Freek Hermkens

The role of middle management in achieving continuous improvement: a demanding playing field

Many organizations in financial services and other industries are constantly trying to adapt to an ever-changing environment. Since the beginning of the 21st century, many of these organizations have been exposed to growing competition and cost pressure. As a result, these companies have been looking for ways to improve their business: that is, providing better services at lower cost, improving customer satisfaction, and staying competitive. One particular example is the Dutch banking sector, which is changing drastically in many ways. Banks are facing increased competition from technology companies outside the traditional financial sector which are offering various new financial technologies (fintech) and other services. Top managers of banks often adopt a strategy of Continuous Improvement (CI) in their organizations as a means to cope with all, or at least some of, these changes. CI practices such as Lean appear to have the potential to position financial institutions for long-term success. Studies in both industrial and service-oriented organizations demonstrate that (initial) results arising from such projects are often not sustained. Previous studies have established that making CI work is more than just the implementation of a tool box; it requires effectuating a management philosophy in combination with the help of (middle) management to make the implementation adhere.

Therefore, it is important to understand the role of middle managers in implementing organizational change initiatives such as CI. Overall, the role and influence of middle management within CI appears to be under-researched. This is remarkable because middle managers can be considered key agents in facilitating CI initiatives and can play a key role in striking a balance between continuity and change. So a better understanding can help organizations to determine what is expected of middle managers and how conditions set by top management influences middle management. As a result, organizations will have more instruments to exert influence, thereby increasing the likelihood of successfully implementing CI. This dissertation investigates how and to what extent middle managers influence CI efforts in the financial service industry.

The main research question of this dissertation is: How and to what extent do middle managers contribute to accomplishing CI in the financial service industry?

This dissertation contains three different studies that serve to further explore the influence of middle managers on CI (implementation) within organizations.

Insights from study 1
First, a systematic review of the literature is conducted to develop a mechanism-based framework that explains the success and failure of CI initiatives (incl. Lean) in which middle managers are key agents. This first study (chapter 2) results in two frameworks. Each of these frameworks assumes that top management consistently seeks to implement a particular (archetypical) philosophy of CI: the first framework assumes an integral management approach and the second starts from the assumption that a cost-cutting strategy is adopted. Each of these two frameworks in itself reflect some of the key tensions and challenges arising from any CI change effort, especially for middle managers. In practice, the two conditions may overlap, which creates an additional level of complexity. Overall, our review provides an understanding of the (non) conditions in which continuous improvement initiatives are likely to succeed or fail, and as such also provides a starting point for future research as well as practical work in this area. Future work in this area will not only need to test the bundle of hypotheses arising from each framework in this study, but also explore and assess the interaction between the two bundles of causal patterns in settings where these two contextual conditions appear to co-exist.

Insights from study 2
Secondly, an experimental vignette study (chapter 3) serves to identify the differences in adopting a CI approach as a management philosophy versus a cost-cutting program. The second study examines the effect of different ways of implementation. The vignette study was carried out at a large bank in the Netherlands. The findings arising from this study suggest that the expectation is that CI is more likely to be integrated in the organizational culture, may enhance the customer orientation among employees, and could improve the work atmosphere when it is implemented as an integral management approach rather than to implementing CI as a cost-cutting tool. These findings suggest that embedding CI in the organizational culture apparently contributes to the sustainability of CI in the organization. We also found some confirmation that, if top management implements CI as an integral management approach, middle managers expect that the organization will become more customer-focused. Finally, middle managers appear to perceive less negative associations regarding the work atmosphere when CI is implemented as an integral management approach rather than as a cost-cutting tool. Middle managers can only help reduce the risk of perceiving CI as another downsizing method focused on short-term financial targets, if top managers commit themselves to it as an integrated management philosophy, and continually communicate this in a consistent manner throughout the entire organization.

Insights from study 3
Thirdly, the different roles that middle managers can play in CI are analyzed and compared. A widely-cited model of Floyd and Wooldridge (1996), which links organizational performance directly to middle management, is used. The main findings from this study (in Chapter 4) suggest that middle management can be perceived as a change agent, involving both upward and downward activities. In line with Floyd and Wooldridge, our results show support for the integrative roles (implementing and synthesizing) that middle managers may play when the organization aims to adopt CI. In particular, middle managers who fulfill an implementing role within the organization are more likely to perceive CI initiatives as a sustainable cultural change and are more likely to take action in this respect.

Overall
The three studies conducted reveal that middle managers engage in a dynamic playing field in which they play a pivotal role in organizational change. More specifically, top management’s conceptualization of the rationale of a CI program appears to affect the role of middle management in getting CI implemented. From a practical perspective, this means that if top management perceives CI as an integral management approach, this may have a positive effect on middle management’s expectation that CI can be incorporated into the organizational culture in a sustained manner. The findings of this doctoral dissertation suggest that the middle management role is not an easy one, because middle managers have to change their own mindset and behavior and lead by example, in order to create and sustain changes in the entire organization. We concluded that it is important that middle managers understand the purpose of the change.

While top and middle managers often deliberately try to plan change to make it more manageable, organizational realities tend to be more messy and noisy than can be effectively planned for. Cooperation between top management and middle management thus appears to be essential for accomplishing CI. Using their link between top management and shop floor, top management needs to create the conditions in which middle managers can ensure that improvements are actually implemented and guaranteed within the organization. Organizations are undergoing major changes including the roles of all types of managers. It is expected that middle management will continue to pay an important role within them. The importance of effective management has apparently not changed, but the way one engages in management may be changing fundamentally. In response to altering customer behavior, shorter times-to-market, shifting expectations of employees, and increasing digitalization, organizations are changing rapidly and need to become more agile. Middle management is an important link in these transformation processes. This in itself requires personal adaptability and a new interpretation of the role of middle management. Thus, the impact that an agile way of working has on the role of middle management is an interesting area for future research, in particular to find out which roles (i.e. championing, synthesizing or implementing) can contribute the most to accomplishing organizational agility.

Further Readings for Practitioners
Canoy, M. (2019). De bank van goede bedoelingen. De ramen open bij de Rabobank. Prometheus, Amsterdam.
Collins, J. (2001). Good to Great. Random House, London.
Cruijff, J. (2016). Johan Cruijff: Mijn verhaal. Nieuw Amsterdam Uitgevers, Amsterdam.
De Man, A.P., Koene, P. and Ars, M. (2019). How to Survive the Organizational Revolution. A Guide to Agile Contemporary Operating Models, Platforms and Ecosystems. BIS Publishers, Amsterdam.
De Waal, A. (2008). Maak van je bedrijf een toporganisatie. Van Duuren Management, Assen.
Derkse, W. (2002). Een levensregel voor beginners. Lannoo, Tielt.
Dweck, C. (2018). Mindset. SWP, Amsterdam
Emiliani, M. (2008). Practical Lean Leadership: A Strategic Leadership Guide for Executives. The CLBM, LLC, Wethersfield.
Eppler, M. (2003). The Wright Way: 7 Problem-Solving Principles from the Wright Brothers That Can Make Your Business Soar. Amacom, New York.
Fontes, M. and Fidus, M. (2017). Middle Management Moans. U2pi BV, The Hague.
Goldratt, E.M. and Cox, J. (1986). The Goal: A Process of Ongoing Improvement. North River Press, Great Barrington.
Hawking, S. (2018). De antwoorden op de grote vragen. Spectrum, Amsterdam.
Jansen, M. (2018). Managen moet: Beter presteren door slim te managen. Boom, Amsterdam
Lammers, M. (2015). Flow: van goed naar goud. Bertram + de Leeuw, Haarlem
Liker, J.K. and Trachilis, G. (2014). Developing Lean Leaders at All Levels: A Practical Guide. Lean Leadership Institute Publications, Manitoba.
Maister, D.H., Green, C.H. and Galford, R.M. (2000). The Trusted Advisor. The Free Press, New York.
Mulder, R.H. (2011). ’t Wordt tijd dat ik hier de leiding neem. Van Gorcum, Assen.
Olffen, W. van, Maas, R. and Visser, W. (2016). Engage! Travel Guide for Change Adventures. Warden Press, Amsterdam.
Robertson, D. and Breen, B. (2014). Brick by Brick. Crown Business, New York.
Romme, A. G. L. (2016). The Quest for Professionalism: The Case of Management and Entrepreneurship. Oxford University Press, Oxford.
Rother, M. (2010). Toyota Kata. MacGraw Hill, New York.
Senge, P. (1990). The Fifth Discipline: The Art and Practice of the Learning Organization. first edn. Currency Doubleday, New York.
Smit, J. (2009). De Prooi. Prometheus, Amsterdam.
Spanyi, A. (2006). More for Less: The Power of Process Management. Meghan-Kiffer Press, Tampa.
Tinline, G. and Cooper, C. (2016). The Outstanding Middle Manager: How to be a Healthy, Happy, High-performing Mid-level Manager. Kogan Page, Philadelphia.
Donna Tart, D. (1993). De Verborgen Geschiedenis. Anthos, Amsterdam.
Van Assen, M.F. (2017) Lean leiderschap - Leidinggeven aan continu verbeteren. Boom, Amsterdam.
Van Eck, M. and Leenhouts, E. (2015). Businessplan op 1 A4: snel en effectief plannen met OGSM. Business Contact, Amsterdam.
Van Solingen, R. (2016). De bijenherder - Leidinggeven aan zelfsturende teams, hoe doe je dat? Business Contact, Amsterdam.
Wiegel, V. and Maes, J. (2013). Succesvol Lean. Pearson, Amsterdam.
Womack, J. and Jones, D.T. (2005). Lean solutions: How Companies and Customers Can Create Value and Wealth Together. Free Press, New York.
Womack, J. and Jones, D.T. (2005). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Simon & Schuster, New York.
Womack, J., Jones, D.T. and Roos, D. (1990). The Machine That Changed the World. Rawson Associates, New York.

Additional Publications and Conference Presentations
Additional publications
Banking & Finance (2013) “Customer Excellence: operating effectively and efficiently from a customer value perspective” [Customer Excellence: vanuit klantwaarde effectief en efficiënt opereren].
Banking Review (2011) “Line managers need to behave as the owner” [Lijnmanagers moeten zich gedragen als eigenaar].
Banking & Finance (2011) “Success runs through the operational manager” [Succes loopt via de operationeel manager].
Business Process Magazine (2010) “The undercurrent of lean processes” [De onderstroom van lean trajecten].
Banking Review (2010) “The operational manager: an important link” [De operationeel manager: een belangrijke schakel].
Banking & Finance (2009) “Excellent Performance: the basis for process optimization” [Excellent Presteren: de basis voor procesoptimalisatie].

Online publications
Management Site (2007) “Operational management and productivity improvement – the top 6 inhibiting and stimulating factors” [Operationeel management en productiviteitsverbetering – De top 6 belemmerende en stimulerende factoren]. www.managementsite.nl/operationeel-management-productiviteitsverbetering
Management & Consulting (2006) “Operational management the basis for success in organizations” [Operationeel management de basis voor succes binnen organisaties]. www.slideshare.net/FreekHermkens/operationeel-management-als-basis-voor-succes-binnen-organisaties
Management & Consulting (2005) “Productivity improvement through focusing on operational managers and employees” [Productiviteitsverbetering door focus op operationele manager en medewerkers] www.slideshare.net/FreekHermkens/04-productiviteitverbetering-door-focus-op-operationeel-managers-en-medewerkers
Management Site (2005) “Productivity improvement in services companies, through the introduction of operational steering” [Productiviteitsverbetering in dienstverlenende bedrijven, door invoering van operationele besturing]. www.managementsite.nl/productiviteitsverbetering-dienstverlenende-bedrijven-door-invoering-operationele-besturing
Management & Consulting (2005) “Productivity improvement – particularly in service companies” [Productiviteitsverbetering – juist ook in dienstverlenende bedrijven]. www.slideshare.net/FreekHermkens/productiviteit-juist-ook-in-dienstverlenende-bedrijven

E-books
Hermkens, F.J.A. (2019) “The road to continuous improvement: Reflections of a dynamic playing field” [De weg naar continue verbetering: Bespiegelingen van een dynamisch speelveld]
Hermkens, F.J.A. (2017) “A brief look into the flexible world: First steps in an agile environment” [Een korte blik in de wendbare wereld: Eerste stappen in een agile omgeving]
Hermkens, F.J.A. (2016) “An important link in the middle: Middle management viewed” [Een belangrijke schakel in het midden: Midden management bekeken]
Hermkens, F.J.A. (2016) “A practical view of Lean: Amazements from a consultant” [Een praktische kijk op Lean: Verwonderingen van een consultant]

Conference and professional presentations
Agile Coach Company (November 19, 2019) Webinar “Middle management, a blessing or a curse in a changing organization?” [Middenmanagement, een zegen of een vloek in een veranderende organisatie?] https://www.youtube.com/watch?v=ODfcLgU4ZnU&feature=youtu.be
IIBA (November 12, 2019) Workshop for business analysts “BPM in a fast changing world” [BPM in een snel veranderende wereld]. Amsterdam, the Netherlands.
ING (February 20, 2019) Workshop for product owners “From brainstorm to improvement initiative” [Van brainstorm naar verbeterinitiatief]. Capelle aan de IJssel, the Netherlands.
ING (November 14, 2018) Workshop for product owners “The backlog as the basis for continuous improvement” [De backlog als basis voor continu verbeteren]. Capelle aan de IJssel, the Netherlands.
ING (June 18, 2018) Workshop for product owners “From improvement initiative to Sprint”[Van verbeterinitiatief naar Sprint]. Dordrecht, the Netherlands.
ABN AMRO (November 28, 2017) Presentation “Continuous improvement: Wondering and creativity” [Continu verbeteren: verwonderen en creativiteit]. Amsterdam, the Netherlands.
European Lean Educators Conference (November 9, 2017) Presentation “The role of Middle Management in Implementing Lean in Financial Service Firms”. Nijmegen, the Netherlands.
Business School Netherlands (June 13, 2017) Presentation for alumni students “Continuous Improvement and the impact of managers on the results” [Continu verbeteren en de impact van managers op het resultaat]. Buren, the Netherlands.
De kleine consultant (January 25, 2017) Presentation for student association “Continuous improvement in a bird’s eye” [Continu verbeteren in vogelvlucht]. Utrecht, the Netherlands.
Nederlands Netwerk voor Kwaliteitsmanagement (March 15, 2016) Presentation “A practical look at Lean management” [Een praktische kijk op Lean management]. Utrecht, the Netherlands.
ABN AMRO (May 10, 2016). Workshop for mid-office employees “Continuous improvement: what’s your story” [Continu verbeteren: wat is jouw verhaal?]. Eindhoven, the Netherlands.
ABN AMRO (January 4, 2016). Presentation for internal Customer Excellence consultants “9 practical implementation tips for Lean” [9 praktische implementatie tips voor Lean]. Amsterdam, the Netherlands.
European Lean Educators Conference (September 18, 2015) Presentation “Lean hitting, fielding and pitching at the same time: a whole new ballgame for Middle Management”. Södertälje, Sweden.
Nederlands Netwerk voor Kwaliteitsmanagement (April 21, 2015) Presentation “The importance of wondering for continuous improvement” [Het belang van verwonderen bij continu verbeteren]. Utrecht, the Netherlands.
Colloquium Organizational Change & Development (September 12, 2014) Presentation “Lean hitting, fielding and pitching at the same time: the role of Middle Management in change management”. Essen, Germany.
PGGM (March 27, 2014) Workshop for employees “Voice of the customer game”. Zeist, the Netherlands.
Adidas (December 2012) Training for employees “Process optimization and continuous improvement”. Herzogenaurach, Germany.
Business Process Management Conference (October 26, 2011) Presentation: “It’s not about the design but about how to make it work: Attitude, behavior and skills of the operational manager” [Het gaat niet om het ontwerp, maar hoe je het laat werken: Houding, gedrag en vaardigheden van de operationeel manager]. Zeist, the Netherlands.
Rabobank Bollenstreek (October 26, 2010) Presentation for board and management team “Role of operational management”. Sassenheim, the Netherlands.
Rabobank NL (September 2010) Training productmanagers directoraat bedrijven “Training Lean Six Sigma”. Utrecht, the Netherlands.

Dutch university guest lectures
Zuyd University of Applied Science (September 24, 2019) Lecture “The dynamic playing field of the middle manager” [Het dynamisch speelveld van de midden manager].
Tilburg University (March 14, 2019) Lecture “Continuous Improvement with agile project management”.
Erasmus University Rotterdam (February 8, 2019) Lecture “The Role of Middle Management in accomplishing CI in Financial Service Industry”.
Zuyd University of Applied Science (November 23, 2018) Lecture “The voice of the customer and continuous improvement” [De stem van de klant en continu verbeteren].
Zuyd University of Applied Science (September 25, 2018) Lecture “The role of middle managers in continuous improvement” [De rol van midden managers bij continu verbeteren].
Tilburg University (March 14, 2017) Lecture “Continuous Improvement and Change”.
Zuyd University of Applied Science (October 21, 2016) Lecture “Continuous improvement of processes” [Het continu verbeteren van processen].
Tilburg University (March 8, 2016) Lecture “9 practical tips for implementing continuous improvement”.
Zuyd University of Applied Science (October 16, 2015) Lecture “Continuous improvement” [Continu verbeteren].
Zuyd University of Applied Science (October 8, 2015) Lecture “Business Process Improvement the future” [Business Process Improvement de toekomst].
Utrecht University of Applied Science (March 5, 2015) Lecture “Introduction Lean: continuous improvement” [Introductie Lean: continu verbeteren].
Zuyd University of Applied Science (January 9, 2015) Masterclass “Voice of the customer and continuous process improvement” [Stem van de klant en continue procesverbetering].
Zuyd University of Applied Science (October, 2014) Lecture “Continuous improvement” [Continu verbeteren].
VU (February 2010) Lecture “Performance management”.