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UNIVERSITY OF PALERMO

MODEL BASED PUBLIC PLANNING, POLICY DESIGN AND MANAGEMENT
Vincenzo Vignieri
RESEARCH PROJECT
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A DYNAMIC APPROACH TO PERFORMANCE MANAGEMENT SYSTEM ! IN ACADEMIC INSTITUTIONS!

Aims and objectives This research aims to analyze how the introduction of Performance Management System (PM) based on System Dynamics (SD) models, into a dynamic and complex context, may allow academic decision-makers to pursue a sustainable performance development. How to develop a deep knowledge of the relevant environment? How to get a dynamic view of an academic institution? How to identify key-performance drivers? How to integrate monetary measurements of the performance with others related to an intangible performance? How to manage the processes of accumulation and depletion of strategic assets? The core of this research project consists in giving satisfactory answers to these questions by means of a dynamic approach to the performance management.

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A short description of the context The improvement of efficiency and effectiveness in public administration management has always been one of the most important issues when talking about the reformation of the way in which public administrations are run. The spread of a trend of thought called New Public Management has brought attention to the question concerning the relation between sustainability and the management of public administrations. It is a common idea to consider universities, among the public administrations, as pillars of our society because of the type of services supplied . Therefore, the analysis and understanding of how to manage university performance are two interesting and innovative aspects to be considered. There are other reasons which justify the adoption of effective instruments for the performance management in academic institutions: • the competitiveness between Italian and international universities; • the budgetary restrictions imposed by national Governments; • the new ministerial fund allocation mode; • the increasing importance of academic researches oriented to the market exchanges; • the investigation of the factors which influence the performance; • the investigation of the strategies that academic institutions can carry out.

The reform passed in december 2010 has introduced a number of interesting challenges in the italian university system, particularly in the areas of researches, teacher’s career and status, and teaching order. It has introduced some significant changes such as a management network which links universities; a new governance structure; an evaluation system; an incentive of research quality inside and outside universities (internationally); the increase of efficiency in the management process and economic balance. In this scenario we wonder how is it possible to manage the dynamical complexity? How to manage the strategic change? How is it possible to get a sustainable development?

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Motivations for research In order to support an academic performance improvement in a sustainable development perspective, it appears necessary to (re)design strategic PM systems. Since an academic institution is characterized by a number of factors of specific complexity which are, in turn, embedded in complex and dynamic contexts, it seems therefore necessary to introduce into universities a framework capable to support and feed the double loop learning process in order to allow decision-makers to successfully steer universities towards their goals achievement. Actually the “traditional” PM Systems allow an improvement of the results as regards customer satisfaction, the use of resources, accountability, the focus on the results rather than on the procedures, business communication and service quality. However, it seems to be unable to understand and manage the dynamic complexity of the current university system. Therefore, it is necessary to introduce the right tools and techniques to implement the strategic PM with methodologies capable to cope with non-linear relations of the relevant system and the temporary delay between causes and effects and secondly to create a balance between a long-term strategy and a short-term management. In brief, this means to manage a system characterized by complexity and dynamism. As reported in Bianchi (2009) «The problems characterized by dynamic complexity do not necessarily involve a high number of variables, yet they are characterized by significant non-linear relations, remarkable delays between causes and effects and by a variable structure […] the systems which present the characteristics of dynamic complexity often show a sort of Policy Resistance». The System Dynamics could be applied to allow PM system to overcome or reduce this resistance.

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Methodology In order to fulfill the purposes of this research, the following tools will be used: • case-studies; • comparisons among sector legislations; • interviews to key-actors; • SD application.

According to the works quoted below, it seems that the SD Methodology can be useful to the PM systems in understanding the causes underlying the performance, as it allows a better identification of the key-performance drivers and the process of accumulation and depletion of the strategic assets. The SD is a methodology developed in the late 50s by Jay W. Forrester at MIT in Boston and it has been applied in several contexts such as physics, medicine, biology and economy because it is suitable to explore the dynamic complexity of the systems by means of models which interpret reality and the observed phenomena. Companies and public organizations represent particularly complex social systems, therefore it is possible to apply the SD principles to them. The System Dynamics bridges two banks which have been traditionally separated: the mathematics-oriented analysis applied to business problems characterized by an optimization-oriented approach, and the actual business reality which requires nonunivocal answers, that is to say some reading keys which allow to understand and treat the complexity of the phenomena properly (Bianchi, 1996). The most important researches about the System Dynamics started in the 60s. Some of the most recent contributions were given by Bianchi (1996), Sterman (2000), Bianchi (2000), Warren (2008), Bianchi (2009). A System Dynamics model is useful if it is applied in dynamic and complex contexts. It doesn’t suggest great solutions, yet it allows to understand the dynamics and structures of the relevant systems through a comparison between the investigated reality and the adopted diagnosis models. The System Dynamics models focus on the outlook and temporal trends of the variables observed in relation to the adopted policy. Their strength consists in the fact that decision-makers are supported to get a deeper insight of the relevant system and they are led to modify their mental models during their learning process. The SD is a representation-oriented methodology, in a selective manner, of the relevant components of a system and allows to focus the attention on the multidimensionality of the performance without neglecting the intangible aspects. The combination of SD models and PM system is particularly profitable in order to get information about the state of goal achievement, if a system of indicators (the key performance drivers are the most important ones) is addressed to monitor the performance of the key-variables. The Dynamic PM (DPM) applied in academic contexts has been the topic of many researches. Barlas and Diker (1996) set up a simulation model to test long-term strategies applied to the main activities carried out in an academic institution, such as teaching, research and professional projects. In his article published in the System Dynamics Review, Galbraith (1998) investigates the Australian university system. Through the use of simulation models, He shows how the differences in the research productivity in different units can influence and determine the allocation of research resources. Kennedy and Clare (1999) emphasized the contribution that SD can give to the investigation of the resource allocation problem inside the universities. Barlas and Diker (2000) carried out researches aiming to set up an SD model that could be used to test university management systems.

Cosenz (2011) applies the DPM to UNIPA. This application focuses on 5 final products supplied by the university: scientific publications, patents and spin off, research projects, conventions and agreements, calls for Ph.D. The aim of this study is to see how an improvement in the performance of research area can lead to the acquisition of a substantial amount of resources coming from the Ministry’s ordinary financial funds. Thanks to a pilot project started in cooperation with the Rectorate and the CEO office board of the University of Palermo, Cosenz and Bianchi (2013) have emphasized how the combination of SD models and PM systems supports decisionmakers to better recognizing and measuring the drivers’ performance. Particularly, their study aims to demonstrate how tracking the feedback relationship between endresults, performance drivers and strategic assets in academic institutions can significantly improve the ability of its decision-makers to manage and measure the organization’s performance. In my degree thesis (2013) the DPM was applied to the UNIPA by means of a casestudy. The developed SD model proved to be very useful under different aspects: 1) to analyze the management process carried out to supply the “Nuovo Corso di Laurea” (New Degree Course) product; 2) to explicit the performance drivers in the different sectors involved in management; 3) to understand how this product influences the performance of UNIPA in terms of admissions, taking into account the policies adopted by competitors. The opportunity to use a dynamic approach – based on simulation models in the academic performance management - can ensure better achievements than the ones provided by the traditional systems of P&C, in terms of awareness of the relevant environment and the determinants of the results. The explanation of the performance drivers allows to constantly show the state of the results and give a new point of view when analyzing the performance determinants. In a dynamic perspective performance drivers are expected to be analyzed in a short-term period, in order to identify immediately the weak signals of change and consequently modify the decision taken in the planning phase, following a logic based on the feedforward.

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Expected results The aim of this project is to demonstrate how the application of the SD may support PM system, since it promotes the combination of planning and short/longterm control, and also the combination of strategic and operative management. Furthermore, it promotes the strategic double loop learning process, which could be used to develop an accurate knowledge of the relevant environment in which the company is set. Such a knowledge will allow decision-makers to adopt a perspective oriented to influence the strategic assets dynamics.!

REFERENCES

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BARLAS Y., DIKER G.V.,1996, Decision Support for Strategic University Management: A Dynamic Interactive Game, Proceedings of the 14th international System Dynamics Conference, Boston, USA. BARLAS Y., DIKER G.V., 2000, A Dynamic Simulation Game for Strategic University Management. Simulations and Games, vol. 31, n.3, Sage Publications Inc. BARNABÈ F., 2004, From Ivory Towers to Learning Organizations: the Role of System Dynamics in the “Managerialization” of Academic Institutions, In Proceedings of 22th System Dynamics International Conference, Oxford, England, pp. 40-59. GALBRAITH P.L., 1998, System Dynamics and university management, in System Dynamics Review, n. 14 (1), pp. 69-84. BIANCHI C., 1990, Il controllo dei costi di gestione e sviluppo delle risorse umane ed informatiche. Talune applicazioni del controllo di gestione all’area “Organizzazione e Sistemi”, Giuffrè, Milano. BIANCHI C.,1996, Modelli contabili e modelli dinamici per il controllo di gestione in un ottica strategica, Giuffrè, Milano. BIANCHI C., 2001, Processi di apprendimento nel governo dello sviluppo della piccola impresa. Una prospettiva basata sulla integrazione tra modelli contabili e di system dynamics attraverso i micromondi, Giuffrè, Milano. BIANCHI C., 2004, Sistemi di programmazione e controllo per l’azienda “Regione”, Giuffrè, Milano. BIANCHI C., 2009, Modelli di system dynamics per il miglioramento della performance aziendale. Verso un sistema di programmazione e controllo per lo sviluppo sostenibile, IPSOA. COSENZ F., 2011, Sistemi di governo e valutazione della performance per l’azienda “Università”, Giuffrè, Milano. COSENZ F., BIANCHI C., 2013, Designing Performance Management Systems in Academic Institutions: a Dynamic Performance Management View, paper presented at the 2013 ASPA Conference, New Orleans, March 15 – 19. HOOD C., 1991, A public management for all seasons, in Public Administration, 69, pp. 3-19. KENNEDY M., CLARE C., 1999, Some issues in building System Dynamics Model for improving the Resource Management Process in Higher Education, in Proceedings of the 17th System Dynamics Conference, Wellington, New Zeland. KENNEDY M., 2000, Towards a Taxonomy of System Dynamics Models of Higher Education, Proceedings of the 18th System Dynamics Conference, Bergen, Norway. STERMAN J., 2000, Business Dynamics. System Thinking and Modeling for a complex world, Irwin/McGraw Hill, Boston. WARREN K., 2008, Strategic Management Dynamics, Wiley.

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Castelbuono, 2/11/2013

Vincenzo Vignieri