PERFORMANCE MANAGEMENT

“Improving operational performance by influencing shop floor behavior Via

performance management practices”

BY Sander de leeuw &

Jeroen P. van den BergCited: 20 times

Article info

Article history:

• Received 1st November 2009

• Revised in revised form , 16th Dec 2010

• Accepted 26th Dec 2010.

• Available online 13 Jan 2011.

• With 4.40 impact factor

Key words

• Performance management

• Performance measurement

• Shop floor behavior

• Survey research

Overview of article• It is generally believed that companies applying

performance management practices outperforms than those do not apply.

• Various studies examined that performance management affects individual’s behavior which then facilitates in achieving organizational goals.

• In this article, authors are more focused on operational performance management at the shop floor level in production and distribution rather than strategic management at higher organizational levels.

The Challenge of managing performance

• The strategic aspect of of performance mgt have received a significant amount of attention in literature (de Waal et al..,2009; Ittner et al.,2003; Wouters and wilderom, 2008).

• However an Operational perspective to P.M is necessary to uncover why and how PM practices impacts improvement.

• That’s why they aimed at gaining insight at the shop floor level.

• Shopfloor refers to operators who do most of their work in direct production and distribution.

• .

Cont.…• Operational performance mgt refers to the

definition, implementation and use of performance measures on the level of day to day operations executed by shopfloor operators in factories and warehouses.

• This article is based on 2 qs.

• Which operator behaviors at the shopfloor lead to improvements in performance?

• Which performance mgt practices influence operator behavior at the shopfloor and how?

Research model

P.M practices

Shopfloor behavior

Performanceresults

Behavioral Effects

• Shop floor behavior consists of cluster of operator behaviors which identified as:

Understanding.Motivation.Focus on improvements.

Understanding behavior of operator

• This article relates behavioral effects with two folds of behavior.(de Waal 2004.)

1- Observable conduct: conduct of shop floor employees which can be observed.

2- Shop floor understanding: The condition that allow employees to display performance related conduct.

• Research has shown that managing performance can have a particularly great effect when appropriate and easily understandable performance information is provided to individuals if not then there will be tough competition.

Motivation behavior• Feedback about performance to operator

can have motivational impact(Luckett and Eggleton, 1991)

• Motivated people are crucial to deliver high performance (Bourne et al., 2005)

• The study of Van Herpen et al.,(2005) showed that the level of transparency that may result from a performance mgt system positively corelates with motivation of personnel.

Focus on improvement• It has been found through research that results are

better if performance mgt is focussed on supporting improvement rather than just for monitoring and control (johnston et al.,2002)

• It has further been found that individuals who collaborate more take decisions that generate higher performance levels(Dummond,1994)

• Typically collaboration in target setting among employees has a positive impact on performance.

• PM is expected to result in an increased focus on improvement actions among employees & may therefore foster proactive behavior to solving upcoming issues.

Performance managementpractices

• P.M phases started with “What to maesure” in performance measurement that described in four phases: (Santos et al 2008).

1. Definition of P.M system.

2. Implementation of P.M system.

3. Data collecting and reporting.

4. Management of P.M system.

Defining P.M system

• Through out recent years several overviews have been published that provide good coverage of idea. (Bemoan 1999).

• P.M definition is to develop the right performance indicator,( Bourne 2002…)

• This should cover three aspects i.e. effectiveness, efficiency and flexibility.

Defining P.M system

• Once P.M standards have been defined then targets need to be set, jointly with all relevant departments. (Holmberg 2000).

Implementing a P.M system• It deals with putting the P.M system and

procedure in place. (Bourne 2000).

• Implementation of system should preferably be done as a part of company wide project. (Bourne 2005).

• As this can facilitates the change process, by delegating authorities to employees. This is positively correlated with Performance management implementation.

Implementing a P.M system

• Feed back is main influencing factor.• Personnel have to be involved in the

development of P.M system. (Franco, Santos &Bourne 2005).

• To develop a P.M system a project team need to be set up. (Bourne 2003).

• Involve an external expert in P.M or organizational changes, in the implementation (Ahn 2001, Bourne 2002 & 2003)

Collecting and Reporting Performance Data

• First there should be a post, responsible for the P.M system/ process for successful activities. (Kuwaiti 2004).

• The data collection is best suited in day-to-day activities. (Bourne 2002).

• Report performance indicator of an individual. (John ston 2002).

• Report performance indicator to operator daily (Bourne 2005), and do it electronically to save time and efforts.( Bourne 2005).

Managing performance

• Data collection helps to manage performance to enable improvements. (Dumond 1994).Management of performance should be non threatening and action oriented. (John ston 2002).

• Leadership style should not only be focused on task but on the relation with operator equally, results should be connected with incentive system (Ahn 2001).

• Discussed achieved performance indicators b/w departments in a structural manner. (Bourne 2002, Cousins 2008, Gunasekaran and kobu 2007)

Research design and data analysis

• Methodology used to design research to obtain information about P.M practices and behavioral effects and performance improvement, on the basis of sample selection and analysis approach was “ Questionaairs”

• This method allows for empirical verifications of theoretical relationships in larger samples for actual business. (Wacker 1998)

Research design and data analysis

• Team developed a Questionnaire that captured the practices used in P.M, helped to developed good scales. (Hensley 1999).

• Questionnaire were contained 20 multiple choice items consisted of 20 practices.

• Questionnaire has been sent to 350 international companies in Netherland.

• On the basis of data received, it has been found that there is no significant difference b/w companies factors, which apply P.M practices.

Data Analysis

• On the basis of sample selected for research, 104 of total questionnaires returned, but data has been taken from 102 questionnaires which were consisted of sufficient information.(29% response rate).

• The data analyzed by applying two statistical test

• Spearman’s rho and Mann-whitney U testMann-whitney U test..

Data Analysis

Spearman’s correlation:

• First analyzed correlations between the three performance improvement items (productivity, quality and inventory turns).

• Because of the significant correlations between the items, we decided to cluster the performance improvement items into a single composite index.

Clusters of Operator Behaviors

• Understanding: representing the fact that operators get a better understanding about their performance as well as the performance of their department

• Motivation: which represents the fact that operators become more motivated to achieve their performance targets.

• Focus on Improvement: which relates to the attention paid by operators to optimizing and improving performance

Conclusion.

• Study results suggest that performance management practices influence the three behavioral effect cluster.

• These clusters are positively relate with performance improvement.

• These studies support managers in identifying preferred performance management practices.

Limitations

• This just focus on a diversity of industries.• Does not establish a ranking of importance in

practice.• It discussed only on the organizations that used

P.M and successfully implemented the practices.• Not able to incorporate the impacts of cultural

differences.• How P.M practices Impact the decision making

behavior of operator

Refrences

• Improving operational performance by influencing shop floor behavior via performance management practices.

• Sander de Leeuwa, Jeroen P. van den Berg.

• Ahn, H., 2001, Beamon, B.M., 1999, Bourne, M., Neely, A., Platts, K., Mills, J., 2002.