Polishing the parts is not enough to improve organisational performance

The COVID-19 pandemic is upending how we think about work. We are all in a period of transition and adaptation as we adjust to meet the immediate needs, but what about the long term?

Today, we are in a rare moment where leaders can reset the underlying factors that contribute to organisational and workforce performance. But we should remember that our organisations are social systems.

There are two important implications of this simple statement: first, history matters; and second, small moments, decisions, and actions can have lasting effects. So, is there a better way to think about workforce and organisational performance?

Polishing the parts to improve the whole…

Workforce performance is often described in productivity terms (the intensity of labour input to produce an output). But people are not widgets that can be so simply categorised.

The economic assumptions of human rationality come unstuck relatively quickly in practice because workforce performance is a function of (but not limited to): leadership climate, employee engagement, organisational design, workplace practices, employee engagement, organisational history, individual wellbeing, and interacting emotion. This is the squishy world of philosophy, psychology, and sociology.

But, despite our understanding that these are interacting parts, our practice is to work on the parts in isolation of the system. Our history has been to think about organisational performance as the sum of these parts. Our practice then becomes dedicated to improving ‘things’ (e.g., leadership, learning, wellbeing) in the hope that overall organisational performance will improve. This takes our attention away from seeing how the whole system works together.

The core characteristic of the workforce system is that it is a concentration of frequent interactions among individuals. We need to see clearly what our workforce is as opposed to what we would like it to be.

The flexibility of the workforce, the efficiency of employment conditions, the portability of skills and the quality of education are all part of the larger workforce and structural reforms that need to take place to improve organisational productivity and performance. But we need a clearer view of the whole system not just the parts.

Focus on organisational capability building …

Improving performance will require leaders to challenge the way they think about the workforce as an interacting system rather than a collection of disparate parts.

The path to improve organisational and workforce performance is to focus on organisational capability building. Performance incentives, if not positioned and managed carefully, can degrade capability by creating inappropriate behavioural responses or distorting the social relationships that are central to the way we work.

The strategic and operational performance outcome of the workforce system is the extent to which it has the capability and capacity to deliver organisational performance. To do this we need a systems-based view that provides the leaders with the tools to integrate and compare the whole system and its components as part of the ecosystem. It should provide the means for us to describe, measure, and compare performance in a way that differentiates the system from processes.

Most importantly, it should be expressed in a language that allows us to position workforce activities and initiatives as part of an integrated organisational system that interacts with other systems, such as financial and technological systems. This will lead to workforce policy and strategy that is built around systemic success, rather than process success.

Shifting the focus to systemic workforce performance lifts our gaze and the linchpin to integrating with these other systems to achieve business outcomes.

Stepping back to see the workforce system…

Can we sketch the outline of the workforce as a system?

To do this, we need to step back from the day-to-day to see the underlying drivers of organisational performance more clearly. I see these as questions of scarcity, motivation, and resilience and responsiveness.

Workforce scarcity is a strategic business problem

The workforce is rarely available to us in exactly the form we want it. So, the workforce we want is always scarce. There are two strategic questions that follow from this: ‘how do we attract and retain the scarce workforce assets available to us?’; and ‘how does we arrange the workforce capability in an organisational framework that ensures control while also maximising performance?’.

Workforce is a problem of capacity and capability but also timing, sequencing, and coordination. It requires continuous attention and investment. However, it is a problem often delegated to human resource and line managers to solve alone.

People are not widgets

People are not technical widgets, so the motivation of the workforce goes directly to the capability and capacity to achieve organisational outcomes. So, the commitment of the workforce is a strategic business performance question.

Workforce motivation, often measured through employee engagement, impacts on organisational performance directly through availability (capacity) and performance (capability). The capacity and capability the workforce gives to the organisation is negotiated every day.

What people think about the organisation affects what and how they contribute. People form a common sense meaning of this through social interactions, incentives, and feedback. If a group shares common meaning and purpose, then collective effort often emerges. If it does not, then workforce commitment is withdrawn and organisational performance is reduced.

Workforce attitudes, opinions, and behaviours are a strategic consideration for those interested in improving organisational performance.

Resilience and Responsiveness

Consistent performance assumes a degree of stability and resilience. But responsiveness assumes change and adaptation. It assumes instability is required to make change.

A strategic response to improving performance out the opportunity created by the pandemic will require leaders to find a path through the contradictions of resilience and responsiveness. The workforce is central to navigating that path.

In all organisations, people serve as the shock absorbers that mediate between a changing strategic environment and an organisation’s capacity to adapt. The workforce is an organisational buffer against uncertainty and the source of both organisational resilience and responsiveness.

How the workforce is organised to buffer uncertainty is critical to organisational resilience and responsiveness, and thereby performance.

Last thoughts…

The pattern of work has been disrupted but the history of organisations is that they fight hard to stay the same. So, our greatest challenge may be to think past the comfort of our own experience of work in order to entertain the possibility that the way we work could be better.

The pandemic has created a unique opportunity for organisational performance improvement, but leaders will need to think differently to make the most of the possibilities it presents.