Academic Interview: Carmine Bianchi

Written by Andrei Costea on February 16, 2018. Posted in Academics, Interviews

In 2018, the Performance Magazine editorial team interviewed Carmine Bianchi, Professor in Business & Public Management at the University of Palermo, Italy. His thoughts and views on Performance Management are presented in detail below.

Measuring performance is important, of course, but if you do not communicate what you’re measuring or the results you’ve obtained, or if you do not work together (collaborate) to understand what is causing underperformance, all your measurement does not serve much purpose.

Trends

Key trends in my opinion are towards the possibility of embracing Performance Management (PM) inter-organizational aspects, inter-agency aspects. The chance to support governance through performance management. This is not only typical of the public sector. When talking about governance, we talk about policy design. When discussing about performance management, nominally, we mainly discuss policy implementation in any kind of organization, not only those in the public sector. The issue is that the level of complexity and unpredictability of phenomena in a community, and even in the world more broadly speaking, is becoming so high that focusing PM on policy implementation alone runs the risk of a number of problems which are difficult to frame.

If we address PM only in the form of policy implementation, this might give rise to a myopic use of performance management, with issues such as lack of coordination quickly becoming a reality. This runs counter to everything that PM stands for, because its role is precisely to streamline any coordination process.

I can explain this by referring to my previous point, about unpredictability, on the topic of communities. For example, youth disengagement, poverty, crime – these are just some examples of issues that happen both at a local level, as well as on a much higher scene, such as the European one. Now if we bring businesses in the mix, whether they’re small or bigger ones, we’ll notice that without proper collaboration or coordination between themselves and the community they are part of, crises start to emerge. If we have coordination between these two, then the possibility of having sound, robust policies becomes a more vivid reality.

Thus, the socio-economic development of a community is possible if you try to establish big outcomes at the community level. Outcome-based performance management is not a new topic in itself; it is however relatively new for the field. Traditionally, this has been an instrument that was used only from an organizational point of view. For example, a municipality that wants to embrace its own performance measurement and management system with more outcome-based variables, may try to understand what kind of outcomes may be achieved in each of its departments. This is an approach that goes from the “inside out”.

However, particularly when dealing with community-wide issues and being ahead of the issues in an organization which can play the part of a key actor for changing performance, maybe even political performance in a community, by affecting more deeply the performance of smaller organizations, like SMEs, one has to take note of how the community – through its various actors – can bring change from the “outside in”, through collaboration.

So let’s take an example I mentioned earlier: crime. Preventing/reducing city crime is a problem that is not generally addressed through a holistic perspective, ergo through collaborative governance. The police have their own output measurements, generally separate from the context, while other community stakeholders (e.g. schools, judicial and penitentiary system) have their own output measurements. Very rarely do we ever see they converge. What could be done to reduce crime is bring together all the involved actors – the police, local community, NGOs, the judicial courts, with the help of a facilitator, and map out shared goals, shared targets. This way, we could develop great synergy between all the action plans, which would make the implementation of policies really sustainable in the long run.

The big change in the gradual change that I envision here is an emphasis on the rising need to address big community issues, through outcome-based performance management, by combining inside perspectives with outside ones. This way we may sketch a bridge by using Dynamic Performance Management (DPM), which tries to understand the effect of delays between causes and effects, and how the end-results are affected by performance drivers, and such drivers are affected by strategic resources. This kind of performance management approach may just become the lever necessary to link policy design with policy implementation.

Policy design is an area within the public sector that generally concerns political scientists, so there is no real PM approach there, while policy implementation is essentially performance management. As we can see, there’s a disconnect there, which in my opinion is the primary cause of the problems mentioned before. If we can build a bridge between the two, I believe we can foster strategic learning, communication, higher awareness regarding causes and effects, and a dynamic view of any issues we may encounter.

Phenomena are not static, they change over time. If we’re not able to perceive even the weakest signs of change and correct them, promptly identifying opportunities, we might end up facing bigger crises down the line at some point. Most of the crises that we face nowadays are a result of this type of oversight.

There is much more work to be done here. One can find quite a few disconnections at the strategic and corporate level, and in how performance measurements are outlined in terms of operational targets. As an example, in some of the organizations where a culture of PM was introduced, some individuals tried to revert that perspective to one focused more on the kind of link you’ve mentioned. In my opinion, this type of link may map the relationship between these levels erroneously, especially regarding how individual performance is modeled.

In order for someone to understand individual performance, you have to see how an individual is expected to achieve performance on his/her individual results, within the group level, and then within his entire department’s level, finally measuring it against the overall company level. This is essentially an analytic or bottom-up approach.

Bottom-up is fantastic when you consider the identification of goals, since you involve your collaborators. But when you – as a department head – want to identify targets, together with the corporate level, it is important to use PM as a vehicle that starts from corporate goals and then gradually cascades these goals to the departmental, group and individual levels. This is what I call a synthetic or top-down approach. This approach fosters coordination.

I remember the reaction of certain employees who believed that their boss was “stealing” their own targets, because they perceived the process of identifying the department’s operational plan was just a simplistic sum of individual targets. It completely eschews coordination, collaboration and communication. Measuring performance is important, of course, but if you do not communicate what you’re measuring or the results you’ve obtained, or if you do not work together (collaborate) to understand what is causing underperformance, all your measurement does not serve much purpose.

So, this is why I believe we need more dynamic version of performance management when it comes to this link, because it enables a series of elements:

• coordination – at the horizontal and vertical level
• motivation – this is nothing new, but remember – it’s one thing to simply mention something, and it is an entirely different element to connect motivation systems with PM. If departmental targets are built by aggregating individual targets in a bottom-up fashion, we will not have any coordination or orientation towards motivation.
• communication – through PM, we have the possibility to sketch action plans at the departmental level, and to link these three layers.

From my experience, in the public sector, the risk is that PM when it comes to this question, is conceived as a mechanistic way of linking performance measurement and management to career advancement and rewards. I have a few clear examples in my mind of PM misuse, whereby its core idea, that of management and measurement, was focused on performance evaluation at the individual level, by completely forgetting why performance management was needed in the first place.

This is somewhat differently framed in the private sector. Here I particularly refer to SMEs. These companies should use lighter, leaner DPM systems, which help entrepreneurs to better understand the system, better motivate their internal collaborators, and to better coordinate their organization so that it fares well against the other players in the market. So, a greater degree of flexibility and a heightened capability to detect delays and their effects, the so-called “intangibles”, which are elements that usually eschew traditional performance measurements.

Intangibles are strategic resources like the organizational climate, the feeling of belonging to the group, employee burnout or any intangibles related to how customers perceive the company’s performance. These have to be taken into consideration more often by both the private and public sector, because they generally provide the source of important drivers behind organizational end-results.

As I mentioned before, what I believe is that performance management should embody more systems-oriented methods. When I say systems-oriented, I mean system dynamics as a methodology. I don’t ascribe to predictive methods, or predictive simulation modelling – I’d much prefer tools and approaches that would bring together players from both the inside and outside of an organization. They could be managers within the organization, or various policy makers from the outside, which would promote coordination at both the horizontal and vertical levels.

Now this cannot be achieved simply by willing it, we need a robust method, a systemic approach. That’s why I believe it is fundamental to have a facilitator who can enhance strategic planning and implementation, on top of having a robust method, like DPM.

To better explain DPM, as I feel I did not do it justice in my previous answer, this is a blend between performance management and systems dynamics modelling. There are examples of approaches in traditional PM that go towards this concept, like the Balanced Scorecard.  This tool, as we all should know, made great strides in the world of business, where it showed that PM is not simply a matter of finance, nor a static issue.

Now, where the BSC starts to falter I would say, is PM framed through it has a number of defects, which are arguably due to the fact that the platform is relatively rigid, prescriptive or axiomatic, if you will, as well as being quite corporate-centric, and in best case scenarios, the aforementioned bridging goes inside-out. Furthermore, it is dynamic only to some extent. There is a lack of focus on the dynamics of strategic resources that would affect performance drivers through decisions, policies and implementation thereof.

Thus, DPM may offer good support to the BSC and traditional PM, while at the same time removing some of the barriers that prevent higher results from being achieved, which the BSC might have placed unintentionally. By combining these two, we can map the performance of a community. Imagine a municipality where you have say lack of trust in government or sliding quality of life, which are big aspects to measure, with big related outcomes if we wish to increase performance.

One way you can go about doing things is by starting with strategic planning, which is not primarily focused on a single organization, but on the community. You deal with the community’s issues through the same approach used for single organizations – which in this case is DPM, to model outcomes for the above-mentioned issues, after which you identify the outcomes at the intermediate level, the outputs at the community level, and then the drivers, as well as the strategic resources.

Following this, you bring together all the involved parties, and through collaboration, you team up the public sector with the private one, along with the non-profit sector. In doing so, I believe you can achieve much better results in combating community issues like obesity or alcoholism, which cannot usually be properly solved by one party alone.

Research

First aspect is associated with delays and causality behind financial measures. Performance is not only a matter of financials, but paradoxically there is still excess focus placed on financials, in my opinion. Whenever there’s an effort to identify non-financial measures, it’s often mainly done through a statistical approach, which is not how I believe it should be done.

Dynamic Performance Management (DPM) is not statistics. Statistics can support the acquisition of data, but having such data does not guarantee we will have a proper interpretation of it. A PM system should be oriented in such a way that from an organizational perspective, the end results should be measured in a flexible way, according to their proper points of view and with a focus on the performance drivers, as well as the strategic resources.

This will make it so that PM is not used in a mechanistic, static way, but rather a learning-oriented, strategic way. When I say strategy here, I don’t mean long term results only, but rather linking short with long-term objectives. A second aspect is having more empirical research of collaborative governance. This has already been defined by researchers as “performance governance”, and is an open, constantly-evolving field of study. We need to unite various actors here, from all sectors, to compile data and information and see what common practices seem to be a good general practice and which ones are highly individualized.

This is quite a difficult question to answer. However, I do believe that when it comes to research rigor and performance, one of the best models for any organization to follow is the OECD. Their report, Systems Approaches to Public Sector Challenges, shows that they understand the systems approach very well and I highly recommend any education-focused organization to take a look at the way the OECD conducts its research.

Another organization whose performance model is quite interesting is the Municipal Administration of Reykjavik, in Iceland. There is a video, on the topic of alcoholism and its abuse in the country, by teenagers. Around 4-5 years ago, about 40% of teenagers were addicted to alcohol. This was no good news in any way, so how they wanted to change this trend by collaborating with various institutions & groups, and established targets for each and every one of them in part, to solve this issue. They even decided to involve parents and entire families, by allowing them to sign a paper according to which they consented to individually be part of those targets.

I don’t think there are any aspects that have lost their importance in any particular way, so I’d say none. However, from my previous answers, if we talk about relative importance – meaning in some cases it is very important, while in others not so much, I’d say financial performance, is somewhat less important from a relative importance point of view.

  To be clear here, it is still very important, because if you operate under losses, you are not sustainable. Nonetheless, if you see losses and only tunnel on financial measures, you are most definitely missing the point and will probably never solve the issues plaguing you. Again, in terms of relative importance, the same would be true for individual performance measurement. Using performance measurement for evaluating bonuses, salaries, career advancement is fine, as these are objective criteria. However, without proper vision on the issue of why individual A or B is underperforming, by looking at the entire context, you’ll never be able to understand what’s truly happening there.

Basically, the traditional way of focusing primarily on an issue as a cause in and of itself was possible – emphasis on the past tense here, in the past, when we had simpler problems, predictable issues. The world today is quite unpredictable, therefore we need clearer lenses, allowing multiple points of view on an issue. This goes hand in hand with a final mention I’d like to add here – modelling performance from the inside out is becoming unfeasible. Reality does not give you grounds to ignore it, while pushing fixes however you think is best. You have to look outwards first, to see the big picture and only then start to think about solutions. Ignoring reality will not get you very far.

Practice

First of all, we need more outcome-based performance measures. These measures would have to be built in the opposite way we’ve been doing them. For the past years, we’ve been looking at issues from the inside, outwards. We need to start focusing on a view from the outside, inwards. This means community and shared goals, with shared responsibilities would be identified at the community level, and then we could more easily see the portion of big outcomes each organization should be responsible for.

Secondly, I’d have to say that although performance measurement in general is intended to concern organizational management, in the public sector performance management should be also used to measure political performance. If we think about how we use PM to evaluate managers, the objective of such an evaluation would be related to payment systems, career systems, professional prestige and managerial reputation. Now, although the politician is not part of the professional structure of the traditional organization, PM could help in their evaluation, in measuring public policy performance – how they are designed, with what targets in mind, how are they being implemented and so on. I find it very often that there’s a gap between the performance being reported and actual performance. This generates a lack of trust in government, which I’ve mentioned earlier is one of the big community issues we’re faced with measuring many times.

What’s more interesting is this can have repercussions on another community issue, which is quality of life – people tend to judge quality of life lower when their confidence in government lowers. This in turn can lead to even worse issues, as some governments might overreact to this news and try to woo back its people through various spending that might lead it into financial underperformance. So in my opinion, although PM is not a universal panacea, it can play a real role here by fixing the heart of the problem and not the effects, because it allows for early detection.

My answer here relates to what I’ve mentioned so far. Having a non-mechanistic way of viewing performance management and measurement, using a DPM approach, knowing how to manage issues that can affect multiple, different organizations.

I’d like to now give an example that relates not so much to PM, but more to industrial districts. In Italy, in the 80s, the capability of small organizations to generate value not only inside the organization, but through synergy and collaboration across the supply chain, was quite high because many of them focused on evaluating performance in an all-encompassing way, from numerous points of view, from the internal ones, to the collaborators, consumers and so on. Imagine the same thing, but using PM tools and methods that are available to us now. If organizations today use the same line of reasoning, but with the tools we have now, they’ll be able to more and better policies.

My answer here will tie in to the one I’ve given at the previous question, so I will be brief. I believe a best practice is to have better performance management system designers who understand how collaboration works and just how valuable it is, whilst being fully knowledgeable on the best methods of implementing outside-inwards approaches that take into account the entire context of each of the scenarios measured.

The designer is the person who tries to glue everything inside the organization and even between different organizations, they are facilitators for all of the plans that go on inside a community, so having such a learned person in the organization is extremely beneficial.

Education

Well, this is related to what I mentioned before – dynamic performance management, outcome-based performance management, collaborative governance. On the business side of education, I’d like to see more entrepreneurs trained to look not only into the short-term results to detect symptoms of change within an organization. Moreover, I’d like to see entrepreneurs also working together with multiple players from within the organization, to solve its performance issues.

An interconnected world requires policy design and implementation be supported by PM, even at the inter-institutional level.

I’ll try to synthesize my ideas here, because from my point of view, this can also be solved by taking notes of the ideas I’ve already mentioned. How I see things, there are four levels – individual, group, organizational and inter-organizational. Each of these parties have their own thresholds that affect their performance one way or another, for example there could be individual limitations regarding skills, knowledge or habits, such as propensity for collaboration.

For example, even the best designed PM system would be a nightmare to implement if people did not collaborate and work together. In my opinion, I’d recommend looking at the organizational status and the inter-organizational one, and see how the individual is expected to perform in that scenario. Again, if say collaboration is very low, then no matter how highly skilled an individual is, he will not be able to become any better because there are forces outside his control that prevent it from happening. His learning is being stifled because of the greater context. The way we can ensure this does not happen is by looking into good or simply put better PM design and implementation, in a way that everything is visible and everything is interconnected.

Specialization Specific Question

My suggestions are towards the possibility of developing academic research & teaching at different levels (Master’s and Ph.D.), on the topic of PM as I talked about it in my previous answers, namely focusing on bridging PM with collaborative governance.

Moreover, two other topics of study that I’d recommend are the DPM methodology and outcome-based DPM. Both of these should receive more attention from the academic world, as these analyze the environment from the outside-inwards, and look to measure performance around this method, by coming up with solutions after looking first at the community, then at what we can do (instead of looking first at what we can do and seeing how this will affect the community).

I’d personally look at how dynamic it is and if it is built around the concept of collaboration. My recommendation would be to appreciate that the longer and more difficult way to solve an issue might be an easier way, as quick fixes could possibly lose sight of important details that may sway a problem one way or another. So as far as I see it as an academic experienced in consultancy, it’s more helpful and efficient to use a more contextualized view when appreciating systems in this manner, and this kind of information should be used by both consultants and practitioners in the field.

Systems nowadays are not so similar to systems a few years back, as organizations have changed. So specialists today have to change their views as well, they have to undergo a sort of culture change, to view things from the outside-inwards, as mentioned throughout the interview. They have to look at the entire system, and go from a general view to a more detailed one, as this will allow them to look at the context and make changes based on what they see is needed.

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Tags: Academic, Interview, Strategy management system, Systems thinking