Management functional assessment model for obtaining sustainable competitive advantages
Dmitry Maslov,
Candidate of Economic Science, Director of the Scientific Centre for Benchmarking and Excellence, Ivanovo State Power University (Russia) (34 Rabfakovskaya str., Ivanovo, 153003, Russia; e-mail: maslow@bk.ru)
Nicholas Chileshe,
PhD, Senior Lecturer, Division of Information Technology, Engineering and the Environment, University of South Australia (School of Natural and Built Environments, City East Campus, BJ3-42, UniSA, Australia; e-mail: Nicholas.Chileshe@unisa.edu.au)
Paul Watson
Professor, Head of the Department of the Built Environment, Sheffield Hallam University (United Kingdom) (Faculty of Development and Society, Sheffield Hallam University, 45 Broomgrove Road Sheffield, S10 2BP, UK; e-mail: P.A.Watson@shu.ac.uk)
Аннотация. В статье описывается функциональная модель оценки менеджмента (ФМОМ) для самооценки управленческой деятельности компании по ключевым функциям менеджмента: прогнозирование/планирование, организация, мотивация, контроль, координация и коммуникация. Приводится методика двухсторонней оценки системы менеджмента, инструментарий анализа результатов самооценки. Авторы описывают методику и полученные результаты валидации модели.
Ключевые слова: оценка менеджмента, функции менеджмента, самооценка, модель, система, качество.
Keywords: estimation of management, function of management, self-assessment, model, system, guality.
Abstracts
To attain and/or maintain a sustainable competitive advantage organisations worldwide require a competitive orientated management system, which is built on continuous learning, innovation and improvement. The proposed Management Function Assessment Model (MFAM) recognizes that sustainable excellence in all aspects of performance can be based upon the management functions of forecasting/planning, organising, co-ordination, motivation, control and communication. Being a TQM
model and designed upon the world quality award models of Deming, Baldrige and EFQM, the MFAM advocates self-assessment based upon 5 functional assessment criteria, 25 categories and 100 focus areas correlated with corporate profitability and stakeholder satisfaction. Proposed two-sided assessment gives an opportunity to align leaders and employees opinions using a Management Adequacy Index, identify Zones of polarity and unity of judgments inside the collective calculating Index of Inside Employees Consent, identify areas to improve
plotting Matrix of Areas of Improvement Abilities. The model is currently being implemented and monitored by a number of Russian and European companies. This paper explores the model in more detail. The study used Canonical correlation methods to correlate simultaneously the management function features to the assessment of competitive advantage measures. The findings indicate that the MFAM is both reliable and valid. The result of the assessment, is a classification of the organisations into five different levels of management maturity in terms of achieving competitive advantage and also identifies the strengths and weaknesses of their management system. The paper further explores the model's constituent parts and relates them to the process of gathering data on organisational requirements focused upon attaining/maintaining a competitive advantage.
Introduction (MFAM in brief)
The Management Function Assessment Model (MFAM) has been designed upon six functions of management: Forecasting & Planning; Organising; Motivation; Control; Co-ordination; and Communication1. The first five functions are encapsulated within a framework (fig. 1) of an effective and efficient system of communication - sixth function.
Each MFAM criterion includes 5 assessment categories; each category consists of 4 focus areas. Thus twenty-five different management function features and 100 focus areas have been correlated with corporate profitability, stakeholder satisfaction and competitiveness.
For example, "Forecasting & Planning" is concerned with determining the shape of future strategy; its function is to answer three questions:
1 See, for example: Watson P., Chileshe N., Maslow D. Deploying Total Quality Management in Russia // European Quality. 2004. Vol. 11, No. 2. P. 28-41. Watson P., Maslow D., Chileshe N., Management Assessment for Competitive Advantage // iSixSigma Insights. 2005. 7 March. Vol. 6. No. 19.
- where is the company now in terms of its vision and mission?
- where does it want to be as part of its future corporate plans?
- how is the company to achieve set aims based upon fore-casts?
Focus areas of 5 assessment categories for "Forecasting & Planning" are the following:
1.1. Setting the objective and strategic planning process in motion
a. Organisation has the general philosophy, core business principles and values are corresponding with company's philosophy.
b. Strategic and operational aims are clear and interrelated, review and update regularly for each stages of business-process and for each employee.
c. Strong and weak areas of organisation's activities are determined. Improve-ment plan is designed.
d. Organisational activities correspond to social requirements.
1.2. Gathering and analysing information related to clients and markets
a. Organisation strongly focuses on customer needs and expectations.
b. There is an organisational system which collects customers' complaints and wishes, requirements.
c. Organisation has detailed customers' database, and uses it in planning and managing activities.
d. Marketing system concentrates on attraction new customers and simulation repeated purchases to increase of a share of regular customers.
1.3. Detailing business-processes
a. Organisational processes are defined and confirmed with documents.
б. Communication
Five assessment categories (1.1 - 5.5)
1. Forecasting & Planning
Criterion (1-5)
Four focus areas (l.l.a - 5.5.d)
Figure 1. Management Functional-Assessment Model (MFAM).
b. Inputs, outputs, owners and resources are identified for each process.
c. Detailed business-process helps to satisfy internal customers and improve quality of each process.
d. Resources are effectively distributed between all processes.
1.4. Gathering and analysing information related to competitors and benchmarking
a. Organisation regularly monitors market and its competitors.
b. Information about competitors, their strong and weak areas, is learnt, ana-lysed and used for planning own improvement initiatives.
c. Best practices, including world and industrial, are gathered, analysed, adopted and included in strategic and operational plans.
d. Organisation uses benchmarking to find new effective approaches and in-crease of competitiveness.
1.5. Resources planning
a. System of suppliers' selection is established in the organisation.
b. Investments for business process are effectively attracted.
c. Material, human, finance and other organisational resources are distributed strongly according to accepted plans.
d. Information computer technologies are widely used for resources planning. ERP-system is launched within organisation.
In order to have an efficient and effective management system the Deming Plan-Do-Check-Act (PDCA) cycle2 should be employed.
2 Deming W.E. Out of the Crisis. Cambridge. - MA: MIT Press. 1986. PDCA is single loop learning which could be reinforced by RADAR cycle from widely known EFQM Excellence Model, because RADAR is triple loop learning involving "thinking and reflection" and it is powerful for continues improvement.
MFAM Criteria and assessment categories Max Score
culture
2.4 Developing a value system based on 4
enhancing performance
2.5 Deployment of new technology linked 4
to corporate enhancement
3. Motivation (20)
3.1 Developing a co-operative culture 4
based upon stakeholder satisfaction
3.2 Ensuring staff have the skills, re- 4
sources and competences to perform set
tasks
3.3 A consideration of personal needs 4
linked to self-actualisation
3.4 Engagement in processes, increase 4
areas of responsibility and self-monitoring
3.5 Results satisfaction - feedback on 4
performance in a timely manner
4. Control (20)
4.1 A monitoring system for each key 4
stage of business-process
4.2 Measuring performance levels 4
4.3 Determining customer satisfaction 4
levels
4.4 Determine the efficiency and effec- 4
tiveness of resource utilisation
4.5 Conduct a comparative analysis be- 4
tween set targets and actual results, lead-
ing to appropriate actions
5. Co-ordination (20)
5.1 Unity of all other functions 4
5.2 Establishing effective internal com- 4
munications
5.3 Developing a conflict solving system 4
5.4 Updating of deviations: revision and 4
possible reco-ordination of other re-
sources
5.5 Ensure effective Information man- 4
agement
Total management estimation (TME) 100
MFAM Self-assessment methodology
The organisational self-assessment of the management system on the Management Functional Assessment Model base is conducted via a questionnaire survey3. The questionnaire is divided into 5 groups according to the criteria of the MFAM. 25 questions correspond to 25 assessment categories (tab. 1). Each question has 5 variants of the answer the and possibility to choose only one. The evaluation scale4 consists of five following items:
0 - No activity demonstrated;
1 - Activity not consistently utilised;
2 - Activity utilised but dependent upon the situation;
3 - The activity is deployed permanently and systematically;
4 - The activity is deployed permanently and systematically, monitored and reviewed via benchmarking for improvement.
Table 1
MFAM Criteria and questionnaire
MFAM Criteria and assessment categories Max Score
1. Forecasting/ Planning (20)
1.1 Setting the objective and strategic 4
planning process in motion
1.2 Gathering and analysing information 4
r
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