Evidence Based Management

A recent McKinsey study of 230 companies (Managing Your Organization by the Evidence) claims to have empirically proven that three key management practices are the best way to improve organizational performance. These practices are:

• clear roles,
• an inspiring vision, and
• an open and trusting culture

McKinsey believes that these three practices play a mutually reinforcing role in supporting high performance regardless of the industry, and demonstrates a correlation between a subjective scoring on these practices and some form of financial outcome. According to their research, almost all other practices, “management fads” and initiatives implemented on their own will fail.

The study was performed by asking managers in these 230 organizations to complete a questionnaire assessing the organizations capability with respect to 34 management practices.
While they make outrageous claims about the ineffectiveness of other techniques, McKinsey covers all the bases by suggesting that “companies cannot afford to neglect any of the 34 practices… lack of success in any two or three practices makes it almost impossible for a company to do well”

Our experience at Collaborative Performance agrees that the three bullets above are indeed the most important organizational characteristics for success. However, interventions by management consultants, executive zealots or any other approach setting out to create such characteristics empty handed will indeed fail. What the McKinsey study fails to describe is how organizations came to achieve these characteristics, other than “senior executives instinctively know that any large company's people, processes, teams, and control systems require artful handling”.

Indeed, high performance relies upon a complex set of factors – there are a great many barriers to achieving clear roles, an inspiring vision and an open and trusting culture present in almost all individuals and organizations. Attempts to address these barriers by adding a charismatic leader, bringing in a management consulting team, or going away for an intense team-building event almost always fail, but for a few high-profile exceptions.

McKinsey claims that “Applied in isolation, KPIs and similar control mechanisms (such as performance contracts) are among the least satisfactory options for improving accountability.” By contrast, we believe that performance management is perhaps the only way to develop the three most effective management practices! How does this work?

1. Selecting measures to focus upon is the most tangible way to engage with the question of what your organization is about, how it creates value for customers, the aspirations of its people. Southwest Airlines is an example of an organization that used the process of measure selection repeatedly over a number of years to focus and refine its vision, operations and alignment and created exceptional value as a result.
2. Assigning ownership for measures is a very effective way to establish clear roles. Making a single person responsible for a desired outcome leaves no room for ambiguity about roles or responsibilities.
3. Regular reviews of progress against measures, KPIs and numerical goals are the perfect opportunity to reinforce the “inspiring vision”, and foster an open and trusting culture
   

This last point merits special attention. Performance Management programs are prone to misuse. A management team committed to blaming, hiding information, or command and control practices will use Performance Management techniques to reinforce and enable these ineffective behaviours. Yet inspirational application of Performance Management techniques can be highly successful in changing these attitudes and behaviours. Making data widely available effectively eliminates information hiding. The intervention of a single person with the ability and commitment to examining results in order to learn how performance may be improved can stop blaming in its tracks. Command and control cultures are difficult to maintain when collaboration around improving performance begins to take hold.

Making a commitment to managing with clear roles and an inspiring vision in an open and trusting culture is absolutely the way to achieve high performance. Performance Management is the way to translate this from a lofty and noble goal to real change and tangible results in your organization.