Organizations across the world are driving to improve organizational performance regardless of the size of the organization or the industry. Managers within the organization measure performance, perhaps by comparing it against a benchmark. They analyze and assess their findings and design their controls accordingly to advance the organization’s performance. Managing a commercial business is different from managing other types of organizations, as the business manager has a key responsibility for the economic performance of the business. The management of an organization is accountable to the owners of the business for the performance and the achievements of the organization. This is usually demonstrated in the accounts produced by the management and presented to the directors in the Board of Director meetings annually. Managers can perform well and justify their authority only if they produce the desired economic results, for instance, the profits they have desired to achieve in a period of time. Management often use the Operation’s Research to maximize the profit, yield, utilization and the performance. The management of an organization usually creates a measurement system to set targets for change and measure organizational performance.
Johnson, Scholes and Whittington have rightly said, “Poor performance might be the result of an inappropriate configuration for the situation or inconsistency between structure, processes, and relationships.” Organizational performance can be increased by implementing management by objectives and using participative style of management i.e. by engaging your people, applying appropriate performance evaluation and reward systems, and enhancing quality of work and instilling good feedback mechanisms.
- Management by Objectives:
Peter Drucker suggested that there are three aspects to manager’s responsibility i.e. managing the business, the managers, and the workers along with their work, to achieve optimum standards of organizational performance. Drucker was the first theorist to use the term “Management by Objectives because he believed that organizational performance success can be achieved when targets for achievement are assigned individually.
- Performance evaluation and benefits
Performance evaluation and career progression can be a key motivating factor for the employees to work effectively and efficiently. Thus, increasing organizational performance. Performance measurement and reward systems in an organization establish views of priority i.e. what is important and what is not so important. This is essential, as individuals will focus on performance that earns rewards. The system must be a sound one so that people can rely on it. According to Maslow’s hierarchy of motivational factors, people will be driven to work if their targets of achievements are associated with a desired outcome. Rewards systems should be amended so that the rewards to managers and other employees are based on performance targets that are consistent with the requirements of the change. Employees should be rewarded for performance based on the desired behavior and results.
Organizational performance comes with job satisfaction. Levels of job satisfaction can be affected by many factors including rewards, recognition, quality of supervision, social relationships with workgroups and extent to which the individual is successful in the performance of their duties. According to Herzberg’s two-factor theory, there are hygiene factors that need to be in place to prevent employees being dissatisfied. The factors being, sufficient remuneration, fair and consistent company policies, fair and consistent supervisory practice and appropriate working conditions. Also, according to Vroom, one of the best management theorists of his time, instrumentality (rewards system) affects motivation for the increase in organizational performance. Managers must keep their promises that they have given of rewards for performance and try to make sure that the employees believe that the management will keep its promises. However, performance targets do not usually have to be financial targets. They can be in other forms such as recognition, promotion etc.
- Quality of work
Organization performance can also be described by evaluating the reliability of service and by understanding the quality of customers of the organization. Value can come from providing a reliable service, so that the customers know that they will receive the service on time, at the promised time, to a good standard of performance. As organizational change is inevitable, critical success factors and key performance indicators should be revised, so that they are consistent with the requirements of the change. Doing good quality work and providing quality results will increase organizational performance as repeated stimuli have greater impact on performance than a single statement as it catches the attention.
According to Vroom’s expectancy theory, the strength of an individual’s strength to put in effort at work can be measured. According to him, there is a positive correlation between the efforts we make and the performance that is the result of our efforts. One of the factors that deeply affect an individual’s motivation is the belief that the individual’s efforts will lead to better performance results. In other words, the more effort we put in, the better the performance will be. Also, the fact that good performance will result in a desirable reward and the reward will satisfy an important need, is also one of the motivational perceptions of organizational performance. Motivation can hence be measured by valence and expectancy. Expectancy is the individuals believe that by putting in more effort, there will be better performance and therefore better results. Valence is the individual’s inner prerequisite for rewards.
- Feedback mechanism and Participative style of management
Employees need feedback about their performance. Employees need to be communicated about their actual performance and their expected performance. In this way, they will know their own performance level within the organization. Bonus must be kept for employees who work overtime and provide efficient results. For achievers, pay is a form of feedback about their performance. High pay and bonuses are a measurement of their success in achieving goals.
Management must adopt a democratic style of management in which they involve the employees in decisions and brainstorming sessions. Hence giving employees the belief that they are participating in all business decisions, which will associate all the employees as one unit. This will help in coordination among employees and taking responsibility. McGregor and Argyris, two brilliant management theorists, have argued in favor of a participative style of management and getting employees involved in problem-solving and decision-making. They believed that this style of management gets more out of employees, which eventually improves the performance of the organization. They also argued that the best leaders are individuals who harbor a need for achievement. Therefore, management should try to identify and develop high achievers among the organization.
- Engaging your people
According to the Gallup survey, engaging your employees to organizational goals is the key feature for every business. Employees can be engaged with their work if they are passionate for their work, deliver their best performance and strengthen their commitment. This can enhance organizational performance by a multiplier effect. This can be done by building a strong understanding of your business strategy throughout the employees, building trust and by making certain that all employees are using their desired set of preferred skills. The management should also ensure that all departments are improving its procedures and controls and targeting its activities on better achieving the company’s competitive differentiation through what the employees do and how they are doing it.
- Better internal controls and eliminating internal roadblocks
Individuals must have better understanding of their metrics. Metrics that people focus on need to be understood by them to be within their influence. The management must design policies and internal controls that enhances the efficiency of work and eliminate all such procedures that are the roadblocks to success including unhygienic factors (as per Herzberg’s theory).
- Using Training and Development
Management must provide appropriate training and development to the employees to increase the efficiency of the employees individually. Management must devise appropriate trainings for every departments. Management must develop an effective workforce plan, training, and development strategy and develop career paths for success of every department. Thereby, leading to increased organizational performance.
- Effective business strategy
Entrepreneurs with business acumen describe that the performance of an organization can be made more effective and efficient by customer intimacy, operational efficiency, and leading edge. Customer needs must be met by customization and by providing outstanding customer instances. The organization must strive to provide a universal set of products and diversify the business by providing improved products and services.
- Communicate your expectations and lead by setting a positive example
The management must communicate their expectations and set a positive example themselves. A successful company culture is one that rewards initiative and performance. This can be done by setting the right examples. The management must communicate their expectations and provide appropriate training as a way to demonstrate that management is committed to helping employees achieve their highest potential by providing them access to opportunities to advance their careers.
These are one of the key ways to increase organizational performance. Increase in organizational performance can lead to timely success of the business whether in a stable or an unstable environment. This is essential as jobs that do not offer much variety in their performance and are of a highly repetitive nature are disliked by employees and eventually results in intentional downsizing by the employees or decreased effectiveness. So, these methods are effective for both small and large organizations that are in a stable or an unstable environment.
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