Performance management strategies: a competitive advantage for high technology firms: a study in ...

318 Pages·2006·1.88 MB·English

Performance Management Strategies:
A Competitive Advantage for High Technology Firms
A Study in the Okanagan Valley Region of British Columbia, Canada

A Dissertation submitted by

Sherry Lee Price, BA, MBA, CHRP

In partial fulfilment of the award of
Doctor of Business Administration,
Faculty of Business, University of Southern Queensland

2006
ABSTRACT
High technology firms are important to economic growth. A key factor in survival
and growth of these firms is the attraction and retention of qualified workers. This
exploratory research compares how high technology firms use performance
management strategies to gain a competitive advantage and, at the same time,
investigates the role of human capital. The eight high technology firms selected for
study are located in the Okanagan Valley region of British Columbia Canada and
each was pre-qualified as a small or medium-sized enterprise – two with 10 to 19
employees, four with 20 to 49, and two with 50 to 200. For this research, eight high
technology case studies were constructed from interviews with the firms’ managers.
Single and multiple case analyses examined performance management processes
from the perspectives of: integration with business strategy, application to business
performance, use by managers and supervisors, and linkage with human resource and
reward practices. The findings indicated that these firms have a well-developed
understanding of performance management but opportunities for executing strategies
with this process are weaker. As well, those firms with human resource managers
have a distinct employee focus, whereas those without emphasise firm performance.
The results also indicate that all firms view superior technology and customer service
as their common differentiating qualities; nevertheless, human capital was endorsed
as either a competitive advantage or an integral component. Regardless,
performance management has potential for greater role in the crafting and executing
of strategy than these firms employ. Further, although culture and change are high
priorities to these firms, none are capitalising fully on the cultural and change
elements inherent in performance management processes. The conclusions for
managers are threefold: a) to develop and implement formal strategic plans, b) to
integrate performance management and human resource practices, and c) to build a
human capital pool that sustains their firm’s competitive advantage. From a
theoretical perspective, the implications are twofold: a) performance management is
a bridge for executing strategic planning and realising a competitive advantage and b)
principal value of human capital is in its capability to sustain a firm’s competitive
advantage. The findings and their implications offer high technology managers and
future researchers a useful framework for growth and research respectively.
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CERTIFICATION OF DISSERTATION
I certify that the ideas, experimental work, results, analyses, software, and
conclusions reported in this dissertation are entirely my own effort, except where
otherwise acknowledged. I also certify that the work is original and has not been
previously submitted for any other award, except where otherwise acknowledged.

_______________________ ___________________
Signature of Candidate Date

ENDORSEMENT
_______________________ ___________________
Signature of Supervisor Date
_______________________ ___________________
Signature of Supervisor Date

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ACKNOWLEDGEMENTS
Completing my dissertation would not have been possible without the support of my
academic supervisors and colleagues, contributing participants, and family and
friends.

To begin, I would like to thank my principal supervisor, Dr. Ronel Erwee, for her
academic knowledge and insights, judicious recommendations, and her continual
encouragement. Other professors who contributed to the direction and quality of my
research include Dr. Bruce Millett, Janelle McPhail and Cec Pedersen.

My exploratory research would not have been possible without the willingness and
dedication of executive and management members from the following Okanagan
Valley high technology firms – Enquiro Search Solutions Inc., Identec Solutions, Inc.,
MicroSurvey Software, Inc., Northern Airborne Technology Ltd., Progressive
Solutions Inc., QHR Technologies Inc., Vadim Computer Management Group Ltd.
and Windward Software Inc. As well, Robert Fine, Executive Director, Economic
Development Commission in the Regional District of Central Okanagan, and his
colleagues from the Okanagan Science & Technology Council offered high
technology expertise and community guidance.

My current knowledge of performance management processes is a direct result of the
confidence entrusted to me by Richard Thomson, former Chairman and Chief
Executive Officer of The Toronto-Dominion Bank to design and implement
Performance Planning for executives and managers. My Performance Planning
Steering Committee members advanced my strategic knowledge and its integration
with performance planning – Ben Boyle (Executive Vice-President and Chief
General Manager), Robin Korthals (Senior Vice President), Ted McDowell
(Executive Vice-President), Urban Joseph (General Manager Personnel), and Arnold
Carpenter (Manager Organization and Evaluation). Thanks to the willingness of Ian
Rush, Chairman and Chief Executive Officer of Polysar Limited, performance-
planning processes were generously shared with my Performance Planning team by
his Human Resources team.

My Okanagan College Faculty of Business colleagues and friends, in particular Dr.
Yunke He and Heather Banham (Doctoral Candidate), have provided continuous
encouragement to me. As well, Brenda Ridgeley who transcribed the subjects’
interview sessions, Ann Gasior who provided editorial input to the case studies, and
Victor Darel who assisted with the dissertation format and graphics enhanced the
quality of my dissertation.

The encouragement of my friends and family permitted me the freedom to
investigate performance management applications in search of new theories. To my
spouse, Dr. John Price, my mother, Jean Jolliffe, and my sister Barb Wigle thank you
for believing in me.

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TABLE OF CONTENTS
Abstract.........................................................................................................................i
Certification of Dissertation.........................................................................................ii
Acknowledgements.....................................................................................................iii
Table of Contents........................................................................................................iv
List of Abbreviations..................................................................................................ix
List of Figures..............................................................................................................x
List of Tables..............................................................................................................xi
CHAPTER 1 – INTRODUCTION...........................................................................1
1.1 Background to research....................................................................................2
1.2 Research problem.............................................................................................5
1.3 Justification for research..................................................................................6
1.4 Methodology..................................................................................................10
1.5 Outline of chapters.........................................................................................11
1.6 Definitions......................................................................................................12
1.7 Delimitations of scope...................................................................................13
1.8 Conclusion.....................................................................................................13
CHAPTER 2 – LITERATURE REVIEW.............................................................15
2.1 Performance management..............................................................................16
2.1.1 Origins and growth.........................................................................................17
2.1.2 Competitive advantage opportunities.............................................................20
2.1.3 Performance management models.................................................................24
2.1.4 High technology applications.........................................................................29
2.1.5 Summary of performance management issues...............................................33
2.2 Human resource management........................................................................34
2.2.1 Changing business environment....................................................................35
2.2.2 Competitive advantages with human capital..................................................39
2.2.3 Relationship between performance management and human resources........41
2.2.4 Human capital challenges facing high technology firms...............................44
2.2.5 Summary of human resource management issues.........................................48
2.3 Prospects for high technology firms..............................................................49
2.3.1 Limitations of performance management......................................................49
2.3.2 Performance appraisal trends........................................................................53
2.3.3 Contextual factors for high technology firms................................................55
2.3.4 Summary of issues for high technology sector..............................................58
2.4 Development of conceptual framework.........................................................58
2.4.1 Components in conceptual framework...........................................................59
2.4.2 Interrelationships among components in conceptual framework...................60
2.5 Conclusion.....................................................................................................61
2.5.1 Identification of gaps in literature..................................................................61
2.5.2 Key research issues........................................................................................62

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CHAPTER 3 – METHODOLOGY........................................................................64
3.1 Justification for the paradigm........................................................................64
3.1.1 Positivism.......................................................................................................65
3.1.2 Realism...........................................................................................................66
3.1.3 Critical theory................................................................................................66
3.1.4 Constructivism...............................................................................................66
3.1.5 Participatory...................................................................................................67
3.2 Justification for methodology........................................................................69
3.2.1 Quantitative and qualitative traditions...........................................................69
3.2.2 Rationale for the case study method..............................................................72
3.3 Research design..............................................................................................74
3.3.1 Purposes.........................................................................................................74
3.3.2 Conceptual context.........................................................................................75
3.3.3 Research issues..............................................................................................75
3.3.4 Methods..........................................................................................................76
3.3.5 Validity...........................................................................................................77
3.4 Criteria for case selection...............................................................................78
3.4.1 Unit of analysis..............................................................................................78
3.4.2 Purposive case selection.................................................................................78
3.4.3 Sampling framework......................................................................................79
3.5 Data collection process..................................................................................81
3.5.1 Case study protocol........................................................................................81
3.5.2 Development of interview process.................................................................83
3.5.3 Other sources of information.........................................................................86
3.6 Pilot study process.........................................................................................86
3.7 Data analysis procedures................................................................................87
3.7.1 Preparation and treatment of data..................................................................88
3.7.2 Individual firm analysis..................................................................................88
3.7.3 Cross-case analyses........................................................................................89
3.8 Research quality.............................................................................................90
3.8.1 Construct validity...........................................................................................91
3.8.2 Internal validity..............................................................................................92
3.8.3 External validity.............................................................................................92
3.8.4 Reliability.......................................................................................................92
3.8.5 Quality control test.........................................................................................93
3.9 Research ethics...............................................................................................95
3.10 Conclusion.....................................................................................................96
CHAPTER 4 – FINDINGS AND DISCUSSION..................................................98
4.1 Overview of data analysis..............................................................................98
4.1.1 Individual case analysis.................................................................................99
4.1.2 Cross-case analyses........................................................................................99

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4.2 Actual high technology case sample............................................................100
4.2.1 Geographical location..................................................................................101
4.2.2 Numbers of employees.................................................................................101
4.2.3 Growing high technology firm.....................................................................101
4.2.4 Understanding performance management....................................................103
4.2.5 Willingness...................................................................................................103
4.2.6 Researcher’s time and finances....................................................................103
4.3 Research issue 1 – How do high technology firms in the Okanagan
Valley region define performance management?........................................103
4.3.1 Initiation of performance management process...........................................104
4.3.2 Objectives of performance management process.........................................108
4.3.3 Performance management components........................................................113
4.3.4 Significant issues and enhancement plans...................................................120
4.3.5 Summary of findings for RI 1......................................................................123
4.4 Research issue 2 – How do high technology firms in the Okanagan
Valley region describe their competitive advantage?..................................124
4.4.1 Types and scope of competitive advantage..................................................124
4.4.2 Role of human capital in building a competitive advantage........................128
4.4.3 Contribution of performance management for building a competitive
advantage.....................................................................................................132
4.4.4 Summary of findings for RI 2......................................................................136
4.5 Research issue 3 - How has business growth affected the development
of a productive workforce in high technology firms in the Okanagan
Valley region?..............................................................................................136
4.5.1 Effects of growth on workforce development..............................................137
4.5.2 Employee turnover analysis.........................................................................140
4.5.3 Summary of findings for RI 3......................................................................142
4.6 Research issue 4 - What is the perceived relationship between
performance management and human resource practices?..........................142
4.6.1 Supportive human resource policies and programs.....................................142
4.6.2 Relationship between performance management and human resources......146
4.6.3 Summary of findings for RI 4......................................................................150
4.7 Research issue 5 - How do key processes in the firm’s performance
management support its competitive advantage?.........................................150
4.7.1 Components of strategic management process............................................150
4.7.2 Role of strategic planning in performance management..............................154
4.7.3 Feedback linkages in the performance management process......................158
4.7.4 Summary of findings for RI 5......................................................................162
4.8 Research issue 6 – What have high technology firms in the Okanagan
Valley region learned from their experiences with performance
management processes?...............................................................................163
4.8.1 Lessons learned from performance management process............................163
4.8.2 Difficulties encountered with performance management process...............166
4.8.3 Recommendations for future changes to performance management...........169
4.8.4 Summary of findings for RI 6......................................................................173
4.9 Conclusion...................................................................................................173
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CHAPTER 5 – CONCLUSIONS AND IMPLICATIONS.................................176
5.1 Research problem and issues.......................................................................176
5.2 Performance management in high technology firms...................................177
5.2.1 Initiation of performance management process...........................................177
5.2.2 Objectives of performance management process.........................................179
5.2.3 Components of performance management process......................................181
5.2.4 Planned enhancements for performance management process....................183
5.2.5 Conclusions about RI 1: Definition of performance management...............184
5.3 Competitive advantage in high technology firms........................................185
5.3.1 Types and scope of competitive advantage..................................................185
5.3.2 Human capital role in competitive advantage..............................................186
5.3.3 Contribution of performance management in building a competitive
advantage.....................................................................................................187
5.3.4 Conclusions about RI 2: Description of competitive advantage..................188
5.4 Growth effects on development of productive workforce...........................189
5.4.1 Effects of business growth on workforce.....................................................189
5.4.2 Influence of employee turnover...................................................................190
5.4.3 Conclusions about RI 3: Effects of growth on development of a
productive workforce...................................................................................192
5.5 Relationship between performance management process and human
resource practices.........................................................................................192
5.5.1 Supporting human resource policies and programs.....................................192
5.5.2 Involvement of human resources.................................................................194
5.5.3 Conclusions about RI 4: Relationship between performance
management processes and human resource practices.................................195
5.6 Key performance management processes supporting firms’ competitive
advantages....................................................................................................195
5.6.1 Strategic management components..............................................................196
5.6.2 Role of strategic planning in performance management..............................197
5.6.3 Feedback linkages in the performance management process......................199
5.6.4 Conclusions about RI 5: Key performance management processes
supporting firms’ competitive advantages...................................................200
5.7 Experiences with performance management...............................................201
5.7.1 Lessons learned............................................................................................201
5.7.2 Difficulties encountered...............................................................................202
5.7.3 Recommendations for change......................................................................203
5.7.4. Conclusions about RI 6: Experiences with performance management........204
5.8 Conclusions about the research problem......................................................204
5.9 Contribution to theory building....................................................................206
5.9.1 Strategic performance management model for high technology sector.......206
5.9.2 Value chain for high technology small and medium enterprises.................208
5.10 Implications for management practice.........................................................209
5.10.1 Formal strategic planning.............................................................................209
5.10.2 Integrating human resource and performance management........................210
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5.10.3 Benefits accrued from a qualified human capital pool.................................210
5.11 Limitations of this study..............................................................................211
5.12 Implications for methodology......................................................................212
5.12.1 Case study methodology is a rigorous alternative........................................212
5.12.2 Each case study is a single experiment........................................................213
5.12.3 Multiple case experiments offer analytic generalisation..............................213
5.13 Implications for further research..................................................................214
5.13.1 Formality of planning-performance relationship.........................................214
5.13.2 Future performance changes in sample high technology firms...................214
5.13.3 Study replication in similar-sized regions....................................................214
5.13.4 Regional comparisons within high technology sector.................................214
5.13.5 Application to a broader population.............................................................215
5.13.6 Quantitative survey of high technology sector............................................215
5.14 Conclusion...................................................................................................215
REFERENCES.......................................................................................................217
Appendix A Consent Form...................................................................................229
Appendix B Interview Protocol............................................................................231
Appendix C Survey of Firm’s Background..........................................................232
Appendix D Firm Case Study Format...................................................................236
Appendix E Pilot and Case Study 1......................................................................237
Appendix F Case Study 2.....................................................................................246
Appendix G Case Study 3.....................................................................................256
Appendix H Case Study 4.....................................................................................264
Appendix I Case Study 5.....................................................................................272
Appendix J Case Study 6.....................................................................................281
Appendix K Case Study 7.....................................................................................290
Appendix L Case Study 8.....................................................................................297

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