Performance Indicators in Context

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Performance Indicators in Context

38TH ANNUAL CONFERENCE, Santiago, Chile, 15-19 March 1999

WP No. 171

Performance Indicators in Context

Introduction

It was decided at Toulouse that Performance Indicators should continue as an agenda item for SC4. The Irish association (IATCA) were tasked with developing the WP.

Discussion

Human Resource Management – A Definition

“Human Resource Management (HRM) concerns the human side of the management of enterprises and employee’s relationship with their firms. Its purpose is to ensure that the employees of a company are used in such a way that the employer obtains the greatest possible benefit.”


HRM Philosophy

The HRM philosophy espouses the view that conflict between the interests of the employer and the employee are unnecessary, that ultimately what is good for the enterprise is good for the employees. This is known as “the unitarist view”. An alternative view is where there is an employer and employees by the very nature of the relationship there must be conflict. This arises because the primary objective of the employer or manager is to get the highest possible productivity out of the employee for the least possible cost while the employee tries to secure the best possible terms and conditions of employment.


HRM IN ATM

Traditionally air traffic service providers were located in the civil service and in recent years in the wider public sector .In more recent times “commercialisation and privatisation” have become major issues for air traffic management professionals and their representative bodies. The pressure on service providers to become more aware of the needs of their customers, the airlines, and the competitive environment in which these airlines exist has resulted in “change management” becoming the oft heard buzz words in the ATM industry.

The “necessary” change is often demanded by the customers, the target areas identified by the corporate accountants and internal auditor and the mechanisms whereby change can be brought about identified and decided upon by the Human Resources Director or Manager. This change can also lead to what Drucker calls “conflict between professional and bureaucratic management”. In our context this means between managers with an ATM / ATC background and those with an accountancy or HRM background.

Below, before dealing with performance indicators per se, I outline some of the approaches which HRM specialists will apply in order to “change the culture of an organisation”.


CORPORATE MISSION STATEMENT

One of the first objectives in changing the culture of an organisation is to get all concerned to accept a common goal towards which “we all must strive”. A simple example of a typical corporate mission statement is “To be an industry leader and world class service provider”. Who in any organisation can possibly object to such an ambition? If we accept that the goal is a desirable one, then surely, we must all work together to attain it. Already we are beginning to “buy into” the “unitarist approach”.


CORPORATE COMMUNICATIONS POLICIES

In order to ensure that the “corporate mission” is known to every employee it is necessary that strong communications channels are established throughout the enterprise. Communication should be constructed in a “top down fashion” with information “cascading from the board-room to all levels of the company”. This kind of information can be conveyed through newsletters, bulletin boards, open fora, where senior managers address the employees, team briefing and group training. The messages must be simple and constant. For example: constant highlighting of areas where “our” costs are out of line with others. Constantly repeating: the need for commitment to the organisation, the establishment of the direct superior as the natural provider of information and guidance.

Apart from the “downward cascade” there is often established a reverse channel where information is fed in from staff to senior management. The preferred avenues for conveying such information is not through representative bodies such as professional associations or trade unions but rather through “joint staff management consultation fora” where the staff representatives may be selected by line management, “quality circles” where problems are identified and solutions proposed, again often outside of the normal representative machinery, or staff suggestion schemes where for relatively small outlay staff can often be instrumental in solving major problems for management.

Schemes such as “quality circles” and “employee suggestion schemes” can be considered as part of “employee involvement” or E .I. schemes. Further development of such approaches included ESOPS, (Employee Share Option Schemes) and Performance Bonuses.


THE EFFORT BARGAIN

Frequently part of the “change agenda” will be the adoption of such concepts as, Total Quality Management (TQM), which in effect is seeking to obtain maximum flexibility from the work force. Such productivity increases change what has been described as the “effort bargain”. In other words, an individual has been hired by the employer to supply his or her work .The nature and intensity of the work is either outlined in the contract of employment or is set by “custom and practice” or is regulated by the employees themselves through various means.

TQM “requires from employees the acceptance of responsibility for the success of the business, a willingness to contribute to problem solving, flexible attitudes and a preparedness to undertake a wide range of tasks” ( Graham & Bennett, p. 130). Again this is exhibiting the unitarist approach.


Quality Champions

“People, who are known, liked and trusted are far more likely to be believed than any amount of management exhortation” in other words the gospel as contained in the mission statement and the path to heaven as contained in the corporate communications policy is to be spread by the disciples of the company. This has many implications for all employees but particularly for “professional workgroups” such as air traffic controllers because inevitably there will come a conflict between what is perceived by management as being in the interests of the company (remember we are talking about a commercial environment) and what controllers perceive as being required in order to maintain their professionalism.


PERFORMANCE INDICATORS

It is surely no coincidence that the first policy document which CANSO (Civil Air Navigation Service Providers) set about drafting concerned P.I.s. Nor is it a coincidence that the revised Eurocontrol Convention sets up a PRC and PRU. The primary target of performance indicators is invariably “professional workgroups” Why? Because of their cost to the employer relative to other “human resources”.

Perhaps the greatest victims of performance indicators to date are, the health and education professionals in the U.K. A recognised expert with regard to P.I.s and their impact on people and work practices is Prof. Roger Seifert who has written extensively on the subject. What follows is taken in the main from his work.

“One major feature of P.I.s is that they tend to concentrate on the measurement of inputs to the service (the number of radiographers), and that the measurement process is primarily concerned with performance. In this way performance itself becomes the ground upon which battles over pay, status, and image are fought both within the profession and its organisations and with outside groups.

At the same time, new powerful line management structures are evolving ways, which may well exclude the profession from the control mechanisms which determine decisions upon which the future of the profession depends. A taste of this conflict can be experienced when comparisons are made between the ideologically biased views of some general managers and the careful and caring considerations of practicing radiographers” ( Seifert 1989).

One could quite easily substitute air traffic controllers for radiographers throughout the above passage. How often has it been said by controllers, that we are “managed by bean counters who know nothing of air traffic control?”. How often have concerns been expressed by controllers’ representative bodies at the emphasis in various documents produced, by Eurocontrol, the European Commission, IATA etc on cost control rather than safety.

Seifert goes on to state that P.I.s “are a management technique designed to increase control over professional staff in order to reduce the power of professionals to resist certain changes”. The direction in which CANSO appears to be going, together with the establishment of the PRC and PRU indicate that “benchmarking” through the use of performance indicators on an international scale will become a major feature of ATM.

On a national level many states have seen the reorganisation of service providers with the establishment of SBUs (Separate Business Units) and productivity comparisons between each units through the use of P.I.s. When we read the ATM 2000 + Strategy Document there is again evidence of a desire to increase the influences of “market forces” on the industry (the “free market”). But the free market can only be, the best mechanism to ensure the distribution of resources efficiently and rationally, if it is imposed through the strengthening of controls over the providers of the service. These controls come from the weakening of their staff organisations (trade unions and professional associations), the bureau-cratisation and regionalisation of pay determination and the use of performance indicators.

Performance Indicators have been described as providing points and signals to areas which appear to merit further investigation. They enable managers to compare the performance of their service with that of others.


Implications of P.I.s

  • The targeting of outliers;
  • Self multiplication;
  • De-skilling, as quantitative measurement overwhelm traditional professional skills along with the development of new techniques and technologies;
  • Possible removal of supervisory management ( eg Volvo, Waterford Foods);
  • Greater use of work study;
  • Re-deployment of staff;
  • Flexibility of labour.

The use of performance related pay is often a spin-off.


The Approach To HRM Of Multi-National Corporations (MNCs)

MNCs have long known the benefits of a performance based management system as opposed to an administrative one (Marginson & Sisson 1995). In practice this means, responsibility and accountability, is devolved to lower levels of each organisation (SBUs) while at the same time central management retain control through an extensive web, of formal and informal performance measures and place a premium on the bottom line responsibility of individual business unit managers, for labour and other costs. MNCs now implement common working and employment practices on a trans-national basis. An example of a corporation using such a system is Danone.

The Single European Market facilitates such an approach. As Marginson & Sisson say, “the system of performance control adopted by corporate management covers not only measures of market and financial performance but extend to indicators of labour performance as well”. In the ATM context one can well imagine a parallel approach being developed through a combination of the PRC /PRU, ATM 2000+ and CANSO.


Prospects for employees

Marginson and Sisson suggest that in the context of the Single Market, which will be a reality in the aftermath of the single currency, the best hope is for employee representative bodies to negotiate a “set of floor conditions” in order to prevent under cutting. They specifically mention pilots and air traffic controllers as being obvious groups to establish such a framework. They go on to say that the success of such an approach depends on effective trans-national representative groups. Further, they suggest that the establishment of what is termed pattern bargaining is essential.


A Possible Response

Several studies, which include Spector & Beer ( U.S.), Hughes et al (U.K). and Joyce (Ireland) have indicated difficulties which exponents of HRM experience when attempting to introduce policies as outlined above into an ATC environment. These difficulties are encountered primarily because controllers form a “professional work group” and identification is with the group not the employing body. Therefore the ”unitarist” view of the world is unlikely to take hold in such an area.

Secondly air traffic controller membership of unions and professional associations is high and this again militates against the acceptance of the unitarist view. On the minus side the studies mentioned above all indicate that career structures for air traffic controllers are inadequate or non-existent outside of the operational area. This situation is not helped by the relatively small number of air traffic controllers who actually pursue a management career.

In a situation where one of the corner stones of a management policy may be to undermine the professional work group through the use of P.I.s, TQM, WCM etc. this attitude on the part of controllers leaves them extremely vulnerable.

Conclusions

There is no one clear solution to the problem. However controllers must seek to ensure that second career training, particularly management training, becomes as much a part of their conditions of employment as their professional training as controllers. Their representative bodies at both national and international level should make this issue a priority.

While not embracing the “common interest” or unitarist view, controllers’ bodies, should seek to have an in-put, into the strategic decision making of the employing body, through the creation of joint decision making councils, or what is termed in Ireland “the partnership forum”. However, for such a system to work, it requires political support. In the ATC context, this support may need to be both National and International.

Recommendation

This paper be accepted as Guidance Material.

Acronyms

CANSO: Civil Air Navigation Services Organisation

E.I.: Employee Involvement

ESOPS: Employee Share Option Schemes

HRM: Human Resource Management

IATA: International Aviation Transport Association

MNC: Multi-National Corporations

P.I.: Performance Indicators

PRC: Performance Review Council (Eurocontrol)

PRU: Performance Review Units (Eurocontrol)

SBU: Separate Business Units

TQM: Total Quality Management

WCM: World Class Manufacturers

References

Definition “Human Resource Management” (Torrington & Hall – Personnel Management 1995 edit).

Unitarism/Pluralism (Fox, Industrial Soc. & Industrial Relations 1996).

Ref. to Drucker – read Rose Industrial Behaviour (1981).

Personnel Management ( Graham & Bennett, Personnel Management, 1996).

Professional Work Groups -ref. Spector& Beer “An Overview of HRM” (1982).

Hughes et al. “Technical Change in ATC”(1988).

Joyce, “Managing Change in the Irish Aviation Authority & Aer Rianta” (M.A. Thesis 1998).

Prof. Roger Seifert “Performance Indicators in the National Health Service” (UK); Marginson & Sisson, “The Approach of Multi-National Corporations to HRM” (1996).

Last Update: September 28, 2020  

March 10, 2020   136   Jean-Francois Lepage    1999    

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