Organizational Performance - Its Measurement
GRI adaptive profiles measure people’s unique ways of performing, acting, and how the environment influences them to adapt and get engaged. The profiles can also be used to convey the general behavior of a team, department, or an entire organization. The shortcomings or functional problems of an organization can be highlighted by taking into account the behavioral requirements of its market, the internal needs of the organization, and the profiles of its various stakeholders.
Construction of Performance Indicators
The unique properties of GRI’s metrics allow a precise understanding of people’s performance in context. Two important properties of those metrics are included in the construction of performance indicators that can then be used at a group level. In summary, they are the following:
- Property 1: GRI’s metrics provide a valid indication of the involvement, engagement, and effectiveness of people within their environment. Little adaptation and high engagement indicate that people are in positions that match their values, expectations, interests, and behavioral preferences. High adaptation and low engagement reveal disengagement, demotivation, and negative emotions of people in their positions. The adaptation and engagement indicate either a misfit between people’s behavioral values and those of their positions or ineffective personal development.
- Property 2: GRI’s metrics with their factors, scales, indicators, graphs, etc., provide a nuanced indication of people’s performance, including their behaviors, values, preferences, styles, interests, and more, anchored on behaviors as well as on how people think and feel about those behaviors. Our best estimate at GRI is that the profiles cover up to 90% of people’s behaviors in the short, medium, and long term. The intensity of the behaviors is moderated by the effects of Property 1 above. Consequently, not only is a better understanding of behaviors available, but also the probable interval within which they will be expressed.
Strategic Performance Indicators
In fact, people consistently express specific social behaviors, preferences, and values that can be measured.
On the other hand, positions also have their behavioral requirements, which express the choices of the organization and its stakeholders. It is logical to think that if the organization, its management, the shareholders, the pressure groups, etc., want the efforts to be committed in a certain way, in a certain direction, in a more or less paradoxical and homogeneous way, so it should happen in reality. If, on the contrary, this is not the case, it can be said that the efforts made in management and selection are not achieving their objectives: Behaviors are out of step with the objectives pursued.
By comparing the actual behaviors of people with the desired behaviors at the position level, the organization is able to assess and manage the relationship between the behaviors of its actors and the needs of the organization expressed according to the same behavioral dimensions.
In practice, the difference can be measured between the behaviors given by the PBI profiles of the positions of the organization and the actual behaviors of the people as they appear in the Effective graph of the GRI profile. The gap between the two is an indication of the kind of action to be taken so that the effectiveness agreed to at each of his positions is behaviorally maximized.
This performance is called Strategic because of the importance of mastering the ways of doing things for all positions in the organization at all hierarchical levels, when setting objectives, planning, and controlling. The ways of choosing people, implementing processes, innovating, managing change, taking risks, defending and winning market share, and other forms of behavior highlighted by the GRI have an impact on the functioning of the organization. They require decisions that are difficult to reverse at the highest hierarchical levels.
The measurement of strategic performance is then identified by a variable 'iopstrat' (as the Indicator of Strategic Performance).
Social Performance Indicators
The measures of adaptation and engagement make it possible to assess the gap between what may be satisfactory from an organizational standpoint, agreed or not by its stakeholders, and what emerges at the individual level in terms of personal effectiveness. The organization may want certain behaviors. However, these behaviors may require efforts that generate tension and a loss of commitment as expressed in property 1 above.
This performance is called social performance. It reflects a consideration of people's expectations and values, a good match between job profiles and person profiles, a positive understanding of individual differences by management, taking charge of their capacity and talents by the people themselves, and a good adjustment of the systems of remuneration and compensation of all kinds.
The measure of social performance is then identified by a variable 'iopsoc' (like the Objective Index of SOCial Performance).
Economic Performance Indicators
Performance other than the strategic and social performance defined above is grouped under the economic performance label. Economic performance includes aspects related to finance, production, marketing and sales, and customer relations. It encompasses the three dimensions of the balanced scorecard of Kaplan and Norton: financial, customer, internal processes and innovation; as well as part of the fourth dimension of learning and growth. As long as the indicators are outside the performance measures that are presented in the strategic and social indices above, they then remain within the framework of economic performance. The absenteeism rate and the staff turnover rate, which can be translated into costs, are therefore also included in the economic performance criteria. Economic performance indicators need to be broken down into as many indicators as necessary, depending on the situation.
The measurement of economic performance is then identified by a variable 'iopecon' (as the Objective Economic Performance Index).
Indicators Calculation
The strategic performance ('iopstra') and social performance ('iopsoc') indices are calculated from individual adaptive profiles and expectations in positions (PBI) and teams (TBI).
Once the individual profiles are available and the position and team expectations are set, the differences are calculated between the various Natural profiles and the position or team profiles on one hand, and between the Natural and Role profiles on the other hand. Calculations are made from the profiles: The more similar the profiles are, the smaller the deviations; the more different the profiles are, the greater the deviations. Calculations of the deviations for different people of the same teams, departments, or company are integrated into the strategic and social performance indices..
Type of performances
Depending on how the values of the economic, social, and strategic performance indices change over the analysis period, we can draw the following conclusions about performance: different combinations of variables tracked over time lead to four possible outcomes: (1) ideal (and pending), (2) lagging, (3) under pressure, or (4) lack of performance.
Ideal Performance
If the three indicators of social ('iopsoc'), strategic ('iopstra'), and economic ('iopecon') performance all evolve positively over the period considered, we can speak of 'ideal performance'. This means that people are more satisfied and involved, that positions in the organization are filled in line with the strategy in the short and medium/long term, and that economic objectives are achieved. ('iopsoc' rising and 'iopstra' rising, 'iopecon' reached).
Lagging Performance
If only the economic performance and the social performance develop positively, one can conclude that there is a 'shifted performance'. This means that people are more involved and satisfied, that economic objectives are achieved, but that job profiles are not filled as they were defined at the strategy level. It is very likely that there is a selection problem. 'iopsoc' is up, 'iopstra' is down, 'iopecon' is reached.
Performance Under Pressure
If only the strategic performance and the economic performance evolve positively, we can conclude that the performance is under pressure. This means that economic performance has increased, and people's adaptive profiles are closer to job profiles, but people are more stressed, less motivated, and less involved. It is likely that there are people management issues. The index 'iopsoc' is down, 'iopstra' is up, 'iopecon' is reached.
Pending Performance
If only the social and strategic performances improve positively, we can classify this as a 'pending performance.' This indicates that people are more engaged and satisfied, with behavioral traits more aligned with the strategy, but the economic objectives have not yet been achieved.
This scenario is categorized under the first 'ideal performance' as a special case. The organization is waiting for economic results, but without this negatively impacting stakeholders. The economic objectives might not have been realistic, yet the organization remains committed. 'iopsoc' is up, 'iopstra' is up, 'iopecon' is not achieved.
Lack of performance
If the economic, social, and strategic performances all declined, we can conclude that there is a lack of performance. People are less involved; the qdqptive profiles are less aligned with the strategy; the economic results are also lacking. 'iopecon' is not reached, 'iopsoc' is down, 'iopstra' is down.
Recap
The following table summarizes the four possible results for performance values:
| Ideal Performance (and performance on hold) |
Lagging Performance |
Performance Under Pressure |
Lack of Performance | |
|---|---|---|---|---|
| Economic performance iopecon |
Achieved (or to be achieved) |
Achieved | Achieved | Not Achieved |
| Social performance iopsoc |
↗ | ↗ | ↘ | ↘ |
| Strategic performance iopstra |
↗ | ↘ | ↗ | ↘ |
The adaptive profiles reflect how people best perform and their adjustments to the environment. The evolution of the two indicators 'iopstra' and 'iopsoc' reflects an idea of the general performance of the organization on the strategic and social level:
- The index 'iopsoc' measures how stakeholders’ satisfaction and involvement evolve over time.
- The index 'iopstra' measures how the strategy is reached as set with the TBI indicators for the teams, departments, and the organization.
The profiles enable performance measurement that closely follows the development of the two indices 'iopsta' and 'iopsoc' over time, aligning as much as possible with where the measures are applied: at the level of the individuals with the adaptive profile and at the management level responsible for executing the strategy.
Given the rapid pace of change and complexity in organizations, it is important to minimize non-performance, as indicated by the metrics 'iopstra' and 'iopsoc'. It’s unrealistic to expect that all stakeholders' profiles perfectly match the expectations of their roles, as reflected in the strategic performance index iopstra, or that all social performance indices reach their maximum values, as indicated by the social performance index. Excessive adaptation and disengagement, which can lead to negative emotions, are not desirable. As shown in management research, feedback to team members and training for managers help both parties take ownership of these measures.
Decentralizing the adaptive profiles to operations enables the implementation of strategy as close as possible to where decisions are made and actions are taken, ensuring that measures and information best benefit the organization and its members at various levels of hierarchy. When integrated into performance reviews, these measures motivate teams and facilitate organizational change. Ultimately, individual and unit-level measures can be incorporated into a management control system to ensure that performance targets are achieved.