Performance by Systems

Performance by systems is one of seven approaches used to manage individual and organizational performance that we've identified at GRI. Systems-based or systemic performance models emphasize the importance of an organization's means, such as inputs, outputs, resource acquisition, and processes. The design of the organization is based on an open system approach; inputs, transformation processes, and outputs are viewed as parts of a whole rather than independent components.

Generalities

With performance models based on systems, the objectives to be achieved by the organization are not the primary focus—without, however, being ignored—but the means employed to achieve them, and more generally, the viability and strength with which the system operates. The organization must have internal consistency. Its resources must be efficiently used.

With the system-based models, a successful organization defines its operating mechanisms and ensures they function in the best possible way.

Systems-oriented models mainly concentrate on system variables that are not specifically related to individuals. They originate from approaches focused on operational and economic processes. They can be described as technical, in contrast to other models within the stakeholders and Value approaches, which emphasize the human and social variables of the systems. Seven systemic models are reviewed below, before we conclude by looking at the other forms of models and what the GRI approach to performance tells us.

Operations Research Model

Like other systemic models, the Operations Research (OR) model emphasizes a performance-focused approach to achieving objectives. Operations Research is characterized by three main aspects:

1. focus on systems and decision makers,
2. use of interdisciplinary teams, and
3. application of scientific methods to control problems.

The Operations Research method uses scientific techniques to develop models of systems involving decision makers. The complexity of these models varies significantly in their mathematical detail. Instead of relying on a single, overall model of the organization, Operations Research employs numerous models, each focusing on a specific part of the system and working together to find optimal solutions for issues related to planning.

The optimization of subsystem performance helps address traditional challenges such as equipment maintenance, repair, and queue management. Understanding how an organization functions requires measuring its system's state variables. These variables relate to the control aspects of the organization, which are technical, not the human or social factors.

Structural Contingency Model

With the Structural Contingency model, an organization's structure should adapt to its specific circumstances, or "contingencies," to achieve optimal performance. There's no one-size-fits-all organizational structure. The most effective structure depends on factors like the environment, size, and strategy of the organization.

For example, if the environment and technologies are uncertain, organizations need to be flexible, decentralized, informal, and participative. Conversely, when technologies and the environment are certain, routine, and predictable, organizations should be structured differently.

With this model, performance, at least implicitly, depends on how closely the organizational structure aligns with technology and the environment.

Resource Model

The resource model was developed in the 1960s in response to what was then seen as blind faith in the goals model. The organization's performance is defined by its ability to use its environment to acquire scarce and valuable resources. To obtain its resources, the organization must negotiate its position.

Energy, as a human activity, is an example of a resource. It is rare, valued, and universally required by all organizations. Other universal resources might include physical facilities such as warehouses or manufacturing workshops, technologies, or money that can be exchanged for other resources. Additional dimensions have been identified: liquidity, stability, relevance, universality, and substitution. Organizational performance is strongest when the organization maximizes its negotiating abilities and optimizes its resource procurement.

Psychological determinants are relatively limited within the resource model compared to other factors. The environment plays a key role, but how environmental variables are utilized and the nature of internal or external stakeholders are not specified. Although this approach focuses on resources, implicitly considering them legitimate regarding an official objective, the resource model is, in fact, similar to goal-oriented models.

Without a clear definition of objectives, the concept of resource value remains ambiguous. The issue of how resources should be allocated and utilized cannot be overlooked. Some argue that because resources can be unique to each organization, acquiring them doesn’t offer a performance measure useful for comparing different organizations.

Additionally, like objective models, it’s hard with the resource model to define a performance measure that applies to the organization as a whole. Conflicts arise from resource acquisition, meaning improving performance in one area can lead to a decline in another. Making trade-offs is necessary, but the resource approach doesn’t provide solutions for this. In fact, the resource model is hard to put into practice.

Katz & Kahn Model

Performance, from the Katz & Khan model, is defined by the components of political effectiveness and efficiency. The higher the political effectiveness and efficiency, the better the organization's performance. Efficiency here refers to the ratio of energy outputs to inputs within the organization as a system. The greater the efficiency, the higher its profitability, stored energy, long-term survival, and growth.

Political efficiency involves maximizing short-term inflows to the organization through advantageous transactions with outside agencies, groups, and members. This includes purchasing products or services at better prices via improved negotiations or lobbying efforts that result in more favorable legislation.

Social Regulation Approach

According to the social regulation approach, to maintain balance, adapt, and anticipate changes in its environment, the organizational system is regulated either autonomously by the actors themselves or through top-down management control. From this perspective, social regulation is the complex set of adjustment mechanisms that the company's social system develops and continuously applies, either officially (control regulation) or unofficially (autonomous regulation by the actors themselves).

The modes of regulation and control of social action consist of three types: acting on the organization, intervening in the interactions of actors, and influencing culture. The channels of control and regulation are, in turn, of four types: supervisors, trade unionists, professional facilitators, and communication (sociologists), as well as participants (involvement of grassroots actors).

The condition for effective control regulation involves strengthening each regulatory channel independently by leveraging synergies between different channels and incorporating them into the same strategic view. In this approach, management plays a key role: that of boosting the efficiency of personnel through tasks focused on skills development, individual motivation, communication, and transmitting the internal culture. According to this model, the problem would be the sole activation of a single channel.

Culturalist Model

In the culturalist model, culture refers to a comprehensive set of knowledge and practices that are standard within an organization, creating its unity and uniqueness. The company is seen as a central social hub and a key source of identity, characterized by its tendency to generate values, standards of behavior, and beliefs.

There is both the importation of exogenous cultures (professional, regional, national) and the specific production of culture within the company. Shared values, feelings of belonging, and consensus around projects are encouraged by a management more focused on human resources as such; everything conspires for the company to operate on the belief: "It breaks out of technocratic logic to redefine the human and social conditions of survival."

Culture encompasses various aspects of its relationship to nature and among people. It emphasizes the importance of myths, rites, and prohibitions, which together form a core foundation. Through their practices, conflicts, and adjustments, individuals intentionally and unintentionally create representations, norms, rules, and values. These representations, then, in turn influence, guide, or restrict individuals’ behaviors. Culture influences individuals' behavior through its presence in them.

These influences are so deeply internalized by the individuals that they may not even be aware of them. Interaction is dynamic and not static. Adjustments are viewed as an ongoing search for balance over time. They manifest as a tendency to preserve the initial state of the organization or as a cumulative process of change.

Legitimacy Model

This legitimacy model is often linked to the population ecology perspective, which views organizational survival as its primary goal.

The organization succeeds when its structures and functions match the demands of the environment and relate directly to its survival or demise. Non-performance is shown by the organization not being selected by the environment. Organizational survival depends on environmental selection rather than solely on actions guided by organizational preferences and values.

The organization aims to establish its legitimacy with the outside world and the general public to ensure its longevity and prevent rejection by the environment.

Critique of the Systemic Models

Systems-oriented models are especially valuable for macro-level analyses, but they overlook the importance of evaluating stakeholder values and preferences, which inherently shape a system.

As evidenced at GRI with the adaptive profiles, values, and preferences from a behavioral standpoint, may adapt, but are consistent over time. Individuals prefer to express some behaviors, think, feel, and perform in specific ways. This, in turn, affects their decisions and the way they influence the organization and its systems.

Some system variables or criteria are not better or superior to others. An example is the survival criterion for an organization; under specific circumstances, it might be better for an organization and its stakeholders not to survive.

The use of a system’s variables, such as power or satisfaction, is never neutral; ideological, political, or philosophical considerations influence it. It is not neutral when viewed from the adaptive profiles either, which affect the way decisions are made and impact an organization’s culture and norms. It is thus helpful to extend the logic of the variables used in the system to continuously revise the system’s ultimate goals, vision, and mission statements, both for the system itself and for its stakeholders.