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Organizational Effectiveness of Siemens Case Study

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Updated: Apr 19th, 2019

Multiple Cause Diagram Showing Factors Creating a High Performance Culture

The main issues that come out as the central drivers of the high performance culture at Siemens are the setting of team and individual targets, promotion of people excellence, talent management, and performance management.

High Performance Culture at Siemens Setting of team and individual targets Desire to create a sense of ownership in the employee’s the business
Company’s preferred basis for creating business goals
Employees need to know their role in the organization
Promoting people excellence Focus on achieving a high performance culture
Supporting employees to become experts in what they do
The company works towards the creation of a large global talent pool
Managing talent (people) Focus on the personal growth of all Siemens employees
Managing talent (talent) Job enrichment
Job enlargement
Rewarding responsibilities
Performance management Honest Performance evaluation
Linking of the organizational strategy to individual plans

The main issues arising from the diagram reveal the centrality of the company’s operational philosophy in regards to their employees. In essence, the issues that lead to a high performance culture at Siemens stem from a central philosophy. This example shows that the philosophical model chosen by an organization plays a major role in the programs developed by the organization.

The second set of issues that arise from the diagram is that Siemens promotes measures that increase employee productivity at a personal level. This is the basis for high performance in the organization. The best measures that an organization can put in place to measure its performance must include the measurement of individual performance.

The third element that arises from the diagram is that the organization uses many measures to promote high performance. It does not limit itself to a single measure. It runs several programs concurrently that meet the motivational needs and the aspirations of the employees.

Closed-Loop Control Model

Control System for performance analysis

Figure 1: Control System for performance analysis

The main components of the control system for performance analysis are system goals, the inputs, the outputs, the feedback path, and the sensor. The system goals in the context of an organization include having highly skilled employees. Other goals may be highly motivated employees or high performing employees. There are two inputs in the performance analysis system.

Employees are one of the inputs. They are the ones that the system tries to improve. The other inputs include training programs and mentorship programs. Inputs are the commitments the organization makes to ensure that the employees have the best environment for personal and professional development.Figure 1: Control System for performance analysis

The main output from this system is employees with better skills. It can also be employees with better attitudes or increased motivation. In a system, all inputs must form part of the outputs. Information is a special kind of input that may change. In this sense, it is not necessary to account for all information inputs because it ends up in some other form in the outputs.

The final part of this system is the feedback path. Performance appraisals are the feedback mechanism that helps the organization to measure the change in the skill level of employees. Performance appraisals mean all the activities the organization may undertake to measure an employee’s performance and not just a quarterly meeting.

Organizational Goals and the Role of Goal Unity in Siemens

Organizational goals are high-level aspirations set to guide the development programs of a business. Organizational goals also refer to the low-level goals within departments and at personal level set across the business towards the achievement of the organizational goals. Therefore, organizational goals refer to the sum total of the goals an organization sets to achieve its objectives.

Goal unity is very vital in organizations. It refers to the ability to align all goals set in the organization to overarching aims. Goal unity makes the organization function like an organism. All the efforts that the members of the organization make contribute towards the achievement of the goals of the organization.

The role of goal unity in an organization is that it enables all the members of the organization to align their abilities and resources towards the achievement of the main goals of the organization. This is the basic ingredient in the success of businesses. When an organization achieves goal unity, it experiences three distinct advantages.

First, it experiences synergy. Synergy is the tendency of people working as a team to achieve more than the sum total of their individual performance. The achievements that an organization makes because of goal unity give it a unique advantage in productive terms compared to similar organizations that have no goal unity. Secondly, goal unity leads to better resource allocation and prioritization.

An organization with goal unity will receive better returns for a given amount of resource outlay. Such an organization is also less likely to waste its resources. Thirdly, goal unity is the basis for the development of certain strategic advantages.

The possession of goal unity by an organization shows that the organization has a focused approach to dealing with issues. In this sense, the organization is able to adapt to change. It is also able to align its resources to take advantage of any opportunities.

In the case of Siemens, the company achieves goal unity by developing its overall goals from the individual goals of each employee. The elaborate components of the high performance culture ensure that there are multiple channels of attaining goal unity.

Long Term Impact of Performance Related Pay on Organizational Effectiveness

Performance related pay refers to financial considerations or special rewards offered to an employee based on their output. It differs from the normal pay because it arises from the performance of an employee. Its role is to motivate employees to perform better.

For instance, a sales representative may get performance related pay associated with the amount of sales. Performance related pay rewards results and not effort. It is possible to find a correlation between performance and results, yet it is also possible to put much effort in a job without producing measurable results.

The first advantage of performance related pay is that it insulates the organization from payments not associated with results. In a sense, it ensures that the organization gets value for its money. Secondly, it serves to motivate high achievers in the organization.

It shows that an organization values those that bring in the best results. Thirdly, performance related pay makes sales planning very easy. It is easy for it to know how much money it will make out of a given business deal since the only costs the organization incurs are costs associated with successful sales.

The disadvantage of performance related pay is that if an organization relies on performance alone as the basis of pay, some employees suffer. For instance, a receptionist cannot do anything to increase the number of people served at the reception. The only way to determine whether a receptionist qualifies for performance related pay is by taking qualitative measurements.

Such measurements are very difficult to quantify in monetary terms. The second disadvantage is that beyond a certain point, money loses its motivational power. Employees look for elements such as job satisfaction, opportunities to grow, and increasing responsibilities. Failure to recognize these changing needs make performance pay ineffective.

The third problem with performance pay is the measurement of performance. In some jobs, it is very difficult to know how to assign a performance value to the nature of work.

For instance, is there a straightforward way of measuring the performance of a delivery truck driver? Is it the number of kilometers covered, or is it the hours spent at work? Which of these two options generates value for the organization, and makes sense to a truck driver?

Performance related pay, unlike scientific management does not require elaborate measurements. Scientific management gives an organization more work in terms of the identification of parameters to use in the planning and management of work.

Performance related pay simply finds a parameter that meets the objectives of the organization and usually leaves the details of the work to the specific employees. This flexibility gives independent minded employees a very good working environment. It is however very stressful for employees who would otherwise thrive in a closely controlled environment.

In Siemens, the organization seems to employ scientific management adapted to its needs. The management philosophy at Siemens is adapted to reduce the impact of scientific management, when applied in its pure form.

The organization takes great care to ensure that they provide the best environment for employee to excel in their work. One of the main criticisms against scientific management is that it tends to ignore the interest of the workers in favor of the interests of the organization.

It looks at employees as machines that produce a uniform output. In reality, each employee is unique. Siemens recognizes this fundamental weakness of the scientific management system. The application of scientific management principles in the company adjusts the method to eliminate its weaknesses. Siemens focuses on the individual strengths and the interests of the employees.

This ensures that the employees are able to concentrate on what they do best. The performance management systems at Siemens all aim at the individual worker. Each worker has a unique performance profile developed by a wide range of performance measures that constitute the high performance culture at Siemens.

The Role of the Organizational Structure on Effectiveness and Performance

The Roman Catholic Church (RCC) is an outstanding organization because of the effectiveness of its organizational structure. The administrative distance between a pope and a local priest is only four levels. These levels consist of the pope, an archbishop, a bishop, and the parish priest. The church illustrates that the strength of an organization can be its administrative structure.

Good structures encourage high performers to take charge of their work because the structures ensure that these high performers receive all the support they need for their work. Organizations with good structures also make it easy for information to reach decision makers, and for decisions to flow to the rest of the members of the organization.

If the RCC adopted a different structure, it would have created bottlenecks in its structure. The first casualty of a poor organizational structure is communication. Once the communication lines of an organization clog, the organization loses its capacity to grow. Organizations with poor structures also tend to lack proper authority and responsibility structures.

As soon as employees realize that they are not answerable for their actions, systems fail. Similarly, a high performing organization needs clear structures that allow rewards to flow to employees. Similarly, clear responsibility lines make it easier for the organization to find ways of motivating demoralized employees.

As an organization, one of the strong points noted in the Siemens organizational structure is that it promotes individual responsibility while it emphasizes teamwork. Teams in the organization are not amorphous groups.

They are actually a collection of individuals, each with clear roles and responsibilities, working towards a joint goal. The company takes great care to ensure that all the employees have a clear role to play in the organization. The employees answer as individuals but their performance counts towards the contribution of their teams in achieving organizational goals.

The Role of Organizational Culture

An organization that fails to develop an enduring culture soon loses its identity. An organization’s culture defines it in many ways. It gives an organization a basis for making decisions. Culture establishes the working relations within the organization. It is the source of a unified approach to issues. For instance, there may be changes in policy regarding hiring.

However, the speed with which a hiring decision takes effect may be a factor of organizational culture. If the culture is such that everyone in the organization communicates rapidly, a hiring decision will move up and down the leadership ladder on the strength of the organization’s culture.

This example illustrates the impact of organizational culture to communication. Culture is the total expression of the values, norms, and processes of an organization. Each organization has its unique culture. High performing organizations such as Siemens tend to adopt cultural elements that support the organization’s overall goal rather cultural elements that lead to wastage.

Siemens’ organizational culture promotes individual development, the establishment of organizational goals derived from individual targets, and a commitment to the management of talent in the organization. Each of the activities Siemens promotes in relation to goal setting and performance reviews aim at developing careers of individual employees.

The organization seeks to ensure that all employees are on track towards their career goals. The organization is reinforcing a goal setting culture built on strong goal setting practices by the development of organizational goals derived from individual goals. It is an interesting approach to planning because in many organizations, plans move from the top levels of management to the lower levels.

The result of such systems is that the organization fails to take advantage of the innovative resources available in the lower levels. The final element in the organizational culture of Siemens is the commitment to the management of culture in the institution.

Organizational culture requires careful management to endure change and to deliver needed change. Culture can change for the worse if not one keeps an eye on how it is developing. Siemens uses multiple systems to ensure that all its employees have sufficient drive and motivation to achieve their best.

Importance of Investing in People for Organizational Effectiveness

The first reason that demonstrates the importance of investing in people for organizational effectiveness is that investing in people within the organization leads to distinct competitive advantages for the organization.

An organization that invests in its people ends up with a unique workforce with high job-related skills. This can give the organization an edge in the marketplace because of its capacity to react to market forces quickly using its human resource.

The second reason is that investing in people gives an organization the ability to retain its best people. Talent is one of the main factors defining competition in many organizations today. The organization with the best talent wins. As such, investing in employees makes them feel valued and it enables them to decide proactively to remain with the organization for the long haul.

Investing in people leads to organizational growth. As the Siemens case demonstrates, investing in people gives the organization the required capacity to pursue growth in various regions. Siemens develops the talent of its employees in a way that insulates the company from talent shortfalls.

More importantly, investing in people makes Siemens capable of rapid growth whenever opportunities present themselves. This strategy allows companies with stronger policies regarding investment in employees to take advantage of new opportunities more effectively, in comparison to companies that recruit to pursue growth opportunities.

One of the strong positive results of investing in people within an organization is that it makes the organization a learning organization. When an organization promotes learning, it makes its growth potential to increase. Investing in people inculcates a learning culture in the organization that in turn contributes towards a strong learning culture in the organization.

Finally, developing an organization with a strong attitude towards learning puts it on the path to profitability. Improved profits in an organization result from better execution of strategy.

This is a product of investing in people. Within an organization, it is possible to invest in people in specific aspects of business performance to encourage people to improve their performance in the selected areas. In this sense, one of the most effective ways of ensuring an organization produces the best results is by investing in its people.

Reference List

Froot, KA 2008, Foreign Direct Investment, Univesity of Chicago , Chicago.

Jeyarathmm, M 2008, Strategic Management , Global Media, Mumbai, India.

Walker, DM, Walker, TD & Schmitz, JT 2003, Doing Business Internationally: The Guide to Cross-Cultural Success, McGraw-Hill Professional, New York, NY.

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