein got madly in love with Mileva Maric, a Serbian -and the only woman in his physics class. They had an illegitimate daughter -named Lieserl –that probably died or was given in adoption. Later they married and had two sons: Hans Albert and Eduard. Mileva was never accepted by Einstein’s mother, Pauline, and finally they got divorced. Later in 1919, Einstein married his cousin Elsa Löwenthal with whom he lived until her death in 1936. Einstein had an aloof personality. Notwithstanding, his detached relationships with others –including his sons, Einstein had the capacity to empathize and nurture long life relationships.

Against all odds, Einstein received the Nobel Prize in Physics

Einstein was nominated 10 times for the Nobel Prize in Physics but for some reason, his nomination was continuously rejected. His revolutionary theories were difficult to be tested at the time, and the Nobel Prize commission did not want to provide him the famous prize -fearing of making a mistake. In 1919 the British astronomer Arthur Stanley Eddington decided to test his relativity theory. Eddington´s expeditions took pictures of the solar eclipse from two places: Brazil and Principe, an island in Africa. Eddington proved Einstein´s theory that light “bends” but later critics declared the method inaccurate and Einstein was not awarded. Finally, in 1921 after so much pressure from renowned physics, Einstein was awarded in 1921 the Nobel Prize in Physics, not for his relativity theory, but "for his services to Theoretical Physics, and especially for his discovery of the law of the photoelectric effect."
At that time Einstein was worldwide famous. He later moved to America where he lived until his death in 1955. In 1939 Leo Szilárd an Hungarian émigré approached Einstein to get his support to develop an atomic bomb. Fearing that Germany win the race to develop the bomb, Einstein wrote a letter to US President Franklin Delano Roosevelt and in 1942 the US started the Manhattan Project with the mission to develop the bomb. Einstein did not work in the Manhattan Project, although the bomb was developed under the basis of his famous paper “Equivalence of matter and energy (E=mc2)”

The creative mind of a genius

On April 17, 1955 Albert Einstein died by the rupture of an
abdominal aortic aneurysm. After his death, the analysis of his brain did not revealed significant differences from other brains. The difference was his mind, and creativity was the basis for his genius. Einstein considered that freedom was the lifeblood of creativity. “The development of science and of the creative activities of the mind requires of freedom of the spirit: the independence of thought from the restriction of authoritarian and social prejudice. Nurturing that, should be the fundamental role of government and the mission of education”.

What teachable lessons can we learn from Albert Einstein?

The analysis of Einstein as an OD practitioner allows the exploration of the mental models and behaviors of a non-conformant genius that broke physics paradigms and challenged conventional wisdom. Einstein is the symbol for creativity and learning. The basis for his genius was his capacity to make the connection of complex things in his mind and provide a simple, yet profound explanation.
“Life is like riding a bicycle; to keep your balance, you must keep moving”
I am a firm advocate of the constructivism learning theory and I strongly believe that the development of key competencies and behaviors leads to the integral transformation of individuals.

Einstein exercised the principles of the
constructivism learning theory. This theory states that people gain knowledge and meaning from experiences, following an internal reflection process. This theory places the responsibility of learning on the individual and his ability to interact with other knowledgeable members. In his young years when he was working at the Patent Office, Einstein started “The Olympia Academy” that consisted of weekly meetings with his friends to discuss philosophy and physics. The Olympia Academy was the social media tool that he used to increase his learning.

Einstein placed special importance to creativity: “creativity requires being willing not to conform, and nurturing free minds and free spirits, which in turn requires a spirit of tolerance. The underpinning of tolerance is humility: the belief that no one has the right to impose ideas or beliefs on others”.

In one of his trips to America he was asked one of the famous questions from the test that
Thomas Alva Edison used to apply to his employees. What is the speed of sound? Einstein was asked. He replied: “I do not know it offhand” “I do not carry information in my mind that is ready available in books”. He explained that the value of a college education was to train the mind to think.

What are we doing as parents, educators, government officials, and leaders in organizations to foster creativity and innovation?

As Einstein said, “creativity is more important than knowledge”.

· Brian. D,
Einstein: A Life, John Wiley and Sons, Inc. 1996. NY
· Isaacson. W (performed by Hermann E.),
Einstein: His life and Universe, Unabridged Books, 2007, Frederick, MD.
· Robinson, A.,
Einstein: A hundred years of relativity, Harry N. Abrams, Inc., 2005, NY.

Tuesday, June 23, 2009

OD Models to Support the Transformational Change Process

This literature review examines various OD methodologies to select the most appropriate given the characteristics of the change process, the organization’s culture, and the strengths and areas of opportunity identified. The analysis reviews different OD models and tools for the entire OD process, starting with the entry and contracting phase, to continue with the organizational diagnosis phase, later, the selection of the OD intervention, and lastly the evaluation of impact and results phase.

Organizational development
OD aims at improving the results at the organization, group and individual levels. Robbins (2003), states that OD should increase performance at organizational and individual levels “OD… it’s a term used to encompass a collection of planned-change interventions built on humanistic-democratic values that seek to improve organizational effectiveness and employee well being” (p. 566).

French and Bell (1999), provide a more comprehensive definition that includes the role of top management, and the use of applied behavioral science methodologies and tools to improve the organization’s ability to visioning, empowering, learning and solving problems. “Organizational development is a long-term effort, led and supported by top management, to improve an organization’s visioning, empowerment, learning, and problem-solving processes, through an ongoing, collaborative management of organizational culture –with special emphasis on the culture of intact work teams and other team configurations –using the consultant-facilitator role and the theory and technology of applied behavioral science, including action research” (p. 25-26).

Another important consideration when implementing OD interventions is to attend two important, yet complementary perspectives: the task and the process. French and Bell examine three different models for managing OD interventions: Burke’s seven phase model which includes activities for the entry, contracting, and diagnosis, feedback, planning change, intervention, and evaluation phases.

Cummins and Worley emphasize the identification of key ingredients of successful change efforts, and describe a five phases model to effectively managing change processes “1) motivating change, 2) creating a vision, 3) developing political support, 4) managing the transition, and 5) sustaining momentum. Lastly, the authors analyzed the change management handbook developed by Berger, Sikora, and Berger for better aligning the organization’s socio-technical elements. The authors consider the process of managing change as the continuous alignment of the organization with the market to be more effective than competitors: “Aligning is the continuous synchronization of four key management levers –strategy, operations, culture, and reward” (p. 124).

Entry and contracting
Any OD intervention should clearly define the intervention’s goals, scope, and main expectations of key stakeholders. Lippitt and Lippitt (1986) describe six phases to effectively manage the entry and contracting phase in a consultant-client working relationship; “1) Engaging in initial contact and entry, 2) formulating a contract and establishing a helping relationship, 3) Identifying problems through diagnostic analysis, 4) setting goals and planning for action, 5) taking action and cycling feedback, and 6) competing the contract (continuity, support, and termination)” (p.11). Instead of offering a step-by step process,

French and Bell (1999) emphasize that contracting is repetitive, continually renewable, and should cover the psychological and financial aspects. Moreover, the authors suggest clarifying and agreeing on the intervention’s conditions, ground rules, deliverables, and price. Additionally, to ensure a successful consultant-client relationship, the authors suggest paying particular attention to trust issues, and five ethical dilemmas: “(1) Misrepresentation and collusion, (2) misuse of data, (3) manipulation and coercion, (4) value and goal conflicts, and (5) technical ineptness”. (p. 266). The analysis of information suggests paying special attention to the clarification of goals, and expectation in any OD intervention, furthermore, given the high visibility of the client, and the recent public scandals, any consultant-client relationship must address trust issues and ethical dilemmas.

Organizational diagnosis and assessment
Literature suggests identifying the most appropriate models and tools to conduct the organizational diagnosis and assessment. Harrison and Shirom (1999) propose the use of the sharp-image diagnosis to examine the organization as a whole, and later focusing on specific areas or issues. “…practitioners of sharp-image diagnosis start with a broad scan of an organization but then select core problems and organizational challenges for a close up examination” (p. 18).

Additionally, the authors emphasize on the need to use the open systems (OS) framework to guide the initial phases of the organizational diagnosis, and then move to a specific areas of analysis. The OS frame which includes various components -inputs, outputs, systems processing, the environment, structure, culture, and systems dynamics, may be applied at organization, group and individual levels. “The OS framework can help practitioners of diagnosis develop a broad overview of the focal organization and its challenges” (p. 48). Furthermore, Harrison and Shirom (1999) encourage the need to conduct targeted assessments to further findings of the organizational diagnosis. “…the term assessment refers to more narrowly focused examinations, whereas diagnosis is reserved for the preliminary stage of diagnosing basic problems and challenges” (p. 183).

OD interventions
An articulated OD intervention should address key issues identified during the diagnosis phase, and should be consistent with the organization’s culture and objectives. Schein (1992) sustains that the analysis of organizational culture is a prerequisite to implement successful OD interventions “Organizational learning, development, and planned change cannot be understood without considering culture as the primary source of resistance to change” (p.xiv).

Moreover, Schein emphasizes that planned change processes must be managed by the top, highlighting the attention of power issues, and the management of the organizational subcultures. “Much of the work of organizational development practitioners deals with knitting together diverse and sometimes warring subcultures, helping leaders, the dominant coalition, or the whole managerial subculture client figure out how to integrate constructively the multiple agendas of different groups” (p. 316). Additionally, the author mentions that leaders play an important role to embed their assumptions on a work group, and therefore in the creation of a new culture. He sustains that in mature organizations, people start reflecting on what has worked in the past instead of the primary agenda of the leader.

Furthermore, to effectively manage a cultural change, Schein suggests working on six mechanisms to embed the leader’s assumptions on the organizational culture. These six elements are: 1) the areas where leaders pay attention to and reward, 2) how the leader allocate resources, 3) the modeling behavior, 4) how the leader deals with critical incidents, 5) the criteria the leader use for recruitment, selection, promotion, and 6) the way a leader communicates.

Additionally, and contrary to common organizational practices, Schein suggests to focus on secondary mechanisms to reinforce the desired culture, among them the following: 1) the organization design, and structure, 2) the organizational systems and procedures, 3) the organizational rites and rituals, 4) the design of physical space, facades, 5) the stories, legends, and myths about people and events, and 6) the formal statements of organizational philosophy, values, and creed. Additionally, to the understanding of organizational culture, OD interventions should use specific OD models and tools to manage resistance, engage key stakeholders, and develop internal capabilities.

Bridges (1991, 2003) provides useful advice to manage the period of uncertainty in any change process. He advocates the management of the transition process, the “three-phased process that people go through as they internalize and come to terms with the details of the new situation that the change brings about” (p. 3). Strebel (1996) considers that most change initiatives lack the attention of personal compacts: the reciprocal obligations and commitments made by employees and organizations.

The author classify personal compacts in three dimensions: formal dimension, which relates to the understanding of new functions and responsibilities, the psychological dimension, which addresses elements of mutual expectation and reciprocal commitment, and the social dimension which relates to the alignment of stated values and mission and the company’s practices and management’s attitudes towards them.

Literature analysis for OD interventions at organizational and group levels, also indicate the need to implement a collaborative and participative approach. French & Bell (1999) examine large scale, group, and individual OD interventions, emphasizing that confrontation meeting and strategic management activities are better suited for management groups, while future search conferences are better suited for a wide spectrum of organizational stakeholders.

Additionally, French and Bell advocate the appreciative inquiry (AI) method to focus on the strengths of the organization and future things that are valued by its members. Furthermore, Hammond (1996) promotes the use of AI to look into the future while accentuating positive aspects of the organization, “Appreciative inquiry suggests that we look for what works in an organization. The tangible results of the inquiry process are a series of statements that describes where the organization wants to be, based on the high moments of where they have been. Statements are grounded in real experience and history, people know how to repeat their success” (p.7).

AI uses a summit to engage participants in a collaborative process to discover what the organization has done to be successful in the past; subsequently participants collectively dream about the new future, and later design the specific strategies and objectives to achieve the organization’s destiny.

Additionally, AI helps to gain the commitment of people to advance the implementation phase, “Through a workshop format, the participants stir up memories of energizing moments of success creating a new energy that is positive and synergistic. Participants walk away with a sense of commitment, confidence, and affirmation that they have been successful” (p.7) Marquardt (1999) propose action learning, a methodology to find practical solutions for problems, while enhancing the team’s ability to learn. “Simply described, action learning is both a process and a powerful program that involves a small group of people solving real problems while at the same time focusing on what they are learning and how their learning can benefit each group member and the organization as a whole” (p. 4)

Contrary to the collective and provocative AI method, Kotter & Cohen (2002) advocate a 8 step methodology to manage organizational change: “Increase urgency, build the guiding team, get the vision right, communicate for buy-in, empower action, create short term wins, don’t let up, make changes stick” (p. 7).

Senge (1990) promotes a systemic and interrelated approach to manage change in organizations, while transforming them into learning organizations. Senge explains that organizations face learning disabilities that affect their capacity to continually learn, and transform. These learning disabilities result in lack of flexibility to adapt to new demands, incompetence to critically analyze internal performance, failure to correct behavior, and ineffectiveness to implement deep and sustained changes. To correct those learning disabilities, Senge proposes the use and practice of five disciplines: personal mastery, mental models, shared vision, team learning, and systems thinking. According to Senge (1990) a learning organization is “an organization that is continually expanding its capacity to create its future” (p. 14). Furthermore, Senge, Kleiner, Roberts, Ross & Smith (1992) provide practical examples and case studies to guide companies in their transformation to learning organizations.

Another important element for consideration in the implementation of OD interventions is the definition of a dedicated team to work full time in the implementation with specific roles, and objectives. Moss Kanter, Stein & Jick (1992), define three key roles in a change intervention: a) the strategist, a role reserved for visionary leaders, whose main function is to identify the need for change and create the conditions to make it happen, b) the change implementer who will develop the required strategies and plans to execute change initiatives, manage resistances and make changes happen, and c) the role of change recipients that represent the vast variety of individuals that must adapt and adopt new changes. As literature suggests OD interventions vary from a large-scale, group, and individual approaches.

Therefore, any change intervention should employ a combination of OD models and tools best suited for the culture of the organization, the characteristics of the change process, and past experiences. Additionally, the intervention should pay attention to the psychological and emotional elements that people go through as they internalize the change process. Furthermore, the use of Kotter & Cohen’s 8 step change management process model will provide an effective framework to target deliberate change efforts to effectively alter individual, group and organizational performance.

Measuring results and impact of OD interventions
Processes utilized for measuring results and impact of OD interventions range from the analysis of qualitative elements such as the adherence to a company’s policies and processes, to more elaborated approaches, such as cost-benefits analysis, and the use of quantitative and qualitative metrics, balanced scorecards, and sophisticated models to determine the return of investment.

Herman, and Renz (1998) examine approaches used by nonprofit organizations to measure their results. They identified the adherence to policies and procedures to measure the achievement of the nonprofit organization’s outcomes. “Institutional theory predicts that when outcomes are difficult to measure, organizations are likely to emphasize following approved procedures to achieve or maintain their legitimacy (p. 29). The authors conducted a study to determine the relationship between board effectiveness and organizational effectiveness. Among the effectiveness measures cited by senior executives of nonprofit organizations were the following: its mission statement, the use of a form to measure client satisfaction, organization’s planning documents, the use of a performance appraisal form, by-laws containing a statement of purpose, etc.

Sawhill, J. & Williamson D. (2001) reviewed the model for measuring performance in the nature conservancy consisting of three broad areas: impact, activity and capacity. The authors conclude the importance of strategic alignment for the nature conservancy “An integrated system of performance measures is no substitute for a compelling mission, uplifting vision, clear goals, and innovative strategies. It would be a serious error to imagine that a nonprofit can develop effective measures in the absence of strategic alignment” (p. 385)

Berry, Fisk, and Zimmerman (1997) suggest the use of a more objective measurement approach to identify the value of a defined program and make a decision: a cost-benefits analysis. “Cost-benefit analysis consists of three steps: calculate costs, calculate benefits, and compare results….In short, cost-benefits analysis helps trainers and managers decide what to do..” (p. 143).

Kaplan and Norton D. (1996) propose the use of quantitative and qualitative elements in the evaluation process. They advocate the use of the balanced scorecard to translate strategy into action. The authors state that the balanced scorecard is a management system to channel the energies, abilities, and specific knowledge held by people throughout the organization toward achieving long-term strategic goals. Furthermore, Kaplan (2001) reveals that nonprofit organizations lack financial measures to track their performance.

After an elaborated literature review on the topic, Kaplan recommends the use of balanced scorecard for managing nonprofit organizations “Thus, the literature concurs with the need to articulate a multidimensional framework for measuring and managing nonprofit effectiveness. This scorecard would seem to provide just such a framework”. (p. 357).

Additionally, Kaplan emphasizes the importance of aligning strategy with performance measurement “Strategy and performance measurement should focus on what output and outcomes the organization intends to achieve, not what programs and initiatives are being implemented” (p. 357). He sustains that the use of the balanced scorecard in nonprofit organizations helps align staff’s day-to-day activities with the organization’s mission and key initiatives “The balanced scorecard has enabled the nonprofit organizations to bridge the gap between vague mission and strategy statements and day-to-day operational actions” (p.369) The model uses 4 key perspectives with specific objectives, metrics, targets, and initiatives.

The financial perspective includes examples applicable to nonprofit organizations, such as net amount of funds raised, or the improvement in net asset and liquidity to support new service development. The customer perspective includes satisfaction and retention of clients, and market growth. The learning and growth perspective has objectives and metrics to improve training, career development, and employee retention. The internal perspective contains research and development activities to support the achievement of the organization’s mission, and to improve client satisfaction and retention.

Following the line of sophisticated measurement systems, Phillips (1994) declares that although top management requires more sophisticated calculations such as return of investment (ROI), only a few programs should be measured using ROI because of complexity of the evaluation. “In the ROI formula the costs of a program are subtracted from the total benefits to produce the net benefits, which are then divided by the costs” (p. 12). Additionally, the author sustains that OD programs are among the most difficult HRD programs to evaluate, because the several factors included.

Berry, K., Fisk, C.& Zimmerman, P. (1997). How to Conduct a Cost-Benefit Analysis. ASTD (9007), 143-158.
Bridges, W., (1991, 2003). Managing Transitions: Making the Most of Change. Cambridge, MA: Da Capo Press.
Cooperrider, D. & Whitney, D. (2005). Appreciative Inquiry: A Positive Revolution in Change. San Francisco, CA: Berrett-Koehler Publishing Inc.
French, W., & Bell, C. (1999). Organization development: Behavioral science interventions for organization improvement. Upper Saddle River, NJ: Prentice-Hall.
Hammond, S. A. (1998). Thin Book of Appreciative Inquiry (2nd edition). Thin Book Publishing Co.
Harrison, M.I. & Shirom, A. (1999) Organizational Diagnosis and Assessment: Bridging Theory and Practice, Thousand Oaks, CA: Sage Publications.
Harvard Business Review. (1996), Harvard Business Review on Change. Boston, MA: Harvard Business Review School Press.
Kaplan, R.S. (Spring, 2001). Strategic performance measurement and management in nonprofit organizations. Nonprofit Management & Leadership, (11) 3, 353-370.
Kaplan, R.S. & Norton, D. P. (1996), The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Publishing.
Sawhill, J.C. & Williamson, D. (Spring, 2001). Mission impossible? Measuring success in nonprofit organizations. Nonprofit Management & Leadership, (11) 3, 371-386.
Kotter, J. & Cohen, D., (2002), The Heart of Change: Real-Life Stories of How People Change their Organizations. Boston, MA: Harvard Business School Press.
Marquardt, M. Action Learning in Action: Transforming Problems and people for World-Class Organizational Learning. Palo Alto, CA: Davies-Black Publishing.
Moss Kanter, R, Stein B. & Jick T., (1992). The Challenge of Organizational Change: How Companies Experience it and Leaders Guide It. New York: Free Press. Phillips, J. (1994), In Action: Measuring Return on Investment. Alexandria, VA: American Society for Training and Development (ASTD).
Robbins, S. (2003), Organizational Behavior (10th, Ed.). Patparganj, Delhi, India: Pearson Education (Singapore) Pte.Ltd.
Schein, E. (1992), Organizational Culture and Leadership (2nd Ed.). San Francisco, CA: Jossey-Bass Publishers.
Senge P. (1990). The fifth discipline: the art and practice of the learning organization. New York: Currency Doubleday.
Senge P, Kleiner A., Roberts C., Ross R., & Smith B. (1994). The fifth discipline fieldbook: Strategies and tools for building a learning organization. New York: Currency Doubleday.

Thursday, June 18, 2009

How to survive and thrive in a matrix management organizational structure?

In an effort to succeed and thrive in an increasingly competitive global business environment, organizations commonly make changes to their organizational structures, making them flatter, customer-driven, and product-centered. Several organizations have implemented a matrix management approach to leverage economies of scale, increase product development capabilities, and augment customer satisfaction levels (Corporate Leadership Council [CLC], 2002). The CLC emphasizes that matrix organizations combine functional and product expertise to keep pace with short product development cycles. The CLC also indicates the strategies employed by organizations to successfully implement a matrix management reporting relationship. These include a common understanding of the company vision and strategy, formalizing reporting relationships, managing matrix issues upfront, and aligning functionally.

Additionally, the CLC identified that strong communication skills, teamwork, adaptability, and shared goal and rewards systems play a critical role for the success of matrix management.
Kochansky and Donnolo (2005) note experiences gained from organizations like GM in the use of matrix organizational structures, and offers valuable suggestions to making them more effective by including a clear definition of roles, development of key competencies such as collaboration and teamwork, the development of supervisors within the structure, and a redefinition of the company’s operational model.

Despite the benefits reported by some organizations with the use of matrix organization structures, the CLC (2002) also notes that organizations frequently abandon this organizational arrangement because of two main reasons: duplication of efforts and inefficiencies. Other important issues reported by the CLC around matrix management are the lack of accountability, and frequent conflicts over allocation of resources and division of authority.

As literature indicates, the use of a matrix organizational structure may provide important benefits to global organizations; however, its implementation requires new organizational arrangements, and increased focus on measurable results, giving up power, and the development of new competencies such as teamwork and collaboration.

Corporate Leadership Council. (2002). Matrix management (CLC1UR1UD): Fact brief, Corporate Executive Board, Washington, DC.
Kochansky, J. & Donnolo, M. (2005). Enter the matrix GM: The general manager for today’s markets. Sibson Consulting. Retrieved on October 5, 2006 from:,b1vhTtNh,ww