Book summary “Improving performance”: summary

Introduction

Organization performance relies on managing the three interdependent levels of organization, process, and job through a systematic horizontal framework.

You likely struggle with persistent performance gaps in your organization despite launching various improvement initiatives. When you view your company only through traditional vertical charts, you create isolated silos and lose sight of how work actually gets done. Geary A. Rummler and Alan P. Brache argue that you must adopt a systems view to diagnose and fix performance problems.

The book introduces the Three Levels of Performance and the Nine Performance Variables as practical tools for managing change. You will learn how to align your strategy, streamline cross-functional processes, and optimize individual jobs.

To transform your organization, you must answer several core questions:

• How do you break down functional silos to focus on customer-driven workflows?
• What causes most performance improvement projects to fail?
• How do you design and manage processes systematically?
• What is the true role of the human resource function in driving business results?

1. Viewing Organizations as Systems

Traditional organization charts display vertical reporting relationships but fail to show customers, products, services, or work flow. This structural setup encourages the formation of functional silos, leading departments to optimize their own metrics at the expense of the entire organization.

Managers who view their organizations exclusively through traditional vertical charts tend to manage functionally, creating isolated departments and losing sight of overall work flow.

You encounter the Traditional (Vertical) View of an Organization in every standard company hierarchy. Functional optimization within these silos causes severe suboptimization across the enterprise.

The Systems Horizontal View

A horizontal or systems view reveals how work actually gets done across functional boundaries and highlights critical interdepartmental interfaces. The systems view incorporates customers, products, and the flow of work.

The greatest performance improvement opportunities typically reside in the functional interfaces, or the white space on an organization chart where responsibilities are passed between departments.

The Organization as an Adaptive System

Organizations function as adaptive systems that must continuously align their internal subsystems with external market feedback to survive. Using a super-system map, an organization converts resource inputs into product and service outputs for markets while delivering financial value to shareholders. Management acts as the control mechanism, interpreting internal and external feedback to maintain balance with the environment.

Computec, Inc. takes in capital, staff, technology, and materials to produce custom software, consulting, and packages primarily for aerospace and other markets.

70 percent of Computec's business comes from custom software development and consulting services, while 30 percent of revenues is generated by off-the-shelf software packages.

2. Three Levels of Performance

Organization performance is determined by three interdependent levels: the Organization Level, the Process Level, and the Job/Performer Level.

The Organization Level covers strategy, goals, structure, and resource deployment. The Process Level captures cross-functional work flows. The Job/Performer Level addresses individual responsibilities, feedback, rewards, and training. Failures in one level undermine actions taken in another.

Combining the Three Levels of Performance with three Performance Needs yields nine distinct variables that serve as comprehensive improvement levers. The three performance needs are Goals, Design, and Management. Applying these needs across the Organization, Process, and Job/Performer levels creates the Nine Performance Variables, providing a complete framework for diagnosing and improving performance.

Organization Level Performance

At the Organization Level, performance requires clear strategic goals, an aligned organizational design, and comprehensive management of goals, performance, resources, and interfaces. Organization goals must reflect competitive advantages and market priorities. Organization design encompasses structural work flows rather than just reporting hierarchies. Organization management requires active goal management, performance tracking, resource allocation, and interface management across silos.

Computec experienced 13 years of initial success before experiencing a significant erosion of market share over the past 2 years. Computec experienced market share erosion and sinking morale because it lacked a clear strategy, had an unsupportive structure, and failed to manage goals, performance, resources, and interfaces.

Process Level Performance

Process performance relies on cross-functional process goals driven by customer needs, streamlined process designs, and active management. Because work is produced through cross-functional processes, organizations must establish process goals linked to customer and organization requirements. Processes must be structured as logical paths and actively managed across functional steps and white spaces.

Job and Performer Level Performance

Individual job performance depends on process-aligned job goals, appropriate job design, and systematic management of the Human Performance System. People act as the vehicles through which processes function. Job management requires treating people management through the Human Performance System, focusing on performance specifications, task support, consequences, feedback, skills and knowledge, and individual capacity.

Computec staffed its customer service hotline on a rotating basis with field operations personnel who found phone duty punishing and lacked the skills to handle customer complaints effectively.

3. Strategy and Improvement Efforts

Organization strategy consists of five core elements, and common performance improvement initiatives fail when they target only a single level without a systemic approach.

Organization Strategy Elements

Strategy development focuses on four core elements. Strategy implementation relies on a multifaceted fifth element comprising systems and structures.

• Determine the products and services you will offer.
• Determine the customers and markets you will serve.
• Determine your competitive advantages.
• Determine your product and market priorities.
• Determine the systems and structures to bring about the what, who, why, and where.

Strategy Formulation Questions

Top managers must answer eleven specific strategic questions before they can design and manage organization performance effectively. These questions precede strategic decision making and address core areas including organizational values, time horizon, external environment assumptions, product criteria, market selection, customer requirements, competitive advantages, and resource allocations.

Baldwin Drug Stores, Inc. used eleven specific questions to establish its three-year retail strategy, deciding to target elderly, disabled, and young affluent families while rejecting grocery and toy lines.

• Identify the values guiding the business.
• Determine the time horizon for the strategy.
• List external environment assumptions regarding regulation, economy, resources, technology, and competition.
• Define current and new products and services to offer and exclude.
• Establish criteria for evaluating new product opportunities.
• Define current and new customer groups to serve and exclude.
• Establish criteria for evaluating new market opportunities.
• Identify factors meaningful to customers and select competitive advantages.
• Determine current and new product or market areas for greatest emphasis.

Strategy implementation requires addressing financial and nonfinancial measures and cascading alignment through all three organizational levels. Beyond formulation, leaders must answer two implementation questions concerning metrics and ensuring that departmental, process, and position goals, design, and management fully support the strategy. Baldwin Drug Stores selected return on net assets, market share, and customer satisfaction ratings as their core strategic measures.

• Select financial and nonfinancial measures to assess strategy viability.
• Ensure departmental goals, design, and management support the strategy.
• Ensure process goals, design, and management support the strategy.
• Ensure position or people goals, design, and management support the strategy.

Flawed Improvement Efforts

Common performance improvement initiatives fail when they target only a single level or a single dimension without a systemic approach. Training programs that address only the skill dimension of the job level fail to deliver long-term impact. Automation initiatives often fail to maximize returns because they automate inefficient processes or ignore human performance needs, and quality programs fail if they amount to mere hype without addressing structural and process requirements.

ABC Electronics spent funds on speakers, posters, and badge inserts while earning a grade of F for doing nothing lasting at the Organization, Process, or Job/Performer Levels.

4. Project Definition and Process Analysis

Phase 1 and Phase 2 of process improvement establish project scope, document current states, and design new processes that meet strategic goals.

Project facilitation scales into full, partial, or no facilitation based on project visibility, complexity, and team experience. Full facilitation involves a certified expert in all phases for high-profile projects. Partial facilitation supports key points for experienced teams. No facilitation suits simple, low-visibility projects handled by seasoned internal teams.

Phase 1 Project Definition Steps

You must complete ten essential steps in Phase 1 before analysis begins:

• Step 1: Review the Outputs from Phase 0
• Step 2: Train Facilitator and Determine the Level of Facilitation Required
• Step 3: Profile Critical Processes
• Step 4: Identify Critical Process Issues
• Step 5: Establish Project Goals
• Step 6: Identify Process Dependencies
• Step 7: Identify Functional Dependencies
• Step 8: Identify Constraints and Assumptions
• Step 9: Define Project Roles
• Step 10: Develop Project Plan

A critical process profile is used for a customer order process where course materials are the output and user companies with $100M annual sales and larger are the receivers. Expect to spend 15 to 30 minutes profiling each process. A design team typically consists of 8 to 15 members. A facilitator needs a minimum of two weeks of training, while design team members require at least two days.

Phase 2 Process Analysis Steps

Phase 2 focuses on documenting the current state and designing a new process that meets strategic goals and resolves disconnects. Ten core steps guide you through analysis:

• Step 1: Document IS Process
• Step 2: Identify Disconnects
• Step 3: Design SHOULD Specifications
• Step 4: Design and Prioritize COULD BE
• Step 5: Develop SHOULD Maps
• Step 6: Develop Process Measures
• Step 7: Develop Cross-Functional Role/Responsibility Matrix
• Step 8: Identify Changes to Performance System
• Step 9: Make Recommendations
• Step 10: Develop Implementation Strategy

Eagle Education Products order fulfillment specifications set product delivery within 24 hours of promised date, 100% order completeness, and 100% invoice accuracy.

Implementation Strategy Matrix

You plot recommendations on an implementation matrix based on organizational readiness and perceived disruption. The vertical and horizontal axes use a scale ranging from 1 to 5.

Nine recommendations are plotted on an Implementation Strategy Matrix mapping organizational readiness versus perceived disruption on axes ranging from 1 to 5.

5. Overcoming the Seven Deadly Sins

Most failures in process improvement stem from committing one or more of the seven deadly sins, which require rigorous strategic alignment and measurement.

Organizations often waste investments because process efforts lack strategic alignment, fail to involve top management properly, or lack clear team charters. Additional sins include treating reengineering merely as downsizing or reorganization, ignoring human performance capabilities during redesign, shifting focus away from rigorous implementation, and failing to leave behind an ongoing measurement infrastructure.

An engineering conglomerate documented dozens of processes in maps that were never actually used. A food company boasted seventy cross-functional teams with vague goals of culture change but no increase in shareholder value.

The Seven Deadly Sins Overview

Process improvement projects must be driven by critical business issues and tied to measurable strategic goals. Teams focusing on self-selected or minor backyard issues fail to impact business results. Improvement efforts must connect directly to strategic visions such as profitability, market share, regulatory compliance, or customer satisfaction, supported by top management.

Process improvement must be performed by internal personnel rather than outsourced entirely to external experts. While consultants can provide tools and guidance, outsourcing the actual analysis and redesign prevents the organization from building internal commitment. Top management must act as sponsors or steering teams to remove obstacles, set direction, and manage implementation.

A manufacturing company dismissed a reengineering consulting firm after spending $70 million because it generated so much ill will among the workforce that long-term performance improvement was ruined.

Radical reengineering, downsizing, and automation are tools rather than universal solutions for performance improvement. Restructuring reporting relationships, cutting staff, or installing new computers rarely improves performance by itself if the underlying processes are flawed. Organizations must evaluate whether incremental or revolutionary change is required based on specific business issues.

Top managers at Dow-Europe rejected a pitch from reengineering advocates who suggested throwing out everything built over the years, preferring to build upon their existing successes.

The resources and management time required for implementation vastly exceed those needed for process redesign. Redesigning a process is purely academic until it is successfully installed. Management must maintain focus over a long implementation period, equip the organization with detailed action plans, and adjust policies, forms, computer systems, and rewards.

A telecommunications company placed a three-by-six-foot cardboard poster of a $1.3 billion bank check made out to the company for restructuring charges in the executive suite to keep executives focused.

Developing Sound Measures

Measurement serves as the foundational tool for managing organizations as systems and linking the three levels. Without measurement, managers cannot communicate expectations, track performance gaps, provide feedback, or make sound resource decisions. Incompatible departmental measures create silos where internal efficiency overrides customer satisfaction.

A paint manufacturing and distribution company lost money because sales reps were measured on bookings, distribution centers on full boxcars, and manufacturing on production line yield, resulting in severe customer delivery delays.

Sound measures and goals must be developed through a structured, output-driven, and customer-focused sequence. Measures should not be chosen merely because they are topical or easy to track. Instead, you must follow a specific sequence that identifies significant outputs, uncovers critical dimensions based on customer and financial needs, creates specific indicators, and establishes performance goals.

Computec set a strategic organization goal to capture 60 percent of the aerospace project management market within three years, which then cascaded down to process product development steps and functional goals.

You must follow a four-step sequence to build sound measures:

• Identify the most significant outputs of the organization, process, or job.
• Identify the critical dimensions of performance for each of these outputs.
• Develop the measures for each critical dimension.
• Develop goals, or standards, for each measure.

A total measurement system links organization outputs to process steps and individual jobs through an output chain. By building an output chain from organization goals to process maps, function models, and job models, companies create a clear line of sight for every performer. This network uses end-of-process measures, subprocess measures, and critical step measures to track performance health.

Computec used role/responsibility matrices and function models to distribute marketing outputs among jobs such as market research analysts.

Constructive Use of Performance Data

Data from a measurement system must be used for constructive problem-solving rather than for assigning blame or punishing employees.

When managers misuse performance data to find culprits or micromanage subordinate tasks, employees react by hiding problems or playing blame games. Effective managers use data to diagnose why a process broke down and to guide collaborative improvements.

A plant manager initially used new measurement reports to find and punish the person responsible during frustrating meetings, but later shifted to collaborative problem-solving, which reduced meeting length from two hours to thirty minutes. Over three months, the plant achieved a remarkable turnaround in quality and productivity.

You must follow these practices to maintain a healthy performance management system:

• Define the outputs and performance expectations for each job.
• Ensure that job holders are able to monitor their own performance on an ongoing basis and take corrective action.
• See to it that job holders and managers periodically review performance trends and determine action required for improvement.

6. Managing Processes and Designing Structures

Organizations must transition from sporadic problem-solving to continuous process management by appointing Process Owners and aligning structures to workflows.

Managing Processes as Systems

You function as an adaptive system that requires continuous process management. Companies like Ford and Boeing established process certification ratings where a top-rated process must meet 35 criteria, ranging from basic documentation to being assessed by customers as free of defects.

To implement Phase 4 of this approach, you follow these steps:

• Formulate a strategy addressing current external realities
• Build a current system Relationship Map without delegating to an analyst
• Overly Organization Level strategic goals onto the map
• Identify cross-functional processes and select those with the greatest impact on organization goals
• Appoint a vice president as Process Owner for each strategic process
• Develop customer-driven, end-of-line Process Goals as a management team
• Form Process Teams to document, analyze, and create SHOULD processes
• Integrate recommendations so all processes work in harmony
• Implement SHOULD processes, reporting structures, and measurement systems in phases

Role of the Process Owner

Appointing a permanent Process Owner ensures that cross-functional processes are continuously monitored and optimized without disrupting existing vertical reporting structures. Unlike matrix or project managers who create a second reporting structure, a Process Owner oversees horizontal performance, chairs cross-functional teams, serves as a white-space ombudsman, and acts as the champion of the process while functional managers retain their vertical power.

In a telephone company, the vice president of finance was appointed Process Owner for the billing process, and when he left the position, his successor automatically assumed the role.

Designing Organization Structure

Reorganizations that focus exclusively on vertical reporting lines often suboptimize the overall business flow. Effective organization design begins by analyzing and redesigning workflows so that form follows function across all three levels.

Ace Copiers experienced 18 months of slowed growth and loss of market share. The firm had introduced only 2 new products in three years prior to their reorganization, which was far below the industry average. Management established a strategic goal to introduce 2 new products per year during each of the next five years, with a standard time limit of 9 months from conception to field training and production of the first 5,000 units.

7. Transforming the Human Resource Function

Treating training as an isolated employee benefit leads to ineffective investments, whereas a performance-driven HRD function diagnoses non-training problems.

In the prevailing vacuum view, managers assume people exist in a vacuum and that arranging proper training input automatically improves output. In contrast, the systems view recognizes that human performance is a function of the Three Levels and Nine Performance Variables, where skills and knowledge represent only one small factor.

Vacuum View Versus Systems View

Determining Training Needs

Responding reactively to training requests requires an outside-in analytical process starting at the organization level rather than merely accepting surface pain. Requesters usually feel pain without understanding the limitations of training. Using a rigorous outside-in process, analysts start at the Organization Level to identify Critical Business Issues, move through the Process Level to find process gaps, and finally determine job and performer needs.

At Property Casualty, Inc., Sharon Pfeiffer requested comprehensive training for claim reps, but an outside-in analysis revealed that claim supervisors were the ones whose job outputs needed improvement, particularly regarding qualifying and assigning claims.

• Identify, at the Organization Level, the Critical Business Issue or performance problem of concern.
• Identify, at the Process Level, the business process with the greatest impact on the Critical Business Issue.
• Use a Process Map to document the process and identify performance gaps at each step.
• Identify the job or jobs impacting the process steps where gaps exist.
• Develop a list of desired job outputs and identify which outputs are not being produced.
• Identify the causes of subpar outputs and develop training only for genuine Skills and Knowledge needs.

Building a Performance Department

HRD departments should move out of a purely reactive mode by establishing proactive eighteen-month operational plans aligned with business strategies. By collaborating with major client managers to map out anticipated operating needs and required training based on business unit strategies, HRD can establish clear priorities, manage resources effectively, and handle unscheduled requests systematically.

• Identify major clients by business unit or department with a senior manager contact.
• Develop an HRD plan with the client contact based on anticipated operating needs for the next eighteen months and unit strategy.
• Consolidate all business-unit HRD plans into an overarching plan and budget for the HRD function.
• Review progress toward the plan with the client every six months.
• Review progress at the end of the year and update the plan for the next year.

Conclusion

Organization performance relies on managing the three interdependent levels of organization, process, and job through a systematic horizontal framework. You can transform functional silos into a flowing system by applying the fourteen-step improvement methodology.

1. Shift your perspective from vertical charts to horizontal workflows that deliver value to customers.
2. Align every change across the organization, process, and job levels to prevent isolated fixes.
3. Define clear project scopes and measure the gaps between current states and desired goals.
4. Appoint process owners to maintain accountability and continuous improvement.
5. Realign your human resource function to focus on systemic performance rather than isolated training events.

10 Key Ideas

1. Traditional organization charts display vertical reporting relationships but fail to show customers, products, services, or work flow, which encourages the formation of functional silos and severe suboptimization.
2. A horizontal or systems view reveals how work actually gets done across functional interfaces, capturing customers, products, and the flow of work in the white space on an organization chart.
3. Organization performance is determined by three interdependent levels consisting of the Organization Level, the Process Level, and the Job/Performer Level.
4. Combining the Three Levels of Performance with three Performance Needs yields nine distinct variables that serve as comprehensive improvement levers for diagnosing and fixing performance problems.
5. Common performance improvement initiatives fail when they target only a single level or a single dimension without a systemic approach, such as training programs that address only skills.
6. Organization strategy consists of five core elements that require top managers to answer specific strategic questions and cascade alignment through all three organizational levels.
7. Phase 1 and Phase 2 of process improvement establish project scope, document current states, and design new processes that meet strategic goals and resolve disconnects.
8. Most failures in process improvement stem from committing one or more of the seven deadly sins, which require rigorous strategic alignment, top management sponsorship, and ongoing measurement infrastructure.
9. Data from a measurement system must be used for constructive problem-solving rather than for assigning blame or punishing employees to prevent workers from hiding problems.
10. Appointing a permanent Process Owner ensures that cross-functional processes are continuously monitored and optimized without disrupting existing vertical reporting structures.