1. Diagnostic Analysis of Constraints to Capacity Cedric Saldanha Melbourne (613) 98592712 csaldanha@netspace.net.au

2. Objectives of the Session Examine the issue of ‘analysis’ Why? Scope? Implications? Review Different Methods of ‘analysis’ Undertake Applications to our own work situations

3. WHY Analysis? Why the need to analyse organizations? Do we typically analyse our organizations in any systematic way – when and why?

4. Analysis - Performance Performance Improvement depends on effective analysis of constraints to performance Effective Capacity Development depends on prior effective organization analysis

5. Analysis – Capacity - Performance Capacity Development Organization Performance Analysis

6. Terminology Institution refers to the formal and informal rules and enforcement mechanisms that influence the behavior of organizations and individuals in society Organization (Agencies) are more narrowly defined than institutions. They are social entities, usually characterized by hierarchical patterns of internal authority that pursue common interests Capacity refers to the abilities of public sector organizations to deliver the outputs and outcomes that reflect their respective mandates.

7. Terminology - contd We are dealing with Organization Analysis Not with Institution Analysis We are also dealing with Capacity Analysis - of public sector organizations to deliver to their mandate

8. Public Sector Organizations Central Agencies (Ministries of Finance, Planning, PSC..) Sectoral Agencies (Transport, Energy, Agriculture,…..) SOEs Local Governments Municipalities

9. Why is Capacity Development of Public Sector Organizations so Often a Failure? CD interventions often introduced without disciplined analysis of causes of underperformance Current tendency is to focus on skills training Another favourite is to re-structure the organization “Prescription without diagnosis is malpractice”

10. What are the typical Causes of Organization Underperformance? Exercise – (i) Brainstorm a Long List of typical causes of organization underperformance (ii) Prioritize these into a Short List of not more that 5 Key Causes

11. Types of Approaches to Organization Analysis Description Assessment Diagnosis

12. Descriptive Analysis Describes Key Characteristics Usually begins with Role and Function Locates the Agency within the Public Management System Covers Internal Structures Provides overview of Staff and Resources Is essential but does not address key requirements of a Feasibility Study or Design of a CD Project

13. S W O T Analysis (Descriptive) Strengths – to be enhanced Weaknesses – to be addressed Opportunities – to be exploited Threats – to be countered Widely used for the last 30 years Powerful organization development tool Encourages team-based search for excellence However, is not adequately ‘diagnostic’

14. Strategy Skills Shared Values Staff Style Systems Structure McKinsey Seven S’ Model Descriptive

15. Assessment Approaches A Model or Standard is established for each key element of an organization – client focus, HR management, quality control etc The organization is compared to the Model or Standard and then rated The organization is accordingly assessed

16. Figure 1: Baldridge Award Criteria Framework System Management of Process Quality Human Resource Development and Management Strategic Quality Planning Information and Analysis Customer Focus and Satisfaction Quality and Operational Results Leadership

17. Table 2.17 The Malcom Baldrige National Quality Award Scoring System (Source: National Technical Information Service, 1995 Malcom Baldrige National Quality Award Criteria, Department of Commerce, Washington, DC, 1995.) Evaluation CriteriaDetail Criteria Point Values in Each Criteria Total Point Values Leadership1.1 Senior Executive Leadership 1.2 Leadership System and Organization 1.3 Public Responsibility and Corporate Citizenship 45 25 20 90 Information & Analysis 2.1 Management of Information and Data 2.2 Competitive Comparisons and Benchmarking 2.3 Analysis and Use of Company-level Data 20 15 40 75 Strategic Planning3.1 Strategy Development 3.2 Strategy Deployment 15 20 55 Human Resource Development 4.1 Human Resource Planning and Evaluation 4.2 High Performance Work Systems 4.3 Employee Education, Training, and Development 4.4 Employment Well-being and Satisfaction 20 45 50 25 140 Process Management 5.1 Design and Introduction of Products & Services 5.2 Process Management Product &Service Production & Delivery 5.3 Process Management Support Services 5.4 Management of Supplier Performance 40 30 140 Business Results6.1 Product and Service Quality Results 6.2 Company Operational & Financial Results 6.3 Supplier Performance Results 75 130 450 250 Customer Focus and Satisfaction 7.1 Customer and Market Knowledge 7.2 Customer Relationship Management 7.3 Customer Satisfaction Determination 7.4 Customer Satisfaction Results 7.5 Customer Satisfaction Comparison 30 100 60 250 Total Points1000 The Malcom Baldrige National Quality Award Scoring System

18. THE UK/EUROPEAN BUSINESS EXCELLENCE MODEL Leadership 10% 10% Leadership 10% 10% People Management 9% People Policy & Strategy 8% Policy Resources9%Resources9% Processes 14% Processes 14% BusinessResults 10% 10% BusinessResults 10% 10% People Satisfaction 9% People Customer Customer Impact on Society 6% EnablersEnablersResultsResults

19. Donor Agency Approaches ADB Typically uses Descriptive Analysis. Also, Governance Assessments UNDP Promotes SWOT approach World Bank Uses PERs, Institutional and Governance Assessments

20. Critique of Descriptive and Assessment Methods Not diagnostic: do not analyze causes of under-performance Some are ‘rating’ methods using industry ‘norms’ or ‘standards’ to assess/rate Some focus only on selective organization factors

21. Diagnostic Approaches Begins with identifying where performance is weak Works back through a diagnostic process to identify the causative factors The assumption is that if diagnosis is correct, and the causative factors are addressed, then performance will improve

22. Need for a New Approach Should be diagnostic in order to guide strategies for performance change and improvement Should be anchored in client expectations / performance Should take account of all contributory organization factors Should explain the internal dynamics of the organization and how this influences performance

23. Starting Point is Clarifying Expected Performance / Results Why does this organization exist? What would be lost if it did not exist? Who does it serve? What is it supposed to deliver for them?

24. Exercise on Clarifying Expected Performance - Who are the key clients of your organization? Identify the two most significant. Identify their key expectations from your organizations –Write these in terms of outputs to be delivered

25. ClientClient Expectations Output Indicators Current Performance Issue Of Concern Clarifying Performance Concerns Agency Name:

26. Category 1 Factors - Clarity of Results Outcomes Outputs

27. Category 1 Factors – Results / Performance Expectations Are performance results specified? Are there clear standards and / or targets? Are performance results monitored and analyzed for improvement? Is performance periodically reported? Is performance periodically audited?

28. Category 1 Factors Allow the Diagnosis to Begin ‘Performance Report’ is essential Identify performance variances in order of priority If performance variance is not clearly identified  diagnosis is not possible  capacity building initiative will be directionless

29. Category 2 Factors – Resources Staff / Skills Budgets Technology Equipment Physical Assets Staff / Skills Budgets Technology Equipment Physical Assets Outputs Outcomes Resources Results

30. Resources and Performance The ‘Wheels’ on which the organization runs Proportionality between Inputs and Outputs –Efficiency: ratio of output for each unit of input –Effectiveness: ratio of outcomes for each unit of input

31. Focus on Resources Resources are often the first and only focus of some CD strategies Typical CD strategies resorted to are  staff increases  training  computerization  increased operating budgets  expenditure tracking leading to changes in allocation

32. Focus on Resources Most obvious set of Factors Necessary and Useful Focus Could be misleading since fundamental causes of underperformance are often not resource related

33. Category 3 Factors - Management Infrastructure Outputs Outcomes Resources Management Infrastructure Systems + Structure + Strategy (Processes) (Policy) Staff Budgets Technology Equipment Physical Assets

34. Strategy Creates Clarity of Purpose Provides Direction Dictates Policy Defines scope and nature of activities Influences choice of technology and people Establishes a framework for Competencies

35. Structure Clarity of Accountabilities & Reporting Relationships Span of Control Level of Delegation Quality of Outreach to Client Checks and Balances Structure can complicate Processes

36. Systems and Processes Planning and Decision Making Systems The Client Interface System The Product Delivery System The Financial Management System The HR Management System The Information Management System Performance Monitoring & Reporting System

37. Management Infrastructure The internal engine of the organization Essentially convert Inputs to Outputs Critical moving parts are – Strategy, Structure, Systems They need to move in harmony Need to be examined in terms of Results Expected and Resources available

38. Category 4 Factors – The Drivers of Performance: Vision (Leadership) & Values (Culture) OutputsOutcomes Inputs Staff Budgets Technology Equipment Physical Assets Management Infrastructure Strategy + Structure + Systems (Policy) (Processes) Drivers: Vision & Values

39. Vision (Leadership) Is the “Core Ideology” Primary Driver Impels Change & Results Is the priority accountability of leadership Is the clearest reflection of quality of leadership

40. Values - Culture The fundamental Guiding Principles The unsaid but expected behaviors The ‘norms’; what is considered important The favored patterns of interaction The way we do things around here The ‘management style’

41. Organization Culture – Visible Forms What do leaders measure, reward, control Leaders’ reactions to critical incidents Role models Criteria for recruitment, promotion, discipline Stories and myths about key people and events

42. The Drivers Efficiency is a function of Management Infrastructure Effectiveness is a function of Leadership and Culture Vision and Values OR Leadership and Culture

43. Organization Model for Diagnostic Analysis Resources Results VisionValues SystemsStructureStrategy

44. Incentives Is not an organization factor itself Is rather a characteristic of a factor  “Clarity of Results” or “Increased Resources” can provide a powerful incentive  “HR systems” can become strong disincentives Check each factor for its incentive message

45. Role of External Variables They rarely influence results directly Their role is through constraining or influencing internal variables Internal variables can be adjusted to cope with external constraints Key management accountability is to manage the influences of external environment

46. External Variables and Organization Performance External Variables Internal Variables Organization Performance

47. The Diagnostic Process Understand the potential variables which can and do influence performance RR + SSS + VV P Use a team based consultative process to identify cause of underperformance – Force Field Analysis – Problem Tree Analysis

48. Force Field Analysis Factors Hindering Performance ……………………………………………. ………………………………… ………………………………….. Factors Supporting Performance Current Performance Level

49. A Simplified Cause-Effect Analysis of the Public Works Agency in a Developing Country