Given the budgetary challenges facing most government organizations, the use of performance management techniques is expected to become even more important in the future. Yet, few managers receive formal training in the use of organizational performance management tools and techniques.
Courses on the topic are available from private sector providers, but the majority of business schools do not specifically integrate the teaching of organizational performance management methods into their management education curriculum.
Cycles of change
The Wharton School at the University of Pennsylvania, established in 1881, is recognized by many as the first formalized, university-based management education program. Prior to Wharton, most management programs were provided by private training firms whose focus was on the mechanics of “organizing” such as the creation of budgets and direct supervision of staff.
Following Wharton, hundreds of business schools emerged, but many were criticized for lack of academic rigour. Universities adjusted by hiring staff with strong academic credentials and by emphasizing research. Accordingly, research output improved but, some would argue, the focus on research rigour also insulated business schools from industry.
Recently, most business schools have taken the approach of balancing academic rigour with industry partnerships to ensure that management education curricula meet practical requirements. Two salient factors endemic to the modern approach are relevancy and integration. Relevancy refers to continually adapting the curriculum to reflect management competencies needed in organizations. Integration refers to ensuring linkages across the various courses so that graduates have a broader understanding of how each business function contributes to overall organizational effectiveness.
Public sector relevancy
Public sector organizations contend with external trends not too dissimilar to those faced by all organizations: changing demographics, globalization, increased information intensity and environmental issues, to name a few. The public sector context, however, is typified by extensive work with information on a scale and scope that has a direct impact on the lives of a significant number of individuals.
Information intensity is therefore a key challenge for public sector managers. They need to know how to work with the ever-increasing volume and variety of information available. And, of course, budget realities continually drive public sector organizations to improve efficiency.
Accordingly, the adoption of Results-Based Management (RBM) and attendant organizational performance management methods is a clear trend in public sector organizations worldwide. RBM is directly influenced by the ability of public sector managers to gather, analyze and understand external information to create effective plans and to understand the potential impact of uncontrollable events on organizational objectives. In addition, defining appropriate performance measures and using these measures to analyze and continually improve organizational performance is at the core of RBM.
Performance management themes
To meet the growing need for performance management savvy managers, business schools are introducing courses, and sometimes entire programs, focused on performance management and analytics.
Although the programs vary widely in the specific courses offered, a few core fundamentals are noted. The foundation of many of the programs is using data to make informed decisions. Courses such as data mining, statistical analytics and business modelling tend to focus on this aspect. In addition, many programs include courses on information systems for managers. The objective is not to convert managers into IT staff, but to enable them to understand their information systems enough to retrieve and manipulate data.
In addition to these foundational courses, schools also teach the mechanics of managing organizational performance such as the use of Balanced Scorecards or specific tools and methods used in particular sectors (for example, in the case of the Telfer School of Management’s program, introduction to public sector frameworks such as the Management Resources and Results Structure).
Conceptually, the overall objective of these programs is to provide managers the tools they need to deliver on strategic outcomes. At the Cranfield School of Management, for example, the MSc program is entitled Managing Organizational Performance. One of the key courses is on the topic of “strategic performance,” outlining the types of linkages required between strategy formulation and strategy execution. This approach, common in many of the programs in the various business schools, emphasizes the articulation of operational tactics linked to strategic objectives and definition of resources needed. In addition, the use of performance information and data analytics to better steer the organization towards success is also addressed.
One of the key outcomes of these programs is that students learn how to manage through measures. They are introduced to the logic of measuring performance across the organization in order to continually explore whether resource deployment is as efficient as it could be and whether operational tactics are in fact leading to the desired strategic outcomes. Because it is not always easy to define measures in a public sector environment, many programs also address situations when measurement could be difficult.
Some programs (i.e., Villanova, Telfer School of Management) also introduce students to process management and lean concepts. The rationale is that process measures can help to identify opportunities for improving efficiency at operational levels in organizations. Moreover, while many of the organizational performance management frameworks in the popular press tend to address strategic issues, process management focuses on the important operational level tactics key to organizational success.
Recognizing that organizational performance draws on many different functional areas (strategy, finance and accounting, etc.), most programs tend to integrate course material across these functional areas, challenging students to make better use of systems thinking to resolve organizational problems. This is accomplished in a number of ways. In some situation courses are team taught by professors from different functional areas. In addition, integrative cases are used making use of data sets that span different levels of the organization as well as a variety of functional areas. Furthermore, some programs are taught in a blended format: a combination of in-class and online modules that allow students time to reflect on the connections between modules from different organizational functions.
Recent trends in management education programs include creating approaches that avoid courses taught in “silos.” Given the emphasis on managing performance in most public sector regimes around the world, and the fact that budgets continue to be tightened in most of these regimes, emerging programs on business analytics and performance management provide a sound foundation for managers (both in programs and through executive education offerings) to sharpen their analytic skills to make better decisions in a context characterized by large volumes of rapidly changing information.
Gregory Richards is professor of performance management at the Telfer School of Management and director of the IBM Centre for Business Analytics and Performance Management. He also coordinates the Interis Public Sector Performance Management Research Cluster.