smartKPIs.com Performance Architect update 7/2010

Setting targets, cooking steak and using thermometers

Setting targets is relatively easy if you want to make it easy – just pluck a number from the air, make it your target and strive to achieve it. However, there is more to target setting than a simple number selection.

One of the first things to be clarified when using target is why they are used. The answer might seem intuitively simple: to facilitate their achievement. Still, there are more reasons to using targets.

One of my favorite metaphors regarding using targets is the thermometer. Thermometers are used in multiple ways:

  • To check if the temperature is within certain limits. In medicine 37° Celsius / 98.6° Fahrenheit is considered the average healthy temperature of a healthy human body. In a way it can be considered a target, however a flexible one, based on a variance interval around it.
  • To ensure the temperature meets a specific value. For example, in cooking some dishes require a specific temperature to be reached as per the recipe. In this case, meeting the target temperature is required for the successful preparation of the dish.

Similarly, in other aspects of human administration, such as business, targets can be set for multiple reasons:

  • To learn – targets provide a good reference point for evaluating achievement and comparing results.
  • To motivate their achievement – as per the principles outlined by the Goal Setting Theory
  • To control / ensure compliance – to verify the achievement of a specific limit required as part of the successful delivery of a business plan.

In time, the latter two reasons worked hand in hand to overshadow the learning aspect of target setting. They work fairly well in the short term and bonuses based on meeting short term targets have become the norm in business. However, their long term impact is in many instances less positive. The Global Financial Crisis is only an example of the manifestation in practice of this thinking.

Coming back at the thermometer metaphor is as we would use thermometers only to check the temperature of the steak we are cooking (satisfying our short term hunger), having forgotten to also using them to monitor the temperature of our body, for long term health benefits. In practice (medicine and manufacturing) this is not the case – thermometers used in equal measure for learning and ensuring compliance. In business administration it is as if we have forgotten about the learning aspects of target setting… Reward and recognition driven target setting is the norm.

The implications at cultural level are important. Targets for control in many instances result in a dangerous combination of human greed and mechanistic behavior. This combination, coupled with ineffective risk management is one of the factors that contributed to the demise of many organizations in recent history. Having a good steak is generally easier and more appealing than monitoring health and learning about ourselves.

Fortunately, the body has the ability to self regulate temperature. Organizations, on the other hand don’t have a mature self-regulation system, again mainly due to the relatively low level of sophistication of organizational culture today. As a result rewards and recognition target setting seems to be a relic of 19th century management prehistory, a reflection of our inability to find the right balance in human organizations. After all, it took hundreds of years to evolve the thermometer to its current form. Scientific management has been around for less than 100. Maybe it is just a question of time.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan
Performance Architect,
www.smartKPIs.com

smartKPIs.com Performance Architect update 6/2010

An introduction to theory in performance management: Goal Setting Theory

In my previous update I highlighted the benefits of increasing theory awareness in performance management practice. It has the potential to positively impact the process of selecting, developing and using performance management solutions. Over the next few months, I will gradually introduce some of these theories, in no particular order.

A very important theory informing performance management is the Goal Setting Theory, which is considered to be one of the most effective motivational theories. It was formulated inductively based on empirical research conducted over nearly four decades by Locke and Latham. Its roots are based on the premise that conscious goals affect action (Locke & Latham, 2002).

An important note to make is that the use of the term “goals” in this theory. Goals are considered here to be the object or aim of an action. As the terminology used in performance management as a discipline is loosely structured, the goal setting theory itself applies to objectives, Key Performance Indicators and targets as well.

Principles

There are four general principles that are linked to an increase in motivation, thus generating optimal performance:

  • Goals should be challenging, but attainable. Locke and Latham (2004) found a positive, linear function in that the most difficult goals produced the highest levels of effort and performance. They also found that performance decreased once the limits of ability were reached or when commitment to a highly difficult goal lapsed.
  • Goals should be specific rather than vague. Research by Locke and Latham (1990) showed that specific, difficult goals consistently led to higher performance than urging people to do their best. As specific goals vary in difficulty, goal specificity in itself does not necessarily lead to high performance, but reduces variation in performance by reducing the ambiguity about what has to be achieved. (Locke, Chah, Harrison, & Lustgarten, 1989).
  • Employees should be involved in the process of setting their own goals. When goals are self set, people with high self-efficacy set higher goals than do people with lower self-efficacy. They also are more committed to assigned goals, find and use better task strategies to attain the goals, and respond more positively to negative feedback than do people with low self-efficacy (Locke & Latham, 2002, Locke & Latham, 1990). The goal–performance relationship is strongest when people are committed to their goals.
  • Goals should be measurable in terms of being clearly understood by employees: quantity, quality, time, and cost. For goals to be effective, people need summary feedback that reveals progress in relation to their goals. If they do not know how they are doing, it is difficult for them to adjust the level or direction of their effort or to adjust their performance strategies to adjust their performance strategies to match what the goal requires. Summary feedback is a moderator of goal effects in that the combination of goals plus feedback is more effective than goals alone (Locke & Latham, 2002).

Mechanisms

Locke & Latham (2002) propose four mechanisms through which goals affect performance:

1. Directive function. They direct attention and effort toward goal-relevant activities and away from goal irrelevant activities.
2. Energizing function. High goals lead to greater effort than low goals.
3. Impact on persistence. When participants are allowed to control the time they spend on a task, hard goals prolong effort (LaPorte & Nath, 1976). There is often, however, a trade-off in work between time and intensity of effort. Faced with a difficult goal, it is possible to work faster and more intensely for a short period or to work slower and less intensely for a long period.
4. Affect action indirectly by leading to the arousal, discovery, and/or use of task-relevant knowledge and strategies (Wood & Locke, 1990).

While Goal Setting Theory is generally analyzed at individual level, its principles are considered relevant at organizational level, too. Locke (2004) argues that goal-setting is effective for any task where people have control over their performance. Research in this field currently explores goal setting theory at both individual and organizational level. Elements of the Goal Setting Theory are present in various degrees in all aspects that relate to performance management practice. Linking theory to practice is up to all of us.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan
Performance Architect,
www.smartKPIs.com

References

LaPorte, R.E., & Nath, R. (1976). Role of performance goals in prose learning. Journal of Educational Psychology, 68(3), 260-264.

Locke, E. A., Chah, D., Harrison, S., & Lustgarten, N. (1989). Separating the effects of goal specificity from goal level. Organizational Behavior and Human Performance, 43, 270–287.

Locke, E. A., & Latham, G. P. (1990). A theory of goal setting and task performance. Englewood Cliffs, NJ: Prentice Hall.

Locke, E. A. and Latham, G. P., (2002), “Building a Practically Useful Theory of Goal Setting and Task Motivation”, American Psychologist, Vol. 57, No. 9, pp. 705–717.

Locke, E. A. (2004), “Goal setting theory and its applications to the world of business”, Academy of Management Executive, Vol. 18, No. 4, pp. 124-125.

Wood, R., & Locke, E. (1990). Goal setting and strategy effects on complex tasks. In B. Staw & L. Cummings (Eds.), Research in organizational behavior (Vol. 12, pp. 73–109). Greenwich, CT: JAI Press.

smartKPIs.com Performance Architect update 5/2010

On the importance of theory in performance management

Performance management is one of those disciplines that seem to be intuitively easy. It is closely related to everyone’s life. We all hear about setting goals here, achieving targets there, implementing strategies, writing vision statements, living values and so on.

It is not the same for disciplines such as risk management and enterprise architecture – ask someone on the street a question in these fields and there is a good chance the person will be much quieter than expected. Ask the same person a question about performance management and the chances of obtaining a response are much higher.

All of us have been exposed to performance management in some form through our lives, starting with childhood. Performance management is about doing well in sports, doing well in school, playing an instrument, doing well at work and contributing to the organization we are a part of.

So intuitively we know what it is about, why it is needed and how it works. But how many times did westop to think about these aspects? Or think about the way we think about performance management? Why does it work? What happens?

Such questions have been asked mainly by researchers (as oftentimes consultants are too busy consulting and experts too busy giving advice to ponder on such esoteric questions). As a result, responses to such questions remained mostly in the realm of the academia. And one of the all time favorite terms in academic literature, almost unknown (in the academic sense) to business practitioners is: theory.

The Merriam-Webster online dictionary states the following about theory:

  • Etymology: Latin (theoria) and Greek (theoria, from theorein)
  • Date: 1592. (Note: There must have been some other term used before that time, as theories are as old as Greek philosophy.)

Of all the uses of the term mentioned by this dictionary, the ones that I prefer are:

  • 1 : the analysis of a set of facts in their relation to one another
  • 3 : the general or abstract principles of a body of fact, a science, or an art <music theory>
  • 4 a : a belief, policy, or procedure proposed or followed as the basis of action <her method is based on the theory that all children want to learn>
  • 5 : a plausible or scientifically acceptable general principle or body of principles offered to explain phenomena <the wave theory of light> (Merriam-Webster, 2010)

So why is theory important in performance management? I propose three reasons why learning and thinking about the theory behind practice is important:

1. As performance management is such an embedded discipline in our life, it impacts us more than many others. It would be beneficial to know the logic behind many of the processes and tools used for performance management initiatives. A driver with a few skills in mechanics is a better driver than the one that doesn’t have a clue that there is an engine behind the bonnet and it requires fuel.

2. Understanding the theory behind practice puts us in a better position make informed decisions and to question solutions proposed to us. Too many performance management products and ideas and promoted and taken for granted. A more informed buyer is a smarter buyer and a happier customer.

3. Critically reviewing the theory behind practice enables us to question its validity and try improving it. How can we improve and advance performance management if we keep focusing on solutions without thinking why and how these solutions work?

Perhaps theory is another item on the already heavy list of elements the Balanced Scorecard should balance. Or perhaps we’ll forget give the Balanced Scorecard a break and start balancing things ourselves… Smartly…

Either way, next time you are offered a solution don’t forget to ask the question: So, what is the theory behind this? You might get lucky and the response will put a smile on your face for the rest of the day.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan
Performance Architect,
www.smartKPIs.com

References

Merriam-Webster Online dictionary (2010) Retrieved online on 6 February 2010 at: http://www.merriam-webster.com/netdict/theory

smartKPIs.com Performance Architect update 3/2010

Performance Management IQ Test or a hermeneutic dialectic process

A new feature available on http://www.smartKPIs.com starting with this month is the smartKPIs Performance Management IQ test.

It consists of a set of 24 statements that appear on the screen one at the time. The task on hand is to decide what each of these statements represents from a set of 12 options:

  1. Mission Statement
  2. Vision Statement
  3. Goal
  4. Objective
  5. Target
  6. SMART Objective
  7. Critical Success Factor (CSF) / Value Driver
  8. smartKPI / Key Result Indicator (KRI)
  9. Metric / Performance Measure / Performance Indicator
  10. Key Performance Indicator (KPI)
  11. Initiative
  12. Milestone

Only one option can be selected as there should be only one option closest to the way the statement is understood and perceived.

The term “IQ test” is pretentious and used to illustrate that being smart in performance management transcends the mechanistic approach of being right or wrong. Having this in mind, the test should be used more as a guide to discover the rich diversity of views on how key terms are or should be used in performance management. Overall the test should be a fun way to rediscover the basics of a performance management glossary. Ideally it should also raise questions about what actually happens in practice, away from the prescribing nature of management books, academic articles and management consultant’s opinions.

To me there are three key learning points illustrated by the test:

1. Performance Management as a discipline contains elements that closely link it to a multitude of other disciplines and organizational capabilities: Strategy Management, Project Management, Human Resources Management, Accounting and Psychology, to name a few. Understanding such linkages and the origins of key terms are an important step in building a robust basis for architecting organizational performance.

2. The popular understanding and perception of certain terms in practice may be very different compared to academic and consultant’s viewpoints. What matters in the end is how such concepts are used in practice to generate value and not necessarily which is the “perfect” definition of what a KPI is.

As Stringer (2007) put it: “Constructions are created realities that exist as integrated, systematic, sense-making representations and are the stuff of which people’s social lives are built. The aim of inquiry is not to establish the truth or to describe what really is happening but to reveal the different truths and realities – construction – held by different individuals and groups. Even people who have the same facts or information will interpret them differently according to their experiences, worldviews and cultural backgrounds.”

3. Have an open mind in terms of rediscovering performance management through the lens of various viewpoints and be prepared to change perspectives or shift entire paradigms. According to one view, by completing the smartKPIs Performance Management IQ test you have completed a test and reviewed different opinions on specific topics. From another viewpoint (Guba and Lincoln, 1989), you have just completed a hermeneutic dialectic process, as new meanings emerge as divergent views are compared and contrasted.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan
Performance Architect,
www.smartKPIs.com

References

Stringer, E. T. (2007) “Action Research, 3rd Edition“, Thousand Oaks, CA, Sage Publications.
Guba, E. G. and Lincoln, Y.S. (1989), “Fourth generation evaluation“, Newbury Park, CA, Sage Publications.

smartKPIs.com Performance Architect update 1/2010

Performance Management and www.smartKPIs.com

aurel-brudan-wwwsmartkpiscomLaunched in November 2009, www.smartKPIs.com was met with overwhelming interest by tens of thousands of visitors from over 160 countries. A base of regular visitors quickly formed in a relative short period of time and it continues to grow with many registering as site users daily.

Why such interest in the subject of Performance Management and more specifically Key Performance Indicators (KPIs)?

What sets smartKPIs.com apart in addressing this interest in the subject?

On Performance Management

Business Performance Management is a dry subject for many. At individual level, annual performance reviews have been compared to preparing tax returns – it is hard to find someone who takes pleasure in completing them, but they are necessary and regular.

For others the topic is complex and rewarding. At company level, Performance Management Systems have been compared to washing machines that have to be properly installed and configured in order to operate as desired (Meekings et al, 2009).

Performance Management is still in the early stages of being established as discipline and the lack of standards makes using tools and concepts from this field a challenging task. There is a certain degree of confusion in the way terminology is used in the discipline both within academic literature, in practice and between them.

Faced with the challenging task of finding coherence in this universe of mostly unstandardised concepts, practitioners welcome tools and methodologies that bring clarity, structure and simplicity to Performance Management. The success of the Balanced Scorecard over the last 20 years is proof of that.

smartKPIs.com fits in this picture as a platform based community that can be used to:

1. Learn more and improve the understanding of Performance Management concepts

2. Review examples of Key Performance Indicators that went through a thorough documentation process

3. Manage personal libraries of KPI examples, selected by users as most suitable for the performance management initiatives they are involved in.

4. Source templates that can be used in better structuring the documentation used as part of organisational performance management frameworks or systems.

smartKPIs differentiation

The world abounds with Performance Management consultants and there are many resources available on the Internet. smartKPIs.com is not the first, nor the latest online platform available to the wider public.

What sets smartKPIs.com apart is:

  1. The combination of insight from practice with academic rigor. We value academic research and use its findings and principles. At the same time, abstract concepts are much better understood when analysed in context, in practice. In addition, practice refines such concepts and contributes to their evolution and usability.
  2. The ability to structure information in clear taxonomies, simplifying the analysis process. This enables visitors to better understand the discipline of Performance Management and the use of KPIs as a core organisational capability. The benefits, although indirect are to be seen at both personal and organisational level: “ I am convinced that the first essential of business success is the capacity for organized thinking” (Follett, 1940)
  3. Expertise in the field of Performance Management, through a “community of inquiry”. The definition of an expert is relative. Today, same as in old times, anyone can claim to be an expert in anything. Mark Twain is credited with using the phrase “an ordinary fellow from another town” as an explanation to the term. Will Rogers is credited with using the phrase “a man fifty miles from home with a briefcase” to express the same. In our times, the number of miles increased considerably and the briefcases were replaced by blogs, websites and accounts on social networking sites. In developing expertise we took the long but steady road of academic study, combined with learning from practical experience and generating new insights. Our approach to learning from practice is action research and it follows Peirce’s inquiry process of abduction, deduction and induction (Barton et al, 2007). More importantly, we have done over 10,000 hours of deliberate practice in the field of Performance Management both at team level and individual level by some of the team members. Academic research supports a causal relationship between the accumulated deliberate practice (guided, highly structured learning activity) and the level of expertise in an area. Deliberate practice being a “highly structured activity, the explicit goal of which is to improve performance” (Ericsson et al, 1993). Having said that, we are great believers in the power of collective intelligence. We see ourselves as informed facilitators of the interaction, collaboration and learning process that smartKPIs.com users will participate in.

smartKPIs.com metaphor

One metaphor that I think describes smartKPIs.com is comparing it to a tree.

  • It first needed a fertile land – Performance Management
  • A seed – myself as Performance Architect
  • A period of growth – the many years of deliberate practice
  • Branches – the team behind smartKPIs.com
  • Flowers – its website content
  • Nectar – the quality of the content
  • Bees – visitors of the website
  • Cross-pollination – the exchange of ideas in the online community
  • Fruits – Financial self sustainability of the website
  • Honey – Value generation for visitors, fed back into their organisations.

Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,

www.smartKPIs.com

References

Ericsson, K. A., Krampe, R. Th. and Tesch-Römer C.(1993), The role of deliberate practice in the acquisition of expert performance, Psychological Review, Vol. 100, Nr. 3, pp. 363-406.

Follett, M. P. (1940), Dynamic Administration. The Collected Papers of Many Parker Follett, edited by Henry C. Metcalf and L. Urwick, Harper & Brothers, New York, London

Meekings A., Povey, S. and Neely, A. (2009), Performance plumbing: installing performance management systems to deliver lasting value, Measuring Business Excellence, Vol. 13, No. 3, pp. 13-19

Barton, J, Stephens, J. and Haslett, T (2007), Action Research: An Exploration of its Logic and Relationship to the Scientific Method. Proceedings of the 13th ANZSYS Conference – Auckland, New Zealand, 2nd-5th December, 2007 Systemic Development: Local Solutions in a Global Environment

Metaphor in performance management

What do prescription medicines, washing machines and performance management have in common?

The answer emerges from several articles published in the Academy of Management Perspectives and the Measuring Business Excellence Journal over the course of 2009.  They reflect a trend in performance management literature of using metaphor to paint the complex picture of some of the theories linked to this discipline.

In their February 2009 article, a group of professors from US based business schools compare goal setting with a prescription strength medication, with powerful and predictable side effects: “Rather than being offered as an “over-the-counter” salve for boosting performance, goal setting should be prescribed selectively, presented with a warning label, and closely monitored.” (Ordonez et al, 2009a). Some of the assertions made by the article were met with a strong response by Locke and Latham, pointing out some of the flaws in the research approach and conclusions (Locke and Latham, 2009a). The debate continued in two more articles (Ordonez et al, 2009b and Locke and Latham, 2009b), however the relevant point here is the use of goals as prescription medicine metaphor.

goals-as-prescription-medicineordonez-2009

The performance management system as a washing machine metaphor comes from an article published by a team of practitioners and academics from the UK (Meekings et al., 2009): “Performance measurement and management frameworks are analogous to new washing machines in the sense that they need to be properly plumbed-in, connected-up and switched-on before they can deliver value.”

lg-dryers-wd-12570fd-3_4view-largelg-dryers-wd13050sd-front-largelg-dryers-wd12576fd-3-4view-large

Same as a washing machine, a performance management system needs to be plumbed in:
1.       located in the organisation (Performance Architecture)
2.       connected to the relevant performance insight sources as input (Performance Insight)
3.       connected to outlet pipes to eliminate redundant and distracting data (Performance Focus)
4.       connected to a power supply – empowered employees that take action (Performance Action).

References

Meekings A., Povey, S. and Neely, A. (2009), Performance plumbing: installing performance management systems to deliver lasting value, Measuring Business Excellence, Vol. 13, No. 3, pp. 13-19
Locke E.A., Latham, G.P. (2009a), Has Goal Setting Gone Wild, or Have Its Attackers Abandoned Good Scholarship?, Academy of Management Perspectives, Vol. 23, Nr. 1 / 2009, pp. 17-23
Locke E.A., Latham, G.P. (2009b), Science and Ethics: What Should Count as Evidence Against the Use of Goal Setting?, Academy of Management Perspectives, Vol. 23, Nr. 3 / 2009, pp. 88-91
Ordóñez, L.D., Schweitzer, M. E., Galinsky A. D., Bazerman, M. H. (2009a), Goals Gone Wild: The Systematic Side Effects of Overprescribing Goal Setting, Academy of Management Perspectives, Vol. 23, Nr. 1 / 2009, pp. 6-16
Ordóñez, L.D., Schweitzer, M. E., Galinsky A. D., Bazerman, M. H. (2009b), On Good Scholarship, Goal Setting, and Scholars Gone Wild, Academy of Management Perspectives, Vol. 23, Nr. 3 / 2009, pp. 82-87

Photo credits
www.sxc.hu
www.aomonline.org
www.lge.com

Success in academia – Advice from 3 high achieving scholars

On the first day of the 2009 Academy of Management Conference, I attended a great panel discussion on the topic: “Success in Academia”. I might add “and Beyond”, as the advice given is also relevant to learning, personal productivity and career in general.

The participants were three Academy of Management Laureates, each of them with an academic career spanning over 40 years.
• Distinguished Professor Michael A. Hitt, from Texas A&M University
• Emeritus Professor Edwin A. Locke, from The University of Maryland, College Park
• Distinguished Professor Fred Luthans, from The University of Nebraska, Lincoln.

The discussion focussed on the journey to become an independent scholar. I have structured their advice into 5 sections:

1. Learning through apprentiship

• Stage 1 – Learn to analyse data by analysing existing datasets. Research assistantship is a useful step in this direction. “Data analysis is not just a science, it is also an art.” Edwin Locke
• Stage 2 – Get involved in the design of studies.
• Stage 3 – Know how to write. The method and results sections are considered to be the easiest. The introduction is the most difficult to write. Reviewers have a hard time getting past the data.
• Stage 4 – Write the discussion section – the easiest to write.
• Stage 5 – Job search preparation. At The University of Maryland a job preparation seminar takes place several times a year, addressing the topic of what it is like to be a professor. All candidates are requested to try 2-3 times their job interview presentation.
• Stage 6 – Seek individual advice customised to personal values, interests. Doctoral students are very poor at introspection.

2. Guidance through mentoring

• Senior academics are interested to provide help with questions about ethics, strategies, getting citations, making tenure upon finishing with the dissertation, etc.
• Professor Michael A. Hitt supervised 85 doctoral students over 40 year career. His mentoring methods changed from early, mid to late stage in the career.
• PhD. students fall in two categories:
1. Irrational type – fixed idea, can’t get out of it.
2. Smart and creative – you can have a rational discussion with them.
Assistant Professors are more rigid.

3. Mistakes made by young researchers

• Junior faculty not getting involved in research soon/early enough. They are unlikely to get tenure as a result. Some don’t get it and some don’t want to.
How to avoid it: An option is to volunteer to review research and make comments.
• Research students lock in on a topic way too quickly after the first exposure to a seminar – topic.
How to avoid it: Take at least one year of review and thinking before locking in a PhD. research topic.
• Not a good idea to select a topic the supervisor has done work in.
How to avoid it: Instead the following rule should be used: pick a topic that interest you; if the supervisor has some knowledge or interest, will supervise.
• Researchers don’t do parallel research. They start one project and stick to that. The linear process is a disaster. The tunnel vision doesn’t work. The duration between design and acceptance extended from 1 to 5 years now due to reviews and reviewers. An assistant professor has about 6 years to make tenure.
How to avoid it: Need to hedge your risks, especially under time pressure. Always work on multiple projects. 5-7 projects at the same time.
• PhD. students shouldn’t be involved in reviewing papers for academic journals. An unexperienced reviewer has tunnel vision, often picks on one thing and expands on it, while missing the point of the article. There are many junior faculty members on the editorial boards of journals. One reviewer didn’t know what self-efficacy meant.

4. Personal research productivity. Personal habits that help being productive.

1. Productivity takes effort, time, concentration and motivation.
2. There is no substitute for hard work. Hard work trumps intellect.
3. To be a world class expert you need 10,000 hours of effort in that field.
4. Avoid procrastination , although it is common in any field around the world.
5. It helps to choose – when and where to work to be productive.
6. You need uninterrupted time to work on research.
7. Establishing rituals and goals works for research productivity. You have got to set up and customise rituals and routines – specific times and specific behaviours. We all use them in day to day life – from being an athlete to brushing teeth. Examples:
• 7-11pm every night in the office at home.
• Stay at home on a particular day: i.e. Thursday.
• Write early in the morning: 7-11am.
• University office time late in the afternoon.
• Rule – only work in the office.
• 5pg./day = x pages/year.
8. Once you have a ritual, feel good for doing it or feeling guilty for not going it.
9. Collaboration is also important. Working with others is important as you get a lot more done – division of labour helps. Need to be sure the uni tenure doesn’t penalise collaborative research.
10. Delegation. Data analysis can be delegated to others. There are new mantas – hierarchical linear regression. The method should reflect what you need.
11. Motivation. To be a good researcher for a long time you have to love it. The entire process – conceptualising, designing, writing , dealing with reviewers. You have to love writing and the process of discovery. You also need to be tenacious in the face of failure.
12. Develop ability to work fast.
13. Keep up to date with business news – Business Week, Fortune magazine.

5. Career Advice

• Career success comes from research – this is how you get distinguished professorship. A large portion of the pie for research. In the order of priority: 1. Research, 2. Teaching, 3. Committee work
• Goal in research – do good work. Not fame and popularity.
• Exposure from textbooks helps a lot for promotion and tenure.
• On teaching: not value in listing tools and listing theories. A better way to teach management is to teach principles. Write chapters around principles. Integrate knowledge into principles and sub principles.
• The data is not what you want.
• Need to be open in the approach to research.
• Pay attention to what is being done, not just doing it
• Insert a set of values in what you do.

2009 Academy of Management Meeting statistics

aommeeting2009

The 69th Annual Meeting of the Academy of Management will take place between 7-11 August 2009 in Chicago, USA. The theme for this year’s edition is “Green Management Matters”, inspired by society’s increasing concern about responsible stewardship of the natural environment.

2009 AOM meeting in numbers

Over 10,000 attendees
8,380 people on program from 78 countries
1,672 sessions

Paper submission statistics

6,795 submissions evaluated by 5,456 volunteer reviewers
Highest number of submissions in the Business Processes & Strategy (741) and Organisational Behaviour (711) Divisions
Lowest number of submissions in the Management History (34), Management, Spirituality and Religion (50) and Management Consulting (61) Divisions.

Affiliations from outside of US with 30+ participants

Bocconi U, Italy
Copenhagen Business School, Denmark
IESE Business School, Spain
INSEAD, France
National University of Singapore, Singapore
Rotterdam School of Management, Erasmus University, The Netherlands
University of St. Galen, Switzerland
University of Toronto, Canada
York University, Canada

Countries with the highest number of participants

2009aom-meeting-statistics1

Data sources:
Academy of Management Program
US Census Bureau

More interesting statistics are available on page 35 of the meeting program guide:
2009 Academy of Management Meeting statistics

Academy of Management launches AOM Connect

The Academy of Management has recently launched AOM Connect, to coincide with the 69th annual meeting.

AOM Connect is a new service offered by the Academy of Management to its members, as an online professional networking tool. The concept is similar to the AAACommons community operated by the American Accounting Association. Both are powered by HiveLive, a provider of enterprise-class online customer communities.

About the Academy of Management

Founded in 1936, is the oldest and largest scholarly management association in the world.
19177 members from 108 nations.
24 professional divisions and interest groups
Publisher of 4 journals: AMLE, AMJ, AMR and AMP.

Relevant links

Academy of Management
AOM Member Directory
AOM Connect
American Accounting Association
HiveLive

2009 PMA Conference – Professor Kenneth Merchant: Alternatives to accounting measures

The opening keynote speech of Day 1 of the 2009 Performance Management Association conference was given by, Kenneth Merchant, Deloitte & Touche LLP Chair in Accountancy and Professor of Accounting at the University of Southern California Marshall School of Business. Professor Merchant is an expert in management accounting and management control systems with numerous publications in this field.
His speech addressed the challenges practitioners are faced with in selecting and using performance measures. He discussed the flaws of accounting measures and presented four alternatives.

I have structured below my notes from this session. In part one of this blog post, a number of issues with using accounting measures were presented. Several alternatives answering the question “What to use instead?” are presented below.

Part 2: Alternatives to accounting measures

1. Use market measures of performance.

• They have an obvious appeal.
• They also have some problems due to market imperfections, noise, feasibility (i.e. “market expectations problem”).
• For private firms there is no data availability.

Example: The case of Christopher J. Steffen at Eastman Kodak Co.
• January 1993 – Christopher J. Steffen was appointed Chief Financial Officer (CFO) of Eastman Kodak Co.. He had a reputation of cutting costs. Within 2 days, the stock increased $2.2 billion dollars.
• April 1993 – After 11 weeks in the job, he resigns (with few accomplishments). The stock declines with 2.0 billion dollars.
• Questions: What if the period of stay changes with a few months? Should bonuses be paid for the increase in the stock price due to market reactions?

2. Extend the measurement window

• Extend measurement horizon to 3, 5, even 10 years.
• The analysis of profit / market correlation in different windows (1, 2, 5 10 years) by Easton, et al.
1 year: 0.22
2 years: 0.39
5 years: 0.57
10 years: 0.79
• Are you willing to wait 10 years for a bonus? Maybe not, however 3-5 years is doable.

3. Use more informative non-GAAP financial measures of performance.

• “Pro-forma” earnings – exclude line-items that are more distracting than informative.
• Funds from operations (FFOs) – seems to work with Real Estate Investment Trusts (REITs).
• Free cash flow (FCF).
• Earnings before interest, taxes, depreciation, and amortization (EBIRDA).

4. Use combinations of measures

• There are many different approaches. Market and/or financial and/or non-financial measures.

Measure combination example 1: The GE Management Development and Compensation Committee uses a combination of financial indicators and subjective measures in the list of the CEO Goals and Objectives for 2007 and 2008.

Financial Objectives (Continuing operations)

Revenues
Earnings
Earnings per share (EPS)
Cash from operating activities (CFOA)
Return on trading capital (ROTC)
Margins

Strategic & Operational Goals

Sustain operating excellence and financial discipline.
Create a more valuable portfolio of businesses
Drive organic revenue growth at 2 to 3 times GDP
Retain excellent teams and a strong culture
Manage the Company’s risk and reputation
Build an excellent investor base
Lead the Board activities

Measure combination example 2: The Balanced Scorecard, with up to 20-25 measures, with casual links between them, grouped in four perspectives: Financial, Customer, Internal Business and People, Learning and Growth.
• The majority of firms claim to have a Balanced Scorecard. They misuse the term.
• Which set of measures in that circumstances provide the best indication of the value creation?
• Combination of short-term backward looking measures with leading indicators of future performance.
• How many measures should be used? The function is non-linear:

Ken Merchant-perf-vs-meas

Historical background on the use of measures
1954 – General Motors started using measures – 3-7 measures
1960 – Critical success factors

Conclusions

• Good news: 
o We are accumulating more and more data about the relationship between market related measures, accounting measures and individual non-financial measures (i.e. customer satisfaction).

• Bad news
o Don’t know when to use each of the 4 alternatives presented. Individual or in combination, in any specific period of time.
o Don’t know about the effects of using concurrently multiple performance measures.
o Over satisfying customers is not good either, as this is generating diminishing returns. There is a limit to “profitable” customer satisfaction.
o The benefits of the BSC may not be sustainable (more research is required on what are the long term effects on BSC implementations in the BSC Hall of Fame companies).
o Still lots of research that needs to be done.