Business performance management relies on a number of theoretical frameworks to be able to undertake its functions. One of the more popular ones in the 20th century has been the six sigma model. It operates by the use of consistent standards and seeks to mitigate or even completely eliminate any defects that are causing bottlenecks within the organizational processes. For some this can be boring because it tends to clamp down on excessive imaginative discretion. However it can also enable managers to control vast sections of a multi disciplinary organization.
One of the key features of six sigma is the desire to quantify all processes. This involves the collation of various data related to all processes within the organization. The processes will then be placed under stress to check that they can withstand market conditions. There will a log of the reactions and the deficiencies that have been identified. Management action is then triggered to ensure that the all bottlenecks are either eliminated or their impact is minimized.
Six sigma also allocates roles to various members of the organization to monitor and report back any problems within the system. They could be senior executives who are encouraged to become passionate about the change management process or they could be middle ranking managers who become change champions. They all form a network that investigates the system. This can foster collegiate working and also gain loyalty to the company. However there is a danger that all this co-operation is merely superficial but deep down the lower ranked employees simply ignore the messages.
As a method of performance management it is more suited to manufacturing industries rather than service industries. Monotony in industries which employ and primarily service human relationships is not ideal. There is also some question as to whether too much uniformity can make the jobs boring and lead to even worse performance. The idea of new structures to support the system can also take away from the normal working practices of the organization and lead to stiff resistance.
There is the issue of complexity which can rear its head when the change champions try to impose their own simplistic interpretations of a given situation. The personalities involved will also have an impact if they do not fit in with the organization or already have existing interpersonal disputes that impact on their role as change champions.
At its best the system can get rid of bad practices that have become institutionalized as well as ushering in new systems that increase output. The creation of standard framework means that management becomes easier and employees have better flexibility in moving around the company. They are also greater management control over the work that is being done.
Not all companies contemplating a formal business performance management system will benefit from six sigma but it has been proven to be quite effective among manufacturing industries and it should be one of the options that are available to executives in their question to increase the competitive advantage of their units.