Montefiore Medical Center is the University Hospital and Academic Medical Center for the Albert Einstein University (Montefiore Medical Center, 2005). It currently ranks among the top 1% of all United States hospitals for investments in medical innovation and cutting-edge technology (Montefiore Medical Center, 2005). Located in the Bronx, many citizens rely on Montefiore’s medical service. Fortunately, the center is dedicated customer service, boasting their ‘State-of-the-Art’ and ‘State-of-the-Heart’ approach in patient care (Montefiore Medical Center, 2005). The center is also known for its distinguished centers that have focus on illnesses such as cancer and heart diseases. Furthermore, it also boasts dedication to family centered care.
The University Hospital of Albert Einstein University may be functioning well today, being the center of latest medical technologies and recognized as being one of the most important hospitals in the United States. However, if we track Montefiore’s journey in reaching the top, we can see that it was not easy for its management.
Montefiore Medical Center had experienced two financial crises in the past – one in 1986; and again in 1995. The financial crisis in 1995 was resolved through promoting a new hospital director, downsizing as many as 150 management positions, and focusing on quality care.
The downsizing part was the start of change for Montefiore. It started the formulation of two strategies, which are: Be “all things to some people”; and be “some things to all people”. In other words, the center decided to provide complete service to some population (children, women, and seniors), while providing specialty treatment to all kinds of patients.
The center also adopted the GRIP approach. It means: Grow volume and market share; Rebalance academic and clinical staff; Infrastructure upgrade facilities, information systems and technology, and; Performance, setting targets and achieve them. Through that approach, it has done a series of reorganization and decentralization. However, the biggest challenge yet was the implementation of strategy.
The Balance Scorecard was the strategy implemented by Montefiore in order to manage the performance of its employees. It was implemented because of the problem aligning the medical center’s various constituents or employees to the new strategies. The company believed that this approach would help them guard against sub-optimization, and improve management effectiveness through its real time decision making that would help them adjust to market changes.
What exactly is the Balanced Scorecard? It is basically a performance measurement strategy that not only focuses on the financial aspects of the organization, but on non-financial matters as well. Its non-financial capability focuses on customer satisfaction, internal business process, and learning and growth (Wongrassamee, Gardener and Simmons, 2003). Its objective is to provide managers a complete view of the business and allow them to focus on critical areas (Wongrassamee, Gardener and Simmons, 2003). The scorecard works as it translates a business area’s mission and strategy into tangible objectives and measures. Measures are balanced between the internal and external context of its focus attributes, and furthermore, balanced between the measurements of the outcome and perceived future improvements (Wongrassamee, Gardener and Simmons, 2003). It translates a business area’s mission and strategy into tangible objectives and measures. Measures are balanced between the internal and external context of its focus attributes, and furthermore, balanced between the measurements of the outcome and perceived future improvements (Wongrassamee, Gardener and Simmons, 2003).
The implementation of Balanced Scorecard has several advantages. First, it gives visibility to worker performance in relation to strategy (Gautreau and Kleiner, 2001). This is the reason why Montefiore implemented it in the first place. With it implementation, Montefiore had been able to identify the employees who performs the best and performs the least. Comments were given to department head’s scorecards, which gave the center the opportunity for improvements.
Another advantage of the Balanced Scorecard is that it allows management to reward performance that is in-line with strategy and caution/correct performance that is not (Gautreau and Kleiner, 2001). Montefiore also reaped this advantage. Charles Balancia, head of the facility support departments, stated: “I determine the salary raises by performance against the targets and hope to be able to award bonuses for excellent performance” (Kaplan and Inamdar, 2001).
Finally, another advantage of the Balanced Scorecard strategy implementation is that it encourages employees to act in accordance with desired goals of the company (Gautreau and Kleiner, 2001). In the case of Montefiore, most employees were not informed about the implementation of the Balanced Scorecard. They just schedule employees for exams and then subject them into evaluation. However, those who know about the system struggle to make a difference and to perform better than they should because they are afraid that their job is in jeopardy (Kaplan and Inandar, 2001).
On the contrary, the Balanced Scorecard has also some disadvantages. Disadvantages include: the difficulty of automating the system; the difficulty of determining performance measures; considerable time and amount needed for its update needs; difficulty to implement; and lack of guidance on how to improve performance (Gautreau and Kleiner, 2001).
Despite the advantages the Montefiore reaped from the Balanced Scorecard system, they were also hit by the number of disadvantages that it brings. First one, in reference to the case study of Kaplan and Inandar (2001), Montefiore had difficulties implementing the strategy. It took them some time to integrate it with the GRIP approach. Furthermore, employees were kept in the dark about the implementation of the strategy. Many employees interviewed in the case study wished they were informed about the system, and that they were able to participate with it.
The Balanced Scorecard implementation covered in the case was still in its early phase and some of the employees are still unconvinced with what it can do. Furthermore, there was still lack of evidence that the center has guidance in improving the performance of those who were subjected to the scorecard method. It still lacks strategic direction, organizational structure and performance management coherence and needs to be reevaluated.
COMPETITIVE ADVANTAGE LIES IN RESOURCE AND CAPABILITY DEVELOPMENT
Instead of merely adjusting its position as a medical service provider, Montefiorte instead tried to improve its allocation of resources and the capability development. During its financial crisis in 1986, Montefiore was still a medical facility that focuses more on positioning rather than on resources or improving capability. It was due to this crisis that the company was forced to do something to improve its capability as a medical service provider. A vision was developed for the company to give the employees the direction they need. But the development of a vision was not enough and soon after a few years, another financial crisis hit the facility. It was this time that the newly elected president decided to take new measures to ensure the future of the company. Resources were taken as the priority in order to save some costs for the company. Many managers were fired because of the downsizing campaign that the president launched.
Further, the new leadership implemented means to develop and improve the capability of company. The GRIP approach was implemented, which led to the implementation of the Balanced Scorecard System. Because of these changes that were applied to Montefiore, employees were directed by the visions and main strategies of the company, and the management had the chance to evaluate the performances of the employee and develop directions for improvement.
The management committee of Montefiore did the right thing by focusing more on resource allocation and capability development, rather than positioning. The GRIP approach was a good move because it created a goal for the management of the companies, and means to control the employee. With the implementation of the Balanced Scorecard, performances of employees became a huge matter. Many were giving out their best just to pass the tests, and not to lose their job.
Montefiore is not a simple organization that focuses on building brands. Of course, it targets categories of customers, but mere positioning of its services may not be enough since the company has many employees and many departments to manage. A mere financial management approach will not work because the business that Montefiore is in is more than just financial matters. It involves real people that deal with real working conditions. Such people experience different things everyday, and are motivated differently by different factors. Not focusing on people undermines and degrades the productivity of the company because there will not be any improvements to develop. People are considered as resources and their performances contribute to capability development. Montefiore was on the right track when it decided not just to focus on market positioning, but also on people and performance measures and improvement.
Although Montefiore may not be as huge as the popular multinational corporations in the United States, its organizational structure is complex enough and requires strategies other than positioning of services. The introduction of Porter’s 5 forces taught the business world that there is more than the 4Ps of marketing. Ma (2004) stated that the competition is now in the global scale, and hints that explaining competitive advantage in the national context may already be obsolete. To make up for the limitations of competitive advantage models of the past such as Porter’s theory, Ma (2004) integrated different theories and created the 4Cs. Here, views of pro-coordinated marketing proponents such as Levitt, Ohmae and Yip are integrated with competitive advantage theory of Porter. This new 4C model features integrated attributes such as: creation and innovation; competition; cooperation; and co-option.
During the financial management crisis of the company in the mid-nineties, the company did not focus on any of those attributes, but only on few strategies on its service positioning. The experience of Montefiore is one example that positioning alone will not work for a complex company like it.
Included in one of the attributes of Ma’s (2004) model is creation and innovation. That attribute is specifically focused in improving the resources and capability of an organization. The attribute does not only include elements of positioning such as new product development or new market entry, but also includes other concerns such as effective organizational structures, organizational learning, superior corporate culture, and effective human resource practices.
Balmer and Greyser (2002) stated that the key elements in corporate identity are culture (sub cultures), strategy, structure, communication, performance, perception. These are important factors in improving the internal function of a complex organization. The implementation of Montefiore’s GRIP approach created the opportunity to shape a specific culture for the organization because employees are directed to what they should achieve and what they should not. Further, this development is measured and managed by the Balanced Scorecard, which created the opportunity to improve the performance of each employee. The Balanced Scorecard approach takes into consideration the management of human resource as it detects efficient and inefficient employees.
On the other hand, positioning elements may be related to branding, which include: the branding covenant, and communication plus other identity elements (actual, communicated, conceived, ideal and desired identities). While this is also an important element for competitive advantage, it cannot be a means to an end for a complex organization such as Montefiore. Small, simple organizations may operate smoothly with positioning alone simply because there is less bureaucracy in their organizational structure, they have fewer employees and they have less service products. Even with only two managers, they can monitor employee performance on a regular basis, without the need of any special measurement strategy. However, Montefiore is not small and simple. It is rather huge and complex. Focusing on positioning alone will overlook the resources and the performance of its employees. The implementation of strategies that directly target improvement and human resources addresses organizational complexity of Montefiore – a basic right move for gaining competitive advantage.
THE ISSUE OF CASUAL AMBIGUITY
Casual ambiguity refers to the “uncertainty regarding the causes of efficiency and effectiveness of an enterprise, when it is unclear which resource combination is enabling specific capabilities that are earning profits” (Potgietter and Bishop, 2003).
Often, casual ambiguity is viewed as a natural phenomenon within the organization, and is linked with defense against competitors or potential new entrants. However, the problem with this natural organizational state is that it keeps the management of the organization in the dark, unaware of the factors that contribute to the growth or downfall of the company. This was the case of Montefiore in the past. Before the Balanced Scorecard, the management has no idea which employees perform better, which departments are underperforming, and who deserves a salary increase or bonuses. Its whole organizational structure is shadowed by casual ambiguity. While this is a method that works for some, it did not work well for Montefiore due to its complex organizational structure. A good example was the 1995 financial crisis. The company was basically unaware that it already had a huge bureaucratic structure, and the company could have saved some money if only it let go some of the unimportant managers. This resulted shortly in downsizing because the new leadership realized that some of the managers are just costs that the company carries. It realized that by tearing down some of bureaucracy in the company, it will save some costs and recover from the financial crisis. This move also led to the realization that there is a need to restructure the company and monitor the performances of employees.
The Balanced Scorecard approach enabled Montefiore to have a value map, which they can use to determine the factors that would link to financial gain. Unlike before, the path is set for the company to develop plans that are well-guided by data, and not haphazardly executed. The value map helped the company identify cause-and-effect linkages among the environment, strategy, and operating plans that would deliver financial results.
The Balanced Scorecard also enabled Montefiore to measure patient satisfaction, and the cost, quality and cycle times of clinical processes.
Employees who were instructed about the map showed their appreciation on its purpose. One employee stated that the value maps are useful in identifying key drivers, specifically improved access, service delivery to patient groupings, and physician to patient satisfaction. On the other hand, another employee mentioned the contribution of the Scorecard emphasizing the need to collaborate with partners and to learn other disciplines. Department heads are becoming anxious of performing better than the rests, which is good in improving their performances. The same goes for employees within the different departments because salaries and bonuses depend on performance. In other words, through this transparent system, the path for Montefiore became clear, enabling them to set strategies that were based on actual data. Things would have been different if the company maintained its previous casual ambiguity setting.
The rationale behind why casual ambiguity is not applicable in today’s business world anymore is because of the rapid distribution of information and the abundance of communication technology. The creation of knowledge and its management has become important strategies for organizations operating in today’s information age. The realization of the need for knowledge management is a byproduct of the information age, where almost everyone can gain knowledge and information in a snap through the use of the Internet and other digital information devices. It is logical that in information-rich societies and industries, knowledge is the real resource. Managers of today argue for a “pull” approach to knowledge distribution (accessed when needed), rather than the typical “push” strategy. Sharing insights and learning among dispersed groups of professionals can yield great benefits in terms of customer satisfaction and speed of solution delivery. Managing the knowledge of organizations involve harnessing the intellectual capacity of employees by building appropriate business processes and supporting information systems. The failure to submit to this effort may endanger an organization’s status as they lag behind key competitors in resources, technologies and other important key points in their business. It would ultimately lead to defeat in the business war. Knowledge becomes a key factor in creating values as it helps the organization perceive the business environment and react to changes (von Foerster, 1995; Arthur, 1996).
Implementing strategies that promote transparency and generates knowledge may help the organization identify and create tacit and explicit knowledge. Tacit knowledge deals with or rooted in action and involvement in the particular context and has both cognitive and technical elements (Rowley, 2005). For instance, the skills of workers of retail companies in using important equipments, or the skill of the company in dealing with people is tacit knowledge. On the other hand, explicit knowledge deals with written or passed knowledge that can be easily expressed such as company rules, knowledge about the strategy of competitors, etc. The Balanced Scorecard that Montefiore implemented helped the company become knowledgeable in both tacit and explicit forms. Because of this, they are able to adjust their strategies and policies for the better, and avoid mistakes that could have caused by casual ambiguity.
The integration and implementation of knowledge management within the organization helps create models or improve the previous models in order to enhance organisational survival. Although the Balanced Scorecard was not meant to actually manage knowledge within Montefiore, it actually gave the company knowledge about different organizational situations and problems, and enables them to monitor and improve the performance of their employees. Through that strategy, Montefiore has been able to adjust their managerial actions that would best fit and work with the organization – that is because they have the data or knowledge to determine how to act accordingly. Casual ambiguity takes away the opportunity for the organization to obtain useful data that they can review and adjust. It is like keeping the organization in the dark and preventing it to do something for its improvement. That is why it is such a problem for managers who operate under such circumstances, mainly because they do not have any idea where to start or which problem to fix.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment