Using OLAP to Improve Organizational Effectiveness – Part 2
This is the second in my series of 3 posts on using OLAP tools to improve the effectiveness of organizations. In Part 1 I discussed some background concepts and terminology. In this part, we’ll talk about some specific examples of how OLAP can have an impact in this area.
OLAP’s Impact on Organizational Effectiveness
How can an OLAP tool help improve an organization’s performance as measured against its objectives? Answering this question requires a greater understanding of how strategies and tactics are implemented within organizations. I’ll use a model of organizational effectiveness developed by Michael Beer to illustrate the implementation of strategies and tactics.
The picture below shows a simplified version of a model of organizational effectiveness developed by Michael Beer (Note on Organizational Effectiveness, 10). Business goals and strategy influence and are influenced by top management. Management determines and implements the proper organizational design to achieve the organization’s goals. The design of the organization, in turn, influences human resources attributes of the organization. Finally, these HR attributes directly impact organizational effectiveness.
This simplified version of Michael Beer’s model is presented again below. Added to the model though, is the position of an OLAP tool in improving organizational effectiveness. OLAP technology exerts its influence on organizational effectiveness in three sections of the model:
- Management
- The Measurement and Reward Systems aspects of Organizational Design
- The Coordination aspects of Human Resources.
While the impact of OLAP technology in each of the areas above is slightly different, each is related and shares a common trait: improvement in communication. Utilizing OLAP tools to improve communication requires a broad audience for their utilization. OLAP tools are traditionally utilized by analysts and managers. In this model, front-line employees become critical users of the tool as well. The wide-scale availability of web-based OLAP tools makes such organization-wide implementations cost-effective.
OLAP’s Impact on Organizational Effectiveness through Management
OLAP’s impact on organizational effectiveness through management is accomplished along traditional lines. OLAP tools facilitate the achievement of organizational objectives by giving management a more complete picture of the organization and its progress toward those objectives. Returning to the Dell example above, an OLAP tool can provide management with a quick and easy means for determining how employees are progressing on their required courses. Departments lagging behind on completing courses could be set back on track.
OLAP’s Impact on Organizational Effectiveness through Coordination aspects of Human Resources
Michael Beer describes coordination as it relates to organizational effectiveness as:
“The extent to which employees coordinate their decisions and actions across departments, functions, businesses, and national borders to improve the enterprise as a whole.” (Note on Organizational Effectiveness, 6)
OLAP’s ability to impact organizational effectiveness from a coordination standpoint stems from its ability to align the actions of individuals at all levels of the organization with the organization’s mission. This is accomplished by demonstrating how individual performance “rolls-up” to organizational performance.
A primary purpose of organizational objectives is to prompt employee coordination of actions and decisions by providing a common target. By relating these organizational objectives to individual employee actions, coordination of effort is increased. The 90% customer satisfaction objective referred to earlier provides an example. A well-designed OLAP cube could demonstrate to employees how quicker call resolution with no complaints leads to higher overall customer satisfaction. If management has done a good job setting objectives that are aligned with the mission of the organization, employees can now see how their effort leads to improved organizational effectiveness. This increased visibility of individual performance and its relationship to organizational performance should lead to increased coordination of effort.
OLAP’s Impact on Organizational Effectiveness through Measurement and Reward Systems
The greatest impact OLAP technology can have on organizational effectiveness is through its impact on measurement and reward systems.
OLAP’s Impact on Measurement and Reward Systems
A group of theories known collectively as Expectancy Theory stress the connection between effort and performance, performance and reward, and motivation. As the name implies, the concept of expectation is Important to Expectancy Theory. An expectation is an individual’s belief that an action on their part will lead to some particular result. The most widely known version of Expectancy Theory, the Vroom Model, stresses two important expectations that effect employee motivation:
- The expectation that effort will lead to performance
- The expectation that performance will lead to reward (Vecchio, 185).
OLAP technology can help improve employee expectations in both areas as illustrated below.
Effort and Performance
OLAP technology can be utilized to reinforce the connection between effort and performance to employees. The Vroom model postulates that the clearer the connection between employee effort and performance, the more likely it is that individuals will exert the desired effort. By emphasizing this connection, an OLAP tool can contribute to increased effort.
An OLAP cube showing performance at an individual employee level provides a powerful link between effort and performance. For instance, a company in a situation similar to the Dell example above may choose to implement a cube showing:
- Total technical support calls
- Total calls requiring a call-back
- Total number of complaints
- Number of minutes to resolve a call
- Customer survey ratings of support representative performance.
Each of these measures could be tracked at an individual employee level across a variety of dimensions. The OLAP tool could then be utilized to communicate to employees:
- Their level of individual performance
- Their performance compared to targets and to organization averages.
With such specific, tangible measures, individuals would have immediate evidence on how their daily efforts lead to performance.
The link between effort and performance is also related to the coordination aspects of effectiveness covered above. As mentioned, an OLAP tool could be utilized to demonstrate to employees how their individual performance rolls-up into overall organizational performance.
Performance and Reward
OLAP technology can also be utilized to reinforce the connection between performance and reward. In addition to emphasizing the connection between effort and performance as shown above, the Vroom model also stresses the importance of employee expectations regarding performance and reward. Employee motivation may be adversely affected if employees do not believe that achieving a level of performance will result in reward. OLAP tools can contribute to improved organizational effectiveness by making it clear that designated levels of performance will indeed lead to associated rewards.
While this capability can provide a powerful incentive, it is critical that rewards be structured properly. Again, the main function of an OLAP tool in such a situation is to provide clear communication to employees of the link between performance and reward. If such a link does not exist, that is if performance does not lead to reward, utilizing an OLAP tool to communicate information on a non-existent link may be detrimental.
In the customer support example, an OLAP cube could be designed displaying customer survey ratings of an individual support person’s performance. A graphical indicator could show the level required to receive a performance bonus.
An employee could quickly see how increasing their performance leads to the achievement of the bonus. In this manner, an OLAP tool can provide a clear indication of the link between performance and reward.
Motivation
Overall, the Vroom model makes the following point: the more clear it is to each employee that Effort will lead to Performance and that Performance will lead to Reward, the higher the level of employee motivation. The role of OLAP technology in this process is to clarify to individual employees the relationship between Effort and Performance and between Performance and Reward.
Next Post…
In the next post, I’ll wrap up with a discussion on leveraging OLAP tools to improve employee Performance Feedback.
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[...] of organizations. In Part 1 I discussed some background concepts and terminology. In Part 2, I talked about some specific examples of how OLAP can have an impact in this area. In this post, [...]