Observation #29
In the previous Observation, we discussed the need to make internal performance improvement (PI) groups more accountable, and by doing so make the operating groups that use them more accountable as well. In this Observation, we are going to add a few more thoughts on some of the problems we have seen that can limit the effectiveness of PI groups.
1. Too “process-focused”
PI groups are often the offspring of some type of process-oriented improvement methodology. This is useful but can be limiting in terms of generating tangible financial results. Many process improvements require changes in the way that managers plan and control their resources and in how they interact with their staff. For example, changing a process results in changes to the time and scheduling parameters associated with that process. This, in turn, requires a change in how the process is scheduled, and how the new expectations are communicated and followed up on. To be more effective, PI groups need to spend more time understanding the management control system and the managers’ actual behaviors.
2. Too “stretched”
In an effort to control what is often perceived as overhead costs, PI groups tend to be kept relatively small. This works fine if the projects they are focused on are also relatively small. However, projects are often quite large in scope. Larger-scope projects are attractive because the financial returns are more appealing but, by design, they require more resources than are often available. The net result is that the burden for implementation of good ideas falls onto operating managers. Often it is the implementation of ideas, not the ideas themselves, that gets stalled in organizations. If PI groups effectively become “advisors” that generate reports, they aren’t very useful to line managers. For changes to stick, they need to be owned by the people who have to make those changes and live with them. Getting people to own change takes the investment of a great deal of time as they need to first understand why change is necessary and then to gain confidence that change will be beneficial to them in some way.
3. Too “corporate”
Finally, as mentioned in the previous Observation, PI groups are often initially put together to enact a corporate vision or objective. Although there is nothing inherently wrong in being a “corporate” function — and a strong argument can be made that it needs to be a corporate function — this can cause resistance to change as strong as that typically reserved for external consultants.
