- Email: [email protected]
Effectiveness Index as an Organizational Cockpit Instrument
Available online at www.sciencedirect.com
Procedia Technology 5 (2012) 244 – 253
CENTERIS 2012 - Conference on ENTERprise Information Systems / HCIST 2012 - International Conference on Health and Social Care Information Systems and Technologies
Effectiveness Index as an Organizational Cockpit Instrument Carlos Páscoaa,b,*, Marco Moreiraa, José Triboletb,c a
Department of University Education, Portuguese Air Force Academy, Sintra, Portugal Department of Information Systems and Computer Science, Technical University of Lisbon, Portugal c CODE – Center for Organizational Design & Engineering, INOV, Rua Alves Redol 9, Lisbon, Portugal b
Abstract The current national and international scene is facing multiple crises. The one that stands out and greatly affects the organization are crises of an economic nature. Given this national and international situation, we are now living in a time of “rationalization of costs” where organizations still continue to nobly and effectively perform their missions, in spite of budget cuts. To accomplish it without the slightest fault, organizations must have the ability to adapt to reality and create mechanisms that help catching up. One of those mechanisms can be finding indicators that can assess the organization’s effectiveness in a strategic way. The research described in this paper aims to develop and define a logical calculation to obtain the Global Organizational Effectiveness Index Subsystem (GOEIS), that is supported by a quantitative and qualitative scale (one number, one scale). The purpose of this “organizational cockpit” tool is to compare execution to planning, in some defined areas, to verify if the proposed objectives of the organization are being met and, therefore, to improve management and performance while increasing effectiveness and self-awareness. © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of CENTERIS/SCIKA © 2012 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of Association for Promotion and Dissemination of Scientific Knowledge
CENTERIS/HCIST.
Keywords: Effectiveness; Rationalization of Costs; Benefits; Proposed Objectives; Performance Management; Effectiveness.
1. Introduction All organizations have survival as a primary objective. One way to survive is to study the surrounding environment and study ways to create value while maximizing effectiveness. It is, then, necessary to create
* Corresponding author. Tel.: +351-214 726 129 E-mail address: [email protected].
2212-0173 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of CENTERIS/SCIKA - Association for Promotion and Dissemination of Scientific Knowledge doi:10.1016/j.protcy.2012.09.027
Carlos Páscoa et al. / Procedia Technology 5 (2012) 244 – 253
mechanisms that can be implemented in the management and control domains. However, managers need to accurately see the performance of the organization without loosing unavailable time. Therefore, the Effectiveness Index, based on one number, one scale concept, will help managers to get situational awareness. This research analyzed and proposed the logic for the development of a calculation formula to ascertain the rate of overall organizational subsystem effectiveness aiming to improve the organization’s operation in various ways. The research question was: the development of GOEIS brings advantage to the organizations in general, and to the Portuguese Air Force, in particular? Literature review, in chapter 2, provided the contact with relevant reading texts about the problem. In chapter 3 will be presented throughout the research work and in the chapter 4 conclusions reinforce that any organization must have the ability to improve and strive for excellence to the customers are well served and both parts get out benefited. 2. Concepts and Application This paragraph describes the theoretical framing that supports section 3, bridging Organizational Engineering to other scientific theories, principles and models directly relevant and necessary to approach the subject, namely Effectiveness Index Developments of an Organizational Subsystem as an Organizational Cockpit Instrument. 2.1. Effectiveness versus Efficiency The focus of this work is the concept of effectiveness so it is very important to know what exactly that term means and to distinguish it from efficiency. This distinction is an important action to do because the two concepts are very similar and normally cause some doubts. Starting by the effectiveness term, it’s allowed to say that effectiveness “reflects the quality and adaptability of products and services or how well customer expectations are being met in front of their requirements. Effectiveness can be measured by the results achieved by the organization against what was planned.” [1]. Another definition of effectiveness can be “degree of stated objectives achievement.” [2]. After defining and understanding the meaning of effectiveness, it can be referred to the organization. When this occurs, the right term becomes “Organizational Effectiveness”. In order to clarify the organization’s effectiveness role and make the distinction to the efficiency term is now cited by Rego [3]: “The effectiveness of an organization is usually taken as a degree to which it achieves its goals. The effective organization is that who is doing the right things. The concept differs from the efficiency. The efficient organization is one that accomplishes the objectives with the least amount of resources (doing the things right). This logic facilitates measurability – defined goals, you can measure whether the organization was effective or not.” [3]. Reinforcing the efficiency’s concept, it “reflects the internal productivity performance of the organization and how well are used the resources. Efficiency can be measured by the ratio between the results achieved and the resources used.” [1]. 2.2. Self-Awareness The GOEIS calculation makes the organization self-aware. In order to improve the effectiveness of one organization, their workers must have the knowledge about the organization’s heading and track, they must be self-aware. And at the same time, the organization must have known their entire operation and their intervenients. Self-awareness has two dimensions: Individual and Organizational. At the Individual level: “As people know who they are and what they are doing, should also know who they (and the others) are in an Organization and, what and how they (and the others) are doing.” [4]. The concept “self-awareness” aims to
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define the role of the individual and those who work with him in the organization. In the Organization level, self-awareness “refers to the human agents and robots combination, resources and procedures that provide the necessary intelligence to the Organization to deal with some questions like: Who are your members? How do they work? What are they doing now?” [4]. The awareness of this concept will tend to expand and improve the effectiveness and efficiency’s organization. If the organizations have the results of their operation in a period of time, the next time they will try to improve it. If an organization is able to align these two dimensions, the organization can be considered self-aware. This self-awareness is all similar to the situationalawareness, much known term in Aviation. “Situational-awareness is the perception of operational and environmental factors that affect the aircraft and the pilot during a specific period of time.” [5]. An organization is situational-aware if it has a full knowledge of their entire operation. 2.3. Business Motivation Model The Business Motivation Model (BMM) “provides a schema or structure applicable to the development of management plans for business in an organized way.” Páscoa and Tribolet [6] citing [7] and the GOEIS make part of it. BMM can be divided into five areas: Means – identifies the how the organization will reach the End. Means are composed by Mission (permanent indication of the organization intentions), Course of Action (plan to configure some organization aspects) and by Directives (indicates how to develop the Course of Action, defines its limitations and the way that are conducted); Ends – represents something that the organization wants to achieve, like Objectives or Goals, and it is composed by View (description of the organization’s future without defining how it will be reached), Goals and by Objectives, which should be SMART (Specific, Measurable, Attainable, Relevant and Time-based). Ends identify the Desired Result. It is something that the organization wants to reach and includes the Goals and the Objectives; Influencers – are anything that can “produce an effect without use of a tangible force or direct exercise of command, often without effort or intent.” [7] and have an impact on the organization; Assessment – is an analyses about an influencer which affects the organization’s ability to employ Means or to achieve the Ends and should be SWOT, in other words, it must be analyzed in the following parameters: Strength, Weakness, Opportunity and Threat; Potential Impact – a potential impact that means something to the Assessment, which may causes Directives that regulate the Course of Action. Like the BMM, the GOEIS provides something (a result) who gives to the people a clear idea of organization actions and their effectiveness. 2.4. Balanced Scorecard Balanced Scorecard (BSc) is “a set of measures that gives a fast but comprehensive view of business to the top managers.” [8]. It is a complex method of evaluation and performance management. Metaphorically, we can think of the BSc like an instrument of a cockpit of an aircraft. The pilot needs to know all the details in order to fly and a distraction can be fatal. An organization works in the same way. BSc has four perspectives that support it, which are: Financial Perspective which answers to: “How do we look to shareholders?”; Customer Perspective which seeks the answer to the following question: “How do customers see us?”; Internal Business Process Perspective: “What must we excel at?”; and Learning and Growth Perspective: “Can we continue to improve and create value?”. The BSc’s main objective is to align the strategic planning with the organization operational activities, and its components are: strategic map, strategic objective, indicator, goal and plan of action. The BSc is an evaluation system that creates reactions in their workers and managers. The GOEIS will work in the same way.
Carlos Páscoa et al. / Procedia Technology 5 (2012) 244 – 253
2.5. Enterprise Architecture & Enterprise Governance The Enterprise Architecture (EA) describes accurately any organization and can be defined as “a coherent set of principles, methods and models that are used in the design and implementation of the following company aspects and reflect: Organizational Structure, Business Process, Information Systems and Infrastructure.” [9]. When companies become larger and more complex it is important use EA, leading to standardization, which in turn provides accommodation within the company and lead it to an effectiveness and efficiency’s improvement. When talking about Enterprise Governance (EG), it is important to know what “governing” means. “Governing is the legal authority, by a direction to exercise power and authority over an organization on behalf of the community (customers) it serves. This direction is authorized to established policies and makes decisions that will affect the organization’s life and work. Governing is action group” [10]. A good level of EG, strategic linked to performance metrics, allows organizations to focus all your energy on key drivers, thereby achieving the required success. In EG, the term “governing” is not only applied to large companies but also to state companies. 2.6. Strategic Management and Performance Indicators The Strategic Management contributes in multiple ways to the organizational success since it: i) organizes the contributions of different areas to the organization, serving as a guideline for integration of efforts; ii) concerns with the character and direction of the organization as a whole; iii) focus on the strategic decisions that serve as a basis for organizational behavior shaping its present and the future; iv) determines the purpose of the organization; v) provides the framework for decisions on people, leadership, customers or clients, risk, finance, resources, products, systems, technology, location, competition and time. “Strategic Management is also concerned with the management planning and decision making for the future medium to long term. It is concerned with the preview of that future and the establishment of a vision or point of view of how the company should develop for the future must face.” [11]. It allows unlocking individualism among the organization sections and a temporal view favorable to the survival of the organization, constantly thinking about the short and long term. The Knowledge Performance Indicators (KPI) are “quantifiable measures that reflect the critical success factors of an organization.” [12]. The KPI help an organization define and measure their progress toward achieving their goals. Well defined KPI, help the organization to focus its time in activities that are important for its performance and less time on activities that are not so relevant. The GOEIS can be considered one KPI. 2.7. Performance Management The knowledge of the GOEIS helps the performance management on an organization. It is a process that establishes a common understanding about what the organization should achieve and how to achieve. It can also be described as a strategic and integrated approach, delivering sustained success to organizations that focus on continuous improvement of its performance and employee development. Regarding the performance management impacts, “performance management has the potential to improve the organization’s performance and act as a lever to achieve a cultural change. By being focused on performance, organizations may receive real rewards.” [13]. The overall objective of performance management is to develop and improve individual and team performance, and consequently, the performance of the organization. It is a tool that can be used to achieve the culture change, create a culture of high performance and it is designed to develop
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personal skills to meet and exceed expectations and reach their full potential, thereby benefiting the individuals themselves and organization. 3. GOEIS Logic In this point it will be developed the logic for the calculation of the GOEIS. A generic meta-model, applicable to all organizations, will built and explained since the particular aspects to the general which it ends in reach the objective’s work, a formula to calculate the GOEIS. After this step being completed, the model developed will be validated and will be given an example in order to: i) verify if it works; ii) verify if it is adjusted to the organization’s reality; iii) show how this tool contributes to the organizational effectiveness improvement. 3.1. Meta-Model Development The meta-model, presented in Fig. 1, has to calculate the overall system effectiveness. To be perceptible, the meta-model will appear with two elements and three vectors in each element. This meta-model is not limited and gives the opportunity to add or remove elements or vectors, depending of the system characteristics’ to be evaluated. It is very important to know that developed meta-model just works in a strategic way and no other. What it pretends is compare the taken actions with the planned actions.
Fig. 1. GOEIS meta-model [14].
This meta-model is regarded as a fundamental line of action which seeks to give information where the organization is heading and how and by what means (elements) is running. This is not only to project the future position of the organization with base on planning, but also to monitor and verify the successful completion of the actions taken. It is also stressed that this meta-model is not limited to the number of vectors and/or elements displayed and, if necessary, it allows the introduction of new components. The components of the meta-model presented above are: • System Identification – System name where the Effectiveness Index is applied; • Elements – Name and description of the constituent entities of the system;
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• • • • • • • •
Vectors – Components of the target area of effectiveness evaluation; Planned Vectors – Planned values for a period of time given and for each vector; Total Values of Planned Vectors – Sum of each planned vectors values; Executed Vectors – Values of execution of a certain period of time and for each vector; Total Values of Executed Vectors – Sum of each executed vectors values; Ratio Executed vs Planned Vectors – Ratio between executed values and planned values; Total Values of the Ratio E/P of Vectors – Total average of E/P values for each vector; Logical Construction – Formulas entering in meta-model and it leads to the calculation of overall system effectiveness; • Effectiveness System Value – Effectiveness of the total values of each vector; • Global Effectiveness System Value – Overall value of system effectiveness; • Scale – Table where consolidates the overall value of system effectiveness. Now, it will be described the process and all the critical calculations to achieve the overall effectiveness system formula, starting by the most private aspects. The values regarding to the planning and to the execution are obtained from the organization information systems. Taken the element A and vector 1 as an example, the ratio executed versus planned vectors are calculated as shown in Equation 1. (1)
For all the other vectors and elements, the reasoning is the same/similar. This result is shown as a percent because this type of representation, when compared to the decimal, it is more advantageous in comparison global values situated on the same reference frame. To calculate the GOEIS it is necessary to know the total values of the vectors that constitute the elements and the organizational subsystem. According to, the same are obtained as shown in Equation 2. (2)
“i” represents the total number of the elements who constitute the entire system. Once again the vector 1 was used as an example, but to the others vectors this reasoning also applies. After this calculation the total (average) of each vector are known. As the vectors belong to the same organizational subsystem and affect each other, this is, are interdependent, the formula core of this study for calculating the GOEIS is shown in Equation 3. (3)
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It should be noted that the values instilled in this logical formula can’t be in the percentage form but in the decimal form. After the multiplication, the Global Effectiveness System Value turns to percentage form to be presented. This also works to the effectiveness elements value calculation. If it is necessary to know what the effectiveness of one of the system elements is, one needs to multiply their vectors (taking as an example the element A), as shown in Equation 4. (4)
The way of how to calculate the totals for the planning and effecting vectors is shown in Equations 5 and 6. (5)
(6)
3.2. GOEIS Scale The scale, presented in Fig. 2, is a quantitative and qualitative scale and its main purpose is to corroborate the result obtained as GOEIS.
Carlos Páscoa et al. / Procedia Technology 5 (2012) 244 – 253
About this table, it contains the total values of effectiveness of each vector, when entered into the calculation of the total system effectiveness. “OI” refers to Observed Index and it is the real value of the vectors and “SI” refers to Standard Index and it works as a reference.
Fig. 2. GOEIS scale [14].
The global effectiveness system value is in a prominent position for a better view of it. Also based on this table, the value obtained as the total effectiveness system will have an expression much more qualitative and quantitative. At the bottom there is a scale, which has five percentages intervals where it may support the total effectiveness system value. And at the right side, there are five quality levels that will give a clear perception of the quality of the operation system. 3.3. Meta-model Validation Validation of the meta-model presented had two elements. Each element was composed by three vectors. However, the validation could be done with any other number of elements and vectors since reasoning is the same. It was assigned some random numbers to the planning (what the organization wants) and execution (what the organization is doing) vectors to see what would happen. Fig. 3 shows the model and Fig. 4 the corresponding scale.
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Fig. 3. GOEIS meta-model example [14].
The values of the planned vectors are defined by the Organization, in its strategic level and through a previous planning. Overtime, the Organization will perform its activities/actions and eventually come up with execution values allowing verifying the evolution of the organization’s activity. The difference between what was executed and what was planned, using the logic previously presented, determines the GOEIS values that, after analysis, identify the dysfunctions causes and improves the next planning cycle. This is how the meta-model helps the organization to improve their effectiveness. It allows a more rigorous study of the activity performed, improves the planning and improves the organizational effectiveness and also increases self-awareness.
Fig. 4. GOEIS scale example [14].
The values of Figures 3 and 4 are only examples given for presentation purposes and, in no way, reflect the reality of the Organization.
Carlos Páscoa et al. / Procedia Technology 5 (2012) 244 – 253
Known the total effectiveness system value and based on the developed scale, it can be stated that the effectiveness of the system is satisfactory. Thus and depending on the organization requirements, it can now proceed to the analysis of this meta-model and try to understand why the effecting vectors is not meeting the planning vectors. This will make a better control and management and help provide a better planning in the future. The intention here is a continuous improvement and evolution of the overall organizational effectiveness index. 4. Conclusion In conclusion, it can be said that this organizational cockpit tool is an asset to the organization, which can be developed and can increase self-awareness. Therefore, the research question answer is affirmative, that is, GOEIS brings advantage to the organizations in general, and to the Portuguese Air Force, in particular since the creation and development of the model and its effectiveness overall calculation logic brings several benefits to the organization: this tool enables the correction and maximize the organization’s effectiveness; enables the detection of problems in the target analysis area; allows a more rigorous monitoring and promotes a better planning and its correction; involves the organization in a continuous improvement cycle; contributes to a better management and control; makes the process of decision-making better, easier, faster and well supported; foster organizational culture, responsibility, spirit of mission and motivation; the organization becomes more demanding; this tool gives it a self-awareness ability; and in the end, makes the organizations more efficient. Finally, it is important to emphasize that planning is the key for a good organizational effectiveness. A plan closer to the ideal will improve the organization’s performance and also their constituent’s elements performance.
References [1] Da Silva, (2007): Effectiveness and Efficiency Indicators: A pratical view about performance indicators to evaluate the efficiency and effectiveness of organizational processes, Qualypro. [2] Santos, António J. (2008): Strategic Management, Lisbon, Academic Publishing House, ISBN 978-972-592-229-3. [3] Rego, A. (2006): Organizational Effectiveness, Daily News, Economy. [4] Vicente, D. (2007): Towards Organizational Self-Awareness: A Methodological Approach to Capture and Represent Individual and Inter-Personal Work Practices, Master Thesis, Technical University of Lisbon. [5] Federal Aviation Administration (FAA) (2003): Glider Flying Handbook, United States Department of Transportation, Flight Standards Service, 1st edition, FAA-H8083-13. [6] Páscoa, C.; Tribolet, J. (2010): Organizational and Design Engineering of the Operational and Support Components of an Organization: the Portuguese Air Force Case Study, Springer Lecture Notes in Business Information Processing (LNPIB) Series on Minutes of the Practice-driven Research on Enterprise Transformation (PRET) Conference on Enterprise Engineering held in the University of Delft, The Netherlands, November 2010. [7] Business Rules Group (BRG) (2007): The Business Rules Group, The Business Model: Business Governance in a Volatile World, V. 1.3, September. [8] Kaplan, R.; Norton, D. (1992): The Balanced Scorecard: Measures That Drive Performance, Harvard Business Review, January– February, p. 71–79, Harvard, England. [9] Lankhorst, M. (2005): Enterprise Architecture at Work - Modelling, Communication and Analysis, Springer; Verlag Berlin Heidelberg. [10] Boardsource (2001): Building Effective Nonprofit Boards, The Handbook of Non-Profit Governance, Wiley Imprint, Jossey-Bass, First Edition. [11] Morden, T. (2007): Principles of Strategic Management, 3rd Edition, University of Teeside, UK, Ashgate Publishing Limited. [12] Mangas, Pedro (2011): Analysis of the Flying Regime: Components and Application, Master Thesis, University Education’s Department, Portuguese Air Force Academy, Sintra, Portugal. [13] Armstrong, K; Ward, A, (2005): What Makes for Effective Performance Management?, The Work Foundation, London. [14] Moreira, Marco (2012): Effectiveness Index Development of an Organizational Subsystem as an Organizational Cockpit Instrument, Master Thesis, Portuguese Air Force Academy, University Education’s Department, Sintra, Portugal.
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Procedia Technology 5 (2012) 244 – 253
CENTERIS 2012 - Conference on ENTERprise Information Systems / HCIST 2012 - International Conference on Health and Social Care Information Systems and Technologies
Effectiveness Index as an Organizational Cockpit Instrument Carlos Páscoaa,b,*, Marco Moreiraa, José Triboletb,c a
Department of University Education, Portuguese Air Force Academy, Sintra, Portugal Department of Information Systems and Computer Science, Technical University of Lisbon, Portugal c CODE – Center for Organizational Design & Engineering, INOV, Rua Alves Redol 9, Lisbon, Portugal b
Abstract The current national and international scene is facing multiple crises. The one that stands out and greatly affects the organization are crises of an economic nature. Given this national and international situation, we are now living in a time of “rationalization of costs” where organizations still continue to nobly and effectively perform their missions, in spite of budget cuts. To accomplish it without the slightest fault, organizations must have the ability to adapt to reality and create mechanisms that help catching up. One of those mechanisms can be finding indicators that can assess the organization’s effectiveness in a strategic way. The research described in this paper aims to develop and define a logical calculation to obtain the Global Organizational Effectiveness Index Subsystem (GOEIS), that is supported by a quantitative and qualitative scale (one number, one scale). The purpose of this “organizational cockpit” tool is to compare execution to planning, in some defined areas, to verify if the proposed objectives of the organization are being met and, therefore, to improve management and performance while increasing effectiveness and self-awareness. © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of CENTERIS/SCIKA © 2012 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of Association for Promotion and Dissemination of Scientific Knowledge
CENTERIS/HCIST.
Keywords: Effectiveness; Rationalization of Costs; Benefits; Proposed Objectives; Performance Management; Effectiveness.
1. Introduction All organizations have survival as a primary objective. One way to survive is to study the surrounding environment and study ways to create value while maximizing effectiveness. It is, then, necessary to create
* Corresponding author. Tel.: +351-214 726 129 E-mail address: [email protected].
2212-0173 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of CENTERIS/SCIKA - Association for Promotion and Dissemination of Scientific Knowledge doi:10.1016/j.protcy.2012.09.027
Carlos Páscoa et al. / Procedia Technology 5 (2012) 244 – 253
mechanisms that can be implemented in the management and control domains. However, managers need to accurately see the performance of the organization without loosing unavailable time. Therefore, the Effectiveness Index, based on one number, one scale concept, will help managers to get situational awareness. This research analyzed and proposed the logic for the development of a calculation formula to ascertain the rate of overall organizational subsystem effectiveness aiming to improve the organization’s operation in various ways. The research question was: the development of GOEIS brings advantage to the organizations in general, and to the Portuguese Air Force, in particular? Literature review, in chapter 2, provided the contact with relevant reading texts about the problem. In chapter 3 will be presented throughout the research work and in the chapter 4 conclusions reinforce that any organization must have the ability to improve and strive for excellence to the customers are well served and both parts get out benefited. 2. Concepts and Application This paragraph describes the theoretical framing that supports section 3, bridging Organizational Engineering to other scientific theories, principles and models directly relevant and necessary to approach the subject, namely Effectiveness Index Developments of an Organizational Subsystem as an Organizational Cockpit Instrument. 2.1. Effectiveness versus Efficiency The focus of this work is the concept of effectiveness so it is very important to know what exactly that term means and to distinguish it from efficiency. This distinction is an important action to do because the two concepts are very similar and normally cause some doubts. Starting by the effectiveness term, it’s allowed to say that effectiveness “reflects the quality and adaptability of products and services or how well customer expectations are being met in front of their requirements. Effectiveness can be measured by the results achieved by the organization against what was planned.” [1]. Another definition of effectiveness can be “degree of stated objectives achievement.” [2]. After defining and understanding the meaning of effectiveness, it can be referred to the organization. When this occurs, the right term becomes “Organizational Effectiveness”. In order to clarify the organization’s effectiveness role and make the distinction to the efficiency term is now cited by Rego [3]: “The effectiveness of an organization is usually taken as a degree to which it achieves its goals. The effective organization is that who is doing the right things. The concept differs from the efficiency. The efficient organization is one that accomplishes the objectives with the least amount of resources (doing the things right). This logic facilitates measurability – defined goals, you can measure whether the organization was effective or not.” [3]. Reinforcing the efficiency’s concept, it “reflects the internal productivity performance of the organization and how well are used the resources. Efficiency can be measured by the ratio between the results achieved and the resources used.” [1]. 2.2. Self-Awareness The GOEIS calculation makes the organization self-aware. In order to improve the effectiveness of one organization, their workers must have the knowledge about the organization’s heading and track, they must be self-aware. And at the same time, the organization must have known their entire operation and their intervenients. Self-awareness has two dimensions: Individual and Organizational. At the Individual level: “As people know who they are and what they are doing, should also know who they (and the others) are in an Organization and, what and how they (and the others) are doing.” [4]. The concept “self-awareness” aims to
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Carlos Páscoa et al. / Procedia Technology 5 (2012) 244 – 253
define the role of the individual and those who work with him in the organization. In the Organization level, self-awareness “refers to the human agents and robots combination, resources and procedures that provide the necessary intelligence to the Organization to deal with some questions like: Who are your members? How do they work? What are they doing now?” [4]. The awareness of this concept will tend to expand and improve the effectiveness and efficiency’s organization. If the organizations have the results of their operation in a period of time, the next time they will try to improve it. If an organization is able to align these two dimensions, the organization can be considered self-aware. This self-awareness is all similar to the situationalawareness, much known term in Aviation. “Situational-awareness is the perception of operational and environmental factors that affect the aircraft and the pilot during a specific period of time.” [5]. An organization is situational-aware if it has a full knowledge of their entire operation. 2.3. Business Motivation Model The Business Motivation Model (BMM) “provides a schema or structure applicable to the development of management plans for business in an organized way.” Páscoa and Tribolet [6] citing [7] and the GOEIS make part of it. BMM can be divided into five areas: Means – identifies the how the organization will reach the End. Means are composed by Mission (permanent indication of the organization intentions), Course of Action (plan to configure some organization aspects) and by Directives (indicates how to develop the Course of Action, defines its limitations and the way that are conducted); Ends – represents something that the organization wants to achieve, like Objectives or Goals, and it is composed by View (description of the organization’s future without defining how it will be reached), Goals and by Objectives, which should be SMART (Specific, Measurable, Attainable, Relevant and Time-based). Ends identify the Desired Result. It is something that the organization wants to reach and includes the Goals and the Objectives; Influencers – are anything that can “produce an effect without use of a tangible force or direct exercise of command, often without effort or intent.” [7] and have an impact on the organization; Assessment – is an analyses about an influencer which affects the organization’s ability to employ Means or to achieve the Ends and should be SWOT, in other words, it must be analyzed in the following parameters: Strength, Weakness, Opportunity and Threat; Potential Impact – a potential impact that means something to the Assessment, which may causes Directives that regulate the Course of Action. Like the BMM, the GOEIS provides something (a result) who gives to the people a clear idea of organization actions and their effectiveness. 2.4. Balanced Scorecard Balanced Scorecard (BSc) is “a set of measures that gives a fast but comprehensive view of business to the top managers.” [8]. It is a complex method of evaluation and performance management. Metaphorically, we can think of the BSc like an instrument of a cockpit of an aircraft. The pilot needs to know all the details in order to fly and a distraction can be fatal. An organization works in the same way. BSc has four perspectives that support it, which are: Financial Perspective which answers to: “How do we look to shareholders?”; Customer Perspective which seeks the answer to the following question: “How do customers see us?”; Internal Business Process Perspective: “What must we excel at?”; and Learning and Growth Perspective: “Can we continue to improve and create value?”. The BSc’s main objective is to align the strategic planning with the organization operational activities, and its components are: strategic map, strategic objective, indicator, goal and plan of action. The BSc is an evaluation system that creates reactions in their workers and managers. The GOEIS will work in the same way.
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2.5. Enterprise Architecture & Enterprise Governance The Enterprise Architecture (EA) describes accurately any organization and can be defined as “a coherent set of principles, methods and models that are used in the design and implementation of the following company aspects and reflect: Organizational Structure, Business Process, Information Systems and Infrastructure.” [9]. When companies become larger and more complex it is important use EA, leading to standardization, which in turn provides accommodation within the company and lead it to an effectiveness and efficiency’s improvement. When talking about Enterprise Governance (EG), it is important to know what “governing” means. “Governing is the legal authority, by a direction to exercise power and authority over an organization on behalf of the community (customers) it serves. This direction is authorized to established policies and makes decisions that will affect the organization’s life and work. Governing is action group” [10]. A good level of EG, strategic linked to performance metrics, allows organizations to focus all your energy on key drivers, thereby achieving the required success. In EG, the term “governing” is not only applied to large companies but also to state companies. 2.6. Strategic Management and Performance Indicators The Strategic Management contributes in multiple ways to the organizational success since it: i) organizes the contributions of different areas to the organization, serving as a guideline for integration of efforts; ii) concerns with the character and direction of the organization as a whole; iii) focus on the strategic decisions that serve as a basis for organizational behavior shaping its present and the future; iv) determines the purpose of the organization; v) provides the framework for decisions on people, leadership, customers or clients, risk, finance, resources, products, systems, technology, location, competition and time. “Strategic Management is also concerned with the management planning and decision making for the future medium to long term. It is concerned with the preview of that future and the establishment of a vision or point of view of how the company should develop for the future must face.” [11]. It allows unlocking individualism among the organization sections and a temporal view favorable to the survival of the organization, constantly thinking about the short and long term. The Knowledge Performance Indicators (KPI) are “quantifiable measures that reflect the critical success factors of an organization.” [12]. The KPI help an organization define and measure their progress toward achieving their goals. Well defined KPI, help the organization to focus its time in activities that are important for its performance and less time on activities that are not so relevant. The GOEIS can be considered one KPI. 2.7. Performance Management The knowledge of the GOEIS helps the performance management on an organization. It is a process that establishes a common understanding about what the organization should achieve and how to achieve. It can also be described as a strategic and integrated approach, delivering sustained success to organizations that focus on continuous improvement of its performance and employee development. Regarding the performance management impacts, “performance management has the potential to improve the organization’s performance and act as a lever to achieve a cultural change. By being focused on performance, organizations may receive real rewards.” [13]. The overall objective of performance management is to develop and improve individual and team performance, and consequently, the performance of the organization. It is a tool that can be used to achieve the culture change, create a culture of high performance and it is designed to develop
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personal skills to meet and exceed expectations and reach their full potential, thereby benefiting the individuals themselves and organization. 3. GOEIS Logic In this point it will be developed the logic for the calculation of the GOEIS. A generic meta-model, applicable to all organizations, will built and explained since the particular aspects to the general which it ends in reach the objective’s work, a formula to calculate the GOEIS. After this step being completed, the model developed will be validated and will be given an example in order to: i) verify if it works; ii) verify if it is adjusted to the organization’s reality; iii) show how this tool contributes to the organizational effectiveness improvement. 3.1. Meta-Model Development The meta-model, presented in Fig. 1, has to calculate the overall system effectiveness. To be perceptible, the meta-model will appear with two elements and three vectors in each element. This meta-model is not limited and gives the opportunity to add or remove elements or vectors, depending of the system characteristics’ to be evaluated. It is very important to know that developed meta-model just works in a strategic way and no other. What it pretends is compare the taken actions with the planned actions.
Fig. 1. GOEIS meta-model [14].
This meta-model is regarded as a fundamental line of action which seeks to give information where the organization is heading and how and by what means (elements) is running. This is not only to project the future position of the organization with base on planning, but also to monitor and verify the successful completion of the actions taken. It is also stressed that this meta-model is not limited to the number of vectors and/or elements displayed and, if necessary, it allows the introduction of new components. The components of the meta-model presented above are: • System Identification – System name where the Effectiveness Index is applied; • Elements – Name and description of the constituent entities of the system;
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• • • • • • • •
Vectors – Components of the target area of effectiveness evaluation; Planned Vectors – Planned values for a period of time given and for each vector; Total Values of Planned Vectors – Sum of each planned vectors values; Executed Vectors – Values of execution of a certain period of time and for each vector; Total Values of Executed Vectors – Sum of each executed vectors values; Ratio Executed vs Planned Vectors – Ratio between executed values and planned values; Total Values of the Ratio E/P of Vectors – Total average of E/P values for each vector; Logical Construction – Formulas entering in meta-model and it leads to the calculation of overall system effectiveness; • Effectiveness System Value – Effectiveness of the total values of each vector; • Global Effectiveness System Value – Overall value of system effectiveness; • Scale – Table where consolidates the overall value of system effectiveness. Now, it will be described the process and all the critical calculations to achieve the overall effectiveness system formula, starting by the most private aspects. The values regarding to the planning and to the execution are obtained from the organization information systems. Taken the element A and vector 1 as an example, the ratio executed versus planned vectors are calculated as shown in Equation 1. (1)
For all the other vectors and elements, the reasoning is the same/similar. This result is shown as a percent because this type of representation, when compared to the decimal, it is more advantageous in comparison global values situated on the same reference frame. To calculate the GOEIS it is necessary to know the total values of the vectors that constitute the elements and the organizational subsystem. According to, the same are obtained as shown in Equation 2. (2)
“i” represents the total number of the elements who constitute the entire system. Once again the vector 1 was used as an example, but to the others vectors this reasoning also applies. After this calculation the total (average) of each vector are known. As the vectors belong to the same organizational subsystem and affect each other, this is, are interdependent, the formula core of this study for calculating the GOEIS is shown in Equation 3. (3)
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It should be noted that the values instilled in this logical formula can’t be in the percentage form but in the decimal form. After the multiplication, the Global Effectiveness System Value turns to percentage form to be presented. This also works to the effectiveness elements value calculation. If it is necessary to know what the effectiveness of one of the system elements is, one needs to multiply their vectors (taking as an example the element A), as shown in Equation 4. (4)
The way of how to calculate the totals for the planning and effecting vectors is shown in Equations 5 and 6. (5)
(6)
3.2. GOEIS Scale The scale, presented in Fig. 2, is a quantitative and qualitative scale and its main purpose is to corroborate the result obtained as GOEIS.
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About this table, it contains the total values of effectiveness of each vector, when entered into the calculation of the total system effectiveness. “OI” refers to Observed Index and it is the real value of the vectors and “SI” refers to Standard Index and it works as a reference.
Fig. 2. GOEIS scale [14].
The global effectiveness system value is in a prominent position for a better view of it. Also based on this table, the value obtained as the total effectiveness system will have an expression much more qualitative and quantitative. At the bottom there is a scale, which has five percentages intervals where it may support the total effectiveness system value. And at the right side, there are five quality levels that will give a clear perception of the quality of the operation system. 3.3. Meta-model Validation Validation of the meta-model presented had two elements. Each element was composed by three vectors. However, the validation could be done with any other number of elements and vectors since reasoning is the same. It was assigned some random numbers to the planning (what the organization wants) and execution (what the organization is doing) vectors to see what would happen. Fig. 3 shows the model and Fig. 4 the corresponding scale.
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Fig. 3. GOEIS meta-model example [14].
The values of the planned vectors are defined by the Organization, in its strategic level and through a previous planning. Overtime, the Organization will perform its activities/actions and eventually come up with execution values allowing verifying the evolution of the organization’s activity. The difference between what was executed and what was planned, using the logic previously presented, determines the GOEIS values that, after analysis, identify the dysfunctions causes and improves the next planning cycle. This is how the meta-model helps the organization to improve their effectiveness. It allows a more rigorous study of the activity performed, improves the planning and improves the organizational effectiveness and also increases self-awareness.
Fig. 4. GOEIS scale example [14].
The values of Figures 3 and 4 are only examples given for presentation purposes and, in no way, reflect the reality of the Organization.
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Known the total effectiveness system value and based on the developed scale, it can be stated that the effectiveness of the system is satisfactory. Thus and depending on the organization requirements, it can now proceed to the analysis of this meta-model and try to understand why the effecting vectors is not meeting the planning vectors. This will make a better control and management and help provide a better planning in the future. The intention here is a continuous improvement and evolution of the overall organizational effectiveness index. 4. Conclusion In conclusion, it can be said that this organizational cockpit tool is an asset to the organization, which can be developed and can increase self-awareness. Therefore, the research question answer is affirmative, that is, GOEIS brings advantage to the organizations in general, and to the Portuguese Air Force, in particular since the creation and development of the model and its effectiveness overall calculation logic brings several benefits to the organization: this tool enables the correction and maximize the organization’s effectiveness; enables the detection of problems in the target analysis area; allows a more rigorous monitoring and promotes a better planning and its correction; involves the organization in a continuous improvement cycle; contributes to a better management and control; makes the process of decision-making better, easier, faster and well supported; foster organizational culture, responsibility, spirit of mission and motivation; the organization becomes more demanding; this tool gives it a self-awareness ability; and in the end, makes the organizations more efficient. Finally, it is important to emphasize that planning is the key for a good organizational effectiveness. A plan closer to the ideal will improve the organization’s performance and also their constituent’s elements performance.
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