the first to use primary data from the Baldrige Award process ... An Information Processing Perspective of Process Management: Evidence From Baldrige Award ...
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients MATTHEW W. FORD, NORTHERN KENTUCKY UNIVERSITY JAMES R. EVANS, UNIVERSITY OF CINCINNATI SUZANNE S. MASTERSON, UNIVERSITY OF CINCINNATI © 2014, ASQ
This study employs an information processing perspective to advance the understanding of the relationship between process management and performance. Process management is viewed as a means for coping with information processing requirements under conditions of uncertainty. The central proposition is that as the amount of uncertainty surrounding an organization’s task environment increases, performance evolves from managing processes to progressively higher degrees of maturity. The authors explore the validity of their conceptual framework using data from feedback reports of 11 past recipients of the Malcolm Baldrige National Quality Award that included each of the award categories except manufacturing. Their analysis found that the processes of Baldrige recipients generally fell short of full integration and alignment sought by Baldrige and other frameworks. Because the sample organizations generally operate in stable contexts, these findings are consistent with the notion that high-performing organizations limit process management efforts to a degree that meets their information processing needs. Because this study constitutes one of the first to use primary data from the Baldrige Award process, a secondary contribution demonstrates how Baldrige data can be employed to advance both scholarship and practice. Key words: integration, process improvement, quality management, resource dependence
INTRODUCTION Central to quality management are the concepts of processes and process management. Processes are collections of activities that transform inputs into outputs (Garvin 1995). Process management is a structured approach for executing the system of interlinked organizational processes that together create value for customers (Linderman, Schroeder, and Sanders 2010). Process management involves the application of decision-making tools, techniques, and infrastructure that enhance process design, control, and improvement (Silver 2004). As process management is performed, processes increase in maturity. In the context of process management, maturity is defined as the extent to which processes are clarified, measured, controlled, and improved (Van Looy, De Backer, and Poels 2011). Mature processes are more repeatable and adaptable, thereby making them more capable of delivering superior performance over a range of contexts (for example, Hammer 2007; NIST 2011). The scholarly literature is ambiguous about the generalizability of this viewpoint, as questions exist about the range of conditions over which process management can deliver high performance. For example, Benner and Tushman (2003) argued that process management can be detrimental in environments that demand major organizational change. In their view, the repeatability and integration that accompany advances in maturity serve to rigidify
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An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients processes, thereby building resistance to large-scale change and stunting adaptive capacity. Benner and Tushman (2003) suggested that, although it may be productive in stable contexts, employing process management in turbulent environments is likely to be counterproductive. On the other hand, Feldman and Pentland (2003) proposed that repeatable, integrated processes provide frames of reference for innovations that facilitate change. Because mature processes typically feature integrative mechanisms capable of transferring innovations to other work units, process management can be seen as a catalyst for learning and change in dynamic settings (Naveh and Marcus 2005). Empirically, the results have been mixed as well, with some studies detecting positive relationships between process management and performance (e.g., Ahire and Dreyfuss 2000), while others report mixed or neutral results (e.g., Ittner and Larcker 1997; Powell 1995). Knowledge about the effects of process management may be restrained by research designs that treat quality management practices as discrete phenomena (that is, present or not present) rather than as being implemented on a continuous scale (Hackman and Wageman 1995; Douglas and Judge 2001). Most organizations should benefit from some degree of process management activities that clarify, measure, control, and improve processes. Process management efforts can also be overdone, leading to degrees of maturity that are counterproductive. Recent reports that 3M’s Six Sigma program stifled the company’s long-standing focus on innovation and creativity (Hindo 2007) support this position. If process management is broadly applicable to some degree, then research questions must address how much process management is appropriate for particular contexts. This study extends the work of Sitkin, Sutcliffe, and Schroeder (1994) that proposed control or learning-oriented TQM approaches that depend on the nature of uncertainty surrounding the operating environment. The authors employ information processing theory (Galbraith 1973; 1977; Thompson 1967; Tushman and Nadler 1978) to conceptualize process management as a means for coping with information processing demands under varying
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degrees of uncertainty. Viewing process management as a means for developing coordination and control mechanisms necessary to effectively manage information processing requirements, the authors postulate that these coordination and control mechanisms accompany higher degrees of process maturity. The authors’ central proposition is that, as the amount of uncertainty surrounding an organization’s task environment increases, performance should benefit from managing processes to progressively higher degrees of maturity. They explore that validity of their conceptual framework using data from proprietary feedback reports of recipients of the Malcolm Baldrige National Quality Award (MBNQA) obtained through the research initiatives at the University of Northern Colorado’s Montfort Institute. The feedback reports included all award sectors except for manufacturing, which has had low representation in the national award program. Such primary data are interesting because award recipients constitute a sample of organizations with face validity as high performers that possess strong process management capabilities. This study makes several contributions. By employing an information processing perspective, the authors offer a fresh perspective for both practitioners and scholars by framing process management/performance as an approach that can be progressively deployed to develop processes that better meet the information processing needs of organizations. They build on a previous contingency-based framework by including the path dependent maturity model concept, which suggests that organizational processes must be managed through moderately mature phases that promote repeatability and control before advancing to highly mature phases that foster responsiveness and learning in turbulent contexts. Since this stance leads to conclusions that call into question claims about process management’s inadvisability in turbulent contexts, the authors’ study also provides motivation for further research into the role of process management in organizational adaptation. Finally, because this study constitutes one of the first to utilize primary data from the Baldrige Award process, a further contribution of this work demonstrates how Baldrige data can be employed to advance both scholarship and practice.
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients
BACKGROUND AND CONCEPTUAL DEVELOPMENT Progressive Maturity Models Among the popular manifestations of process management are performance excellence models such as the Baldrige Criteria for Performance Excellence (CPE) (NIST 2011). The CPE is composed of six categories of organizational processes: Leadership; Strategic Planning; Customer Focus; Measurement, Analysis, and Knowledge Management; Workforce Focus; and Operations Focus. These processes are specified as driving multidimensional organizational performance results. The CPE proposes that processes in these categories must be managed to high degrees of maturity, defined as the extent to which processes are clarified, measured, controlled, and improved (Van Looy, De Backer, and Poels 2011), in order to achieve high performance. Similar to other maturity models (for example, Hammer 2007; Paulk, Weber, and Curtis 1995), the maturity model specified by the CPE suggests that maturity progresses through various phases as process management advances toward a repeatable, integrated, responsive ideal. The CPE describes the progression of maturity in four phases (NIST 2011, 65). In the first, or reactionary, phase, systematic processes are virtually non-existent; and operations are characterized by activities with poorly defined goals that are largely responsive to immediate needs or problems. The second phase occurs when processes begin to display some repeatability, evaluation, and improvement, with early coordination among organizational units. Goals are locally defined with little strategic connection to other work units. In the third phase, one begins to see processes aligned with each other and with strategic and operational goals. They are repeatable and regularly evaluated for improvement, with significant coordination among organizational units. The fourth, most mature phase is characterized by repeatable processes that are not only regularly evaluated for change and improvement in collaboration with other units, but also achieve and share cross-unit efficiencies, and measure progress on key strategic and operational goals.
Processes that have been managed to high degrees of maturity are predictable and well integrated into the organization, yet capable of modification in the face of change. Accordingly, managing processes to a high degree of maturity should lead to favorable process outcomes. An important feature of this model is its path-dependent nature. In order to achieve the integrated, responsive characteristics associated with high degrees of maturity, organizational processes must first be managed through moderately mature phases that promote repeatability and control. This maturity model supports the Baldrige core value of agility, which encourages capacity for rapid change and flexibility in the design and management of work processes. Processes that approach the highly mature ideal are seen as aligned with strategic objectives yet responsive to change. The implication is that high performance is best achieved by managing processes toward the highest achievable degree of maturity. Some scholars have contested the assertion that mature, integrated processes can be a general source of high performance. Processes that are highly routinized and integrated can be sources of inertia and inflexibility (e.g., Hannan and Freeman 1983). Mature processes impair radical organizational adjustments in situations demanding major change (Hackman and Wageman 1995). As such, routinized and integrated processes serve to rigidify organizations, thereby placing them at risk in environments exerting pressure for rapid adaptation (Benner and Tushman 2003). Consequently, only organizations facing stable environments should manage processes toward highly mature ideals such as those specified in the CPE maturity model elaborated previously. Not only might they be ill-advised in some contexts, but highly mature processes may be difficult to achieve. The extensive coordination and collaboration necessary to realize high degrees of maturity may require process improvements that do not align well with existing organizational structure (Tushman and Nadler 1978). Moreover, managers may not recognize how to interlink processes that sometimes span complex organizational boundaries (Sherman and Keller 2011). Facing such obstacles, managers may cut process
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An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients management efforts short and settle for less-than-ideal degrees of maturity. Some research, however, refutes these claims. One counterargument posits that the routinization of work that occurs as processes become more mature develops recognizable patterns of actions involving various actors over time. These patterns create frames of reference for improvisations that serve as sources of meaningful change (Feldman and Pentland 2003). These improvisations are more likely to be advanced when coordinating mechanisms are in place to spread favorable variations to other work units (HowardGranville 2005). Viewed from this perspective, process management can be seen as a catalyst for significant learning and change (Naveh and Marcus 2005). As maturing processes become more repeatable, routines can be studied for improvement and innovation purposes. The integrative infrastructure provided by process management offers coordinating mechanisms for transmitting improvement and innovation throughout the organization (Ford, Masterson, and Evans 2012).
Information Processing Theory and Process Management Sitkin, Sutcliffe, and Schroeder (1994) observed that most contingency theories of organizational effectiveness (for example, Lawrence and Lorsch 1967; Thompson 1967) not only stressed the importance of matching an organization’s structure and process to situational requirements, but also the necessity of adapting to uncertainties created by conditions of inadequate or incomplete information. In the context of total quality management (TQM), information-related uncertainties shape a range of concerns from internal task execution to external customer satisfaction. Sitkin, Sutcliffe, and Schroeder (1994) argued that controloriented TQM approaches were more appropriate for low uncertainty contexts, while learning-oriented TQM approaches were more applicable to high uncertainty contexts. Distinguishing between control and learning orientations in TQM, and contingently applying these orientations to effectively cope with information-related uncertainties, provide a theoretical basis for linking
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process management to the progressive maturity model described earlier. The framework can be advanced by applying concepts from information processing theory. In information processing theory, uncertainty is primarily viewed in the context of task performance (Daft and Weick 1984; Galbraith 1973; 1977; Tushman and Nadler 1978). Uncertainty is defined as the difference between the amount of information needed to perform a task and the amount of information already possessed by the organization (Galbraith 1973, 5). If task uncertainty is high, then more information must be processed among decision makers during production in order to achieve acceptable performance (Galbraith 1973). Because tasks are ultimately completed to satisfy the needs of external actors, task uncertainty is strongly related to the uncertainty of the external environment. Generally, the more dynamic the external environment, the greater the task uncertainty (Tushman and Nadler 1978). Through an information processing lens, process management can be viewed as an approach for coping with uncertainty. Uncertainty creates lack of clarity about what must be accomplished to satisfy customer needs, and generates exceptions to the status quo. In immature processes, these exceptions are typically sent up through decision-making hierarchy for resolution. As uncertainty increases, however, exceptions mount, and decision makers must process ever greater quantities of information in order to achieve acceptable performance (Galbraith 1973; March and Simon 1958). At some point, the information processing capacity of the hierarchy is exceeded and exceptions can no longer be effectively managed, leading to lower performance. To take pressure off the hierarchy and to improve performance, organizations must develop mechanisms for coordinating and controlling tasks among work units that enable a matching of information processing requirements with information processing capacity (Nadler and Tushman 1978). The tools, techniques, and infrastructure of process management offer a means for developing such coordination and control mechanisms. Figure 1 illustrates how process management can be employed to address information processing requirements under varying degrees of uncertainty.
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients When uncertainty is very low, there is little doubt about how work needs to be performed in order to achieve acceptable performance. Information processing requirements are low, and the few exceptions that do arise can be handled by the hierarchy. Organizations facing these conditions might effectively operate with immature processes such as those described in the first phase of the CPE maturity model. Process management would be unnecessary in these instances, as the inherent information processing capacity of the existing hierarchy is sufficient for managing the few exceptions that do arise. This is, of course, a “base case” situation that is more theoretical than practical, as most organizations face uncertainties that challenge the information processing capabilities of the hierarchy alone. If uncertainty exceeds the base case situation, then information processing theory posits that performance will benefit from establishing coordination and control mechanisms that reduce information processing requirements (Galbraith 1973; 1977; Tushman and Nadler 1978). Several types of mechanisms are possible. Rules or programs that coordinate work among units reduce the need to intervene in tasks that have been made repeatable and predictable (March and Simon 1958). Setting common goals and objectives reduces burden on the hierarchy by increasing the amount of discretion exercised by operating personnel in the production of effective output (Galbraith 1973). Joint planning and creation of self-contained workgroups decreases necessity for frequent interaction among units as long as task performance remains within specification (Galbraith 1973). Process management provides an approach for creating coordinating and control mechanisms that reduce information processing requirements. Many tools, techniques, and infrastructure of process management are readily associated with these mechanisms. For example, process mapping and standard operating procedures provide a basis for routinized, programmed tasks. Statistical process control (SPC) facilitates goal setting and establishes corrective-action procedures that support programmatic and self-contained work. Local planning and problem-solving teams enhance work unit discretion while reducing reliance on
outsiders to process information. Processes to which such tools, techniques, and infrastructure have been applied have been managed to moderate degrees of maturity, similar to those corresponding to the second and third phases of the CPE maturity model elaborated previously. Processes managed to moderate degrees of maturity are characterized by moderate to very good repeatability, well-defined objectives, occasional coordination with other work units, and local evaluation and improvement. These characteristics facilitate coordination and control in a manner that reduces information processing requirements (see Figure 1). As long as uncertainty remains in a low to moderate range, then performance should benefit from process management efforts that add coordination and control mechanisms that reduce information processing requirements. Extending process management efforts beyond those necessary to develop moderate degrees of maturity is likely to create infrastructure that the organization does not need in order to effectively operate in stable environments. Generating additional information processing infrastructure in such contexts adds unnecessary cost and complexity (Tushman and Nadler 1978). For organizations operating in relatively stable contexts, process management efforts are best aimed at achieving moderate degrees of maturity. Moderately mature processes are repeatable and capable of local improvements that reduce information process requirements, thereby decreasing the burden on the hierarchy for managing exceptions. The authors, therefore, posit that: • Hypothesis 1a: In stable contexts, high performance is associated with processes that are managed to moderate degrees of maturity. If uncertainty exceeds that associated with stable contexts, then benefits gained from mechanisms that reduce information processing requirements no longer sufficiently compensate for the large number of exceptions that must be addressed. At some point, the amount of information to be processed exceeds capacity and performance suffers. Information processing theory suggests that, in order to maintain or improve performance in turbulent environments, organizations must establish coordination and control mechanisms that increase information processing
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An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients
Degree of uncertainty
Very low (Nearly certain)
Low to moderate (Stable context)
High (Turbulent context)
Appropriate degree of maturity
Immature
Moderately mature
Highly mature
Process characteristics
Unpredictable Few objectives Isolated Random improvement
Somewhat repeatable Objectives defined Some interunit coordination Local evaluation, improvement
Repeatable and predictable Objective driven Strong integration, alignment Systematic evaluation and learning
N.A. Representative process management tools, techniques, infrastructure
Process mapping, SPC, standard operating procedures, local problemsolving teams
Shared information systems, policy deployment, cross training, crossfunctional improvement teams
Impact on information processing
Coordination and control mechanisms to reduce information processing requirements
Coordination and control mechanisms that increase information processing capacity
Hierarchy deals with occasional exceptions
capacity (Galbraith 1973; 1977; Tushman and Nadler 1978). Mechanisms for increasing information processing capacity are generally of two types. When the information to be transmitted and processed is formal, management information systems that span work unit boundaries effectively convey information and create common languages across work units (Galbraith 1973). For conveying and processing informal information, lateral relationships that cut across lines of authority create joint decision processes to effectively handle more data. Cross-functional teams, task forces, and integrating roles such as project or program managers exemplify lateral mechanisms that add information processing capacity (Galbraith 1973). Creating these types of formal and informal information systems is within the scope of process management. Evidence of this appears in the CPE where the overall conceptual framework is dedicated to the development and implementation of interlinked information systems that improve organizational performance. Measures of performance versus strategic objectives, systems that capture and broadly disseminate customer and market data, and benchmarking and best practice sharing are among the CPE requirements that must be addressed by process managers. Moreover, the frequent use of cross-functional teams and coordinators in process management efforts 30 QMJ VOL. 21, NO. 1/© 2014, ASQ
provide conduits for conveying less formal information between units. Processes that have been subjected to such process management efforts have been managed to high maturity levels, similar to those corresponding to the third and fourth phases of the CPE maturity model elaborated previously. Processes managed to high degrees of maturity are characterized by excellent repeatability, strong connection between objectives and action, strong integration and alignment across units, and systematic evaluation and learning. These characteristics facilitate coordination and control in a manner that increases information processing capacity (see Figure 1). It is important to note that, unlike the contingency framework proposed by Sitkin, Sutcliffe, and Schroeder (1994), the process management framework developed here specifies a path-dependent relationship between high and more moderate degrees of maturity. The integrative, responsive characteristics of highly mature processes are built upon the repeatable, locally controlled characteristics of moderately mature processes. In the language of Sitkin et al. (1994), organizations must focus on developing control capacity before focusing on developing broad learning capacity. When uncertainty is high, performance should benefit from process management efforts that add coordination and control mechanisms that increase
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Figure 1 Process management and information processing requirements under various degrees of uncertainty
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients information processing capacity. Processes that have been managed to high degrees of maturity are integrated, aligned, and responsive to change, making them well-suited for coping with the high information processing demands of turbulent contexts. Of course, coordination and control mechanisms that elevate information processing capacity are expensive and add complexity to the organization (Tushman and Nadler 1978). However, for organizations operating in turbulent contexts, process management efforts aimed at achieving high degrees of maturity are desirable because they provide infrastructure that enables organizations to effectively cope with high information demand environments. Stated formally: • Hypothesis 1b: In turbulent contexts, high performance is associated with processes that are managed to high degrees of maturity. Processes that are self-contained are better able to manage information processing requirements (Galbraith 1973). However, no processes are completely self-contained because transforming inputs into outputs necessarily requires some exchange with external resource providers. These exchanges create dependence and constitute significant sources of uncertainty (Pfeffer and Salancik 1978). Organizational processes vary in their external resource dependence. Processes that require high amounts of information from external groups such as customers, suppliers, regulators, or shareholders are generally more dependent than processes with more inward orientations. For example, among the categorical processes specified by the Baldrige CPE, one should expect those processes related to customers and markets to be more difficult to advance to mature states than processes that are more inwardly focused, such as those related to leadership or human resources. Higher degrees of maturity should be more difficult to achieve when processes are more externally dependent. Coordination and control mechanisms must be established that bridge internal and external processes in order to provide vital information for effective operation (Premkumar, Ramamurthy, and Saunders 2005). External resource providers may be reluctant to collaborate in building such integrative infrastructure due to concerns about losses of sovereignty and market power
(Bode et al. 2011; Casciaro and Piskorski 2005; Pfeffer and Salancik 1978). Moreover, low understanding of external resource providers creates causal ambiguity, making it difficult for internal process managers to identify integrative mechanisms that would effectively link inter-unit activities (Sherman and Keller 2011). Even if appropriate integrative mechanisms are identified, lack of control over external entities may hinder implementation (Pfeffer and Salancik 1978). Bridging boundaries between organizations challenges many structural arrangements (Aldrich and Herker 1977). When boundary spanning involves integrating internal processes with external units that provide essential resources, then process management will be more difficult. In such cases, higher degrees of maturity will be harder to achieve. In summary: • Hypothesis 2: Greater external dependence hampers managing processes to higher degrees of maturity.
METHODOLOGY Past recipients of the MBNQA provide an interesting sample source for studies of process management. Evaluation of Baldrige Award applicants includes careful assessment of organizational processes for their repeatability, integration, and learning capacity associated with maturity (NIST 2011). Organizations must demonstrate connections between well-managed processes and superior performance results. Doing so has proven difficult, however, as only some 80 organizations have received Baldrige Awards out of approximately 1,400 applicants. Thus, there is some degree of face validity in considering Baldrige recipients as high performers with strong process management skills. While investigators have employed interview and case techniques to gather insight into characteristics of Baldrige recipients (for example, Garvin 1991; Rayner 1992; Blackburn and Rosen 1993), primary data sources such as examiner scores and feedback reports generated from the award assessment process have been largely unavailable due to confidentiality agreements between Baldrige applicants and the award administrators. Recently, however, collaborative partnerships have opened primary Baldrige data sources to www.asq.org 31
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients
Organization Award category
Sizea
Sector
A
Govt/Nonprofit
Large
Public
B
Service
Small
Private, for profit
C
Education
Large
Public
D
Small business
Small
Private, for profit
E
Education
Large
Public
F
Healthcare
Large
Private, nonprofit
G
Service
Large
Private, for profit
H
Healthcare
Large
Private, nonprofit
I
Small business
Small
Private, for profit
J
Healthcare
Large
Private, nonprofit
Education
Large
Public
K a
500 or fewer employees = small; more than 500 employees = large
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Table 1 S ample organization background information
Table 2 Baldrige Criteria for Performance Excellence categories and itemsa 1 Leadership 1.1 Senior Leadership 1.2 Governance and Social Responsibilities 2 Strategic Planning 2.1 Strategy Development 2.2 Strategy Deployment 3 Customer and Market Focus 3.1 Customer and Market Knowledge 3.2 Customer Relationships and Satisfaction 4 Measurement, Analysis, and Knowledge Management 4.1 Measurement, Analysis, and Review of Organizational Performance 4.2 Information and Knowledge Management 5
Human Resource Focus 5.1 Work Systems 5.2 Employee Learning and Motivation 5.3 Employee Well-Being and Satisfaction
7 a
Results 7.1 Product and Service Outcomes 7.2 Customer-Focused Outcomes 7.3 Financial and Market Outcomes 7.4 Human Resource Outcomes 7.5 Organizational Effectiveness Outcomes 7.6 Leadership and Social Responsibility Outcomes
2006 version
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6 Process Management 6.1 Value Creation Processes 6.2 Support Processes and Operational Planning
scholarly study (Latham 2008). Through one such collaboration, feedback documents for 11 award recipients from the years 2000 to 2008 were made available to support the present research effort. While this sample size does not provide a basis for broad, generalizable conclusions, the source of the sample and the associated data do suggest opportunity for exploring the validity of the hypotheses elaborated above. Keeping in mind that a condition for using these data was preservation of confidentiality, limited background information on the 11 sample organizations is presented in Table 1. Baldrige Awards are granted according to several categories, including manufacturing, service, small business, healthcare, education, and nonprofit. Each of the award categories except manufacturing is represented in the sample. Public and private sectors are both present, and private sector organizations include both for-profit and nonprofit operations. The size of the organizations in the sample ranged from about 75 to 16,000 employees. The age of the sample organizations at the time of Baldrige Award reception ranged from 12 to 115 years. Specific industry contexts included public school education, commodity finishing, hospitals, municipal government, water treatment, and commodity storage and distribution. The data suggest relatively stable industry and internal contexts for the sample organizations, with no organizations that could reasonably be deemed as operating in emerging industries or environments of rapid technological change or restructuring. In the Baldrige process, each applicant submits a 50-page report that explains how the organization meets the requirements specified by the Baldrige CPE. The applications are reviewed by a group of “examiners”— professionals of varied backgrounds who have been trained in evaluating organizational processes and performance against the CPE requirements. The seven CPE categories and their associated items for the 2006 version of the CPE (the version associated with the median year of Baldrige Award receipt among the sample organizations) appear in Table 2. When evaluating items under the six process categories (excluding results), the examiners employ a framework linked to the process maturity model described above (for a detailed description of the Baldrige evaluation process,
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients see NIST 2011, 65-70). For each process category item, examiners look for the extent to which processes, or “approaches,” are repeatable, regularly evaluated for improvement, consistently deployed throughout the organization, and integrated and aligned with other organizational units. When evaluating items in the seventh results category, examiners assess current performance levels; performance levels relative to appropriate comparisons and benchmarks; rate, breadth, and importance of performance improvements; and linkage of results to process approaches identified in the first six categories. After evaluating an applicant’s response to the CPE requirements, which includes visits to applicant sites for Baldrige Award finalists, the examiners develop the feedback report. Feedback reports often exceed 30 pages in length, and provide Baldrige applicants with comprehensive summaries of strengths and weaknesses (known as opportunities for improvement, or “OFIs,” in Baldrige nomenclature) identified during the assessment. Strengths summarize effective and positive approaches that favorably align with the CPE. OFIs focus on deficiencies in meeting criteria requirements, such as lack of systematic approaches, ineffective deployment, poor alignment and integration, or adverse or missing results. Once complete, feedback reports are provided to each Baldrige applicant to communicate key findings and to provide a basis for further process management activity by the applicant. The number of OFIs identified during the assessment should inversely reflect degree of maturity. Processes found to be repeatable, consistently deployed, and highly integrated and responsive should not be the subject of significant OFIs. Because repeatability, integration, and responsiveness are conditions associated with high degrees of maturity (Hammer 2007; NIST 2007), OFI-free processes can be presumed to have been managed to high degrees of maturity. On the other hand, processes found to possess characteristics that fall below the repeatable, integrated, responsive ideal should be viewed as problematic by examiners and the subject of OFIs. It follows, then, that processes to which many OFIs have been assigned reflect lower degrees of maturity. Thus, the quantity of Baldrige OFIs and their nature—that is, whether the OFIs pertain
to lack of repeatable approach or poor integration— provide a reasonable basis for measuring the extent to which organizations in the study sample have managed their processes to highly mature degrees. To obtain their measures, the authors first developed a data dictionary of terms that reflected the scoring dimensions examiners use (for example, “no systematic approach,” “early stages of organizational alignment,” “little/no deployment”). The OFI comments from each feedback document were coded independently by each member of the research team. The team then met to compare codes and resolve any differences. A qualitative data analysis software package was used to process the coded data. For purposes of this analysis, the scoring term codes were consolidated into either “approach,” signifying an OFI associated with a relatively low degree of maturity, or “integration,” signifying an OFI associated with a more advanced degree of maturity. Thus, the resulting database permitted the authors to count the number of OFIs by organization and by CPE category/item, and to distinguish the OFI as related to the achievement of a low degree of maturity (that is, lack of repeatable approach), or a moderate degree of maturity (that is, approach established but not well integrated).
Measures Maturity Using the method described above, degree of maturity was approximated from the opportunities for improvement cited in the feedback reports of each sample organization as part of the Baldrige evaluation process. External dependence The six categories of organizational processes specified by the Baldrige CPE (see Table 2) were divided into two groups using Flynn, Schroeder, and Sakakibara’s (1995) framework as a conceptual basis. One group consisted of CPE categories 3, 4, and 6. These CPE categories relate to what Flynn, Schroeder, and Sakakibara (1995) termed core quality practices (Ford 2011). Core quality practices directly influence technical aspects of the organization, and include activities linked to market and product development, information management, and process control and improvement. Organizational processes that house these core activities are central to
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An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients value creation, and must be well connected to outside sources in order to achieve highly refined, integrated states. However, achieving high levels of integration is likely to be difficult because the resources necessary to advance process maturity extend beyond the boundaries of the organization and are thus difficult to manage internally. Category 3 demands intimate knowledge of customers and their requirements, as well as the development of strong customer relationships and practices that measure and enhance customer satisfaction. Category 4 requires information systems that are networked with external sources of data that enable thorough analysis to support decision making. Category 6 necessitates a value chain that is well connected with upstream suppliers and downstream customers to enable design, production, and delivery of valuable output. The external dependence of these three CPE process categories is therefore considered to be relatively high. The other group consisted of CPE categories 1, 2, and 5. These CPE categories relate to what Flynn, Schroeder, and Sakakibara (1995) termed infrastructure quality practices (Ford 2011). Infrastructure quality practices are not central to value creation. Rather, they pertain to behavioral aspects of quality management necessary to create an environment supportive of core practice use. When employed in combination with core practices, infrastructure quality practices enhance performance outcomes. By themselves, however, infrastructure quality practices are unlikely to generate substantial performance gains, since they do not directly impact important valuecreation processes. Processes that house infrastructure quality practices may achieve highly integrated states by employing resources obtained from internal sources that are easier to manage. Because the CPE categories related to leadership, strategic planning, and human resource processes tend to be more inwardly focused, they are considered to require less connection to outside resource providers in order to achieve mature, integrated states. The external dependence of these three processes is therefore considered to be relatively low. Size Organizational size was included as a background variable due to the possible influence of size on achieving maturity. Although there are longstanding
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arguments over whether increased size rigidifies or fluidizes organizations with respect to change (Haveman 1993), some research suggests that, particularly in the case of implementing administrative changes such as those associated with process management, larger organizations may hold some advantage over smaller ones (for example, Adler 1999; Ford 2009). To observe possible background effects of size, the authors employed the 500-employee threshold that is commonly used for categorizing small organizations (for example, NIST 2011; U.S. Small Business Administration 2006). As noted in Table 1, sample organizations B, D, and I were assigned to the “small” group with the remainder assigned to the “large” group.
RESULTS Table 3 presents OFI counts by sample organization, with the left side of the table dedicated to CPE process category 1 through 6 OFIs and the right side dedicated to CPE category 7 results OFIs. The counts are sorted from highest to lowest total process OFI count (boldfaced). Focusing on the process OFI counts, several observations can be made. First and foremost is that OFIs were a routine occurrence across all organizations in the sample. In the six process CPE categories, 476 total OFIs were observed, for an average of 43.3 per organization. A second observation is that the majority of OFIs were of the “approach” type. Approximately 70 percent of all process OFIs involved lack of a repeatable approach. This suggests that examiners frequently observed the presence of relatively underdeveloped processes that had yet to be advanced past the first or second phases of the CPE maturity model used in the assessment. The primary notion behind hypotheses 1a and 1b is that, in order to achieve high performance, organizations will manage processes to a degree of maturity that allows them to effectively cope with the information processing requirements of their environments. According to the information processing perspective, one should expect high performers to operate highly mature processes only in uncertain environments. As observed previously, demographic backgrounds suggested that the sample organizations generally operated in stable contexts. As such, it should
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients Table 3 OFI counts by sample organization Size
Approach Integration
Total
Results category 7
% Approach % Integration Poor results Missing results
Total
D
small
51
17
68
75
25
19
35
54
F
large
38
17
55
69
31
13
36
49
I
small
35
14
49
71
29
7
26
33
B
small
28
16
44
64
36
5
18
23
K
large
31
13
44
70
30
7
22
29
G
large
27
14
41
66
34
2
36
38
A
large
30
7
37
81
19
6
36
42
J
large
25
12
37
68
32
16
19
35
C
large
28
6
34
82
18
4
13
17
H
large
19
15
34
56
44
7
15
22
E
large
73
27
9
44
53
95
300
395
8.6
27.3
35.9
24
9
33
Total
336
140
476
per org
30.5
12.7
43.3
75
not be surprising that this sample of high performers generated large numbers of OFIs from the examiners. The organizations can be seen as managing their processes to a degree of maturity that enabled them to effectively cope with modest information processing demands emanating from relatively stable settings. Managing processes to higher levels of maturity would have constituted a mismatch with the environment leading to lower performance. Results in Table 3 therefore provide support for hypotheses 1a. However, because the sample lacked organizations that could be construed as operating in turbulent contexts, no support could be found for hypothesis 1b. The authors’ analysis is based on classifying all of the sample organizations as high performers due to their status as Baldrige Award winners. One issue with doing so is that there is no variance in performance that can be studied in relationship to variance in maturity. To obtain some sense of the possible relationship, the authors conducted two simple regression analyses using data from Table 3. Regression 1 employed total process OFI counts as the dependent variable and total results OFI counts from category 7 as the independent variable. Regression 2 substituted category 7 poor results OFI counts as the independent variable. Results from regression 1 suggested a positive but
25
nonsignificant relationship between total process OFIs and total results OFIs (β = .578, F = 2.81, p = 0.128, Adjusted R2 = 0.153). Regression 2 suggested a positive and significant relationship between total process OFIs and poor results OFIs (β = 0.292, F = 4.96, p = 0.052, Adjusted R2 = 0.284). While this approach certainly raises common methods variance issues, the results do demonstrate how performance might vary with degree of maturity within a particular environmental context. Tables 3 also places the three organizations categorized as “small” among the top four OFI count recipients. Applying a nonparametric Mann-Whitney rank sum test for two independent samples of unequal size (Snedecor and Cochrane 1989) found the differences in rank between small and large sample organizations to be significant at the 0.01 level. Table 4 compares the average OFI counts of small and large sample organizations. Small organizations displayed higher average approach, integration, and overall OFI counts. The difference in average integration OFI counts between small and large organizations was significant at the 0.05 level. Higher OFI counts among small organizations suggest that small organizations managed processes to lower degrees of maturity than larger organizations. Table 5 displays differences in OFI counts by CPE category according to the high and low external
www.asq.org 35
©2014, ASQ
Process categories 1 through 6
An Information Processing Perspective of Process Management: Evidence From Baldrige Award Recipients dependence process groups. The left side of the table shows the average number of OFIs per organization for each category, while the right side of the table reports
Small (n=3) Mean (Sdev)
Large (n=8) Mean (Sdev)
Diff
p valuea
−3,641
0.084
−55.3
0.002
10.3
0.267
4.0
0.037
14.3
0.180
Number of employees
272
3,913
(214)
(5,114)
Age
18.7
74.0
(7.6)
(33.4)
Approach OFIs
38.0
27.8
(11.8)
(5.6)
Integration OFIs
15.7
11.6
(1.5)
(3.9)
Total OFIs
53.7
39.4
(12.7)
(7.3)
a
Two sample t-test, variances assumed unequal
©2014, ASQ
Table 4 OFI counts by organization size
“normalized” average OFI counts per category item. The normalized counts were determined in order to account for changes in the number of items in several CPE categories during the 2000-2008 Baldrige Award period represented by the sample. Categories with more items should generally be subject to more OFIs. In 2006, for example, category 5 contained three items, while the other process categories had only two (see Table 2). Correcting categorical OFI counts for the number of items provided for more equitable comparison. The authors should note that changes in the number of items corresponding to each category were infrequent. Categories 5 and 6 moved from three to two items (in 2007 and 2003, respectively) and category 7 went from five to four (in 2001) and from four to six items (in 2003). The number of items remained the same (two each) for categories 1 through 4 during the entire period. Average OFI counts for the high and low external dependence groups were obtained by pooling the
Table 5 OFI counts by CPE category and category item OFI counts per organization Category
OFI counts per category item per organization
Approach
Integration
Total
Approach
Integration
Total
3 Customer Focus
7.00
2.00
9.00
3.50
1.00
4.50
6 Operations Focus
5.00
2.73
7.73
2.27
1.23
3.50
4 Msmt, Analysis, and KM
3.91
1.45
5.36
1.95
0.73
2.68
Average
5.30
2.06
7.36
2.58
0.98
3.56
5 Workforce Focus
7.00
2.82
9.82
2.59
1.11
3.70
1 Leadership
3.91
1.91
5.82
1.95
0.95
2.91
2 Strategic Planning
3.73
1.82
5.55
1.86
0.91
2.77
Average
4.88
2.18
7.06
2.14
0.99
3.13
Diff (High – Low)
0.42
−0.12
0.30
0.44
−0.01
0.43
p valuea
0.561
0.732
0.167
High external dependence
Low external dependence
0.784
Poor Results Missing Results 7 Results
8.64
27.27
Total 35.91
0.980
Poor Results Missing Results 1.50
4.82
0.254
Total 6.32
High external dependence averages if category 7 missing results OFIs added to category 4 integration OFIs Diff (High – Low) p value a
a
5.30
16.45
2.58
1.99
4.08
0.42
8.97
9.39
0.44
1.00
0.96
0.561
0.001
