APPLICATION OF THE TACIT SIGNAL METHOD FOR
PERFORMANCE MANAGEMENT IN PROJECT-BASED ACTION
LEARNING TEAMS
Kris M. Y. Law, The Hong Kong Polytechnic University, Hong Kong
kris.law@inet.polyu.edu.hk
Marko Kesti, University of Lapland, Finland
marko.kesti@mcompetence.com
ABSTRACT
This paper presents an integrative infrastructure for performance management in innovationoriented learning organizations. The integrative design embraces both the concepts of
project-based action learning (PAL) - driven organizational learning and tacit signal based
performance management.
The concept of organizational learning (OL) has raised attentions of researchers and
practitioners for a long time, from different perspectives. The studies of OL include the ideas
of “continuous improvement, competence acquisition, experimentation, and boundary
spanning” (Argyris, 1999). Learning Organizations (LO) are places where new and
expansive patterns of thinking are nurtured, where collective aspiration is set free, and where
people are continuously learning how to learn together (Senge, 1990). The effectiveness of
OL process and better performance management is critical performance driver for many
organizations.
This paper first discusses the background of the tacit signal method and how it is applied in
performance management, and then describes the PAL framework with tacit signal e-HRM
system embedded. In the integrative infrastructure presented in this paper, the tacit signal
based e-HRM system is embedded as the built-in performance management tool under a
Project-based Action Learning driven organizational learning setting.
The effectiveness of the proposed integrative infrastructure is verified by empirically
grounded real company case studies. Case studies, in the form of tacit signal based action
learning projects, were carried out in eight different SMEs at Finland. Results obtained from
the case studies are very promising, and shows the proposed system supports innovation and
learning.
Keywords: Organization learning, Learning organization, performance management,
innovation management
INTRODUCTION
The concept of organizational learning (OL) has raised attentions of researchers and
practitioners for a long time, from different perspectives (Argyris and Schon, 1978; Revans,
1982; Senge, 1990; Pedler 1991; Lyles, 1992; Garvin, 1993; Tsang, 1997; Garratt, 1999). The
studies of OL include the ideas of “continuous improvement, competence acquisition,
experimentation, and boundary spanning” (Argyris, 1999). Learning Organizations (LO) are
places where new and expansive patterns of thinking are nurtured, where collective aspiration
is set free, and where people are continuously learning how to learn together (Senge, 1990).
The organization learning is the process by which the organization applies various modes of
learning to achieve sustained competitive advantage (Wang and Ahmed, 2003).
Since the effectiveness of OL process can be hindered by some unprecedented events and
organizational changes, the role of better performance management becomes even more
critical and important. The OL vehicle, Project Action Learning (PAL) framework of Law
and Chuah (2004) was developed for performance improvement and competitiveness
sustainability.
The OL vehicle, Project Action Learning (PAL) framework of Law and Chuah (2004) was
developed for performance improvement and competitiveness sustainability. Performance
Management is one of the key features and supporting pillars of PAL implementation.
Meanwhile, it has been found that management style leadership are influencing
organizational performance (Schlevogt, 2002). Human factors such as stress and its impact on
work performance have also been addressed (Putkonen, 2009). To understand these
intangible factors, tacit signal method has been proposed to be used as an intelligent
analytical tool to understand the competency levels of human resources (Kesti, 2007), and the
tacit signal based e-HRM system is proposed as a human resources performance management
infrastructure in the PAL-driven OL framework.
This paper first discusses the tacit signal method theoretical background and how it is applied
in performance management, and then describes the PAL framework with e-HRM system
embedded by the tacit signal method. A practical performance-managed-PAL framework is
expressed and proposed.
BACKGROUND
The tacit signal method
The tacit-signal-based e-HRM system (Kesti et al., 2008) has been found effective in
improving organization performance (Kesti and Syväjärvi, 2009) by offering intelligent
analysis and monitoring. With the detailed analysis of competencies of human resources, this
system can be used for competencies developments at collective levels. Therefore, it is
definitely suitable for performance management in learning organizations.
Tacit signals refer to individuals beliefs concerning the improvement needs of human
competencies. The tacit signals rise from personal tacit knowledge (Kesti, 2007). Tacit
knowledge is experience-based knowledge that is difficult to document or describe by words
(Nonaka and Takeuchi, 1995). Tacit knowledge is highly personal and therefore it is difficult
to express. The tacit-signal-based e-HRM system introduced as a human resource information
system (HRIS) (Kesti et al., 2008) has been found effective in improving organization
performance (Kesti and Syväjärvi, 2009). Nonaka and Takeuchi (1995) point out that each
employee is a knowledge worker having important tacit knowledge about the organization’s
operations and work. This individual tacit knowledge can be used for competencies
developments at collective levels. In many cases the most important competencies are
leadership, team culture and work process (Kesti and Syväjärvi, 2009).
Leadership competencies at collective level
In working units the tacit signals can be used as guiding opinions to help solving problems by
fundamental concepts such as participative and effective leadership. “The leader who wants
to create an emotionally intelligent team can start by helping the team raise its collective self
awareness,” (Goleman et al., 2008), while collective emotional intelligence seems to be
characteristic for top performing teams (Wheelan, 2005). In team performance improvement
it is essential to recognize that they may be working on situations that are dissonant
(Goleman et al., 2008). Festinger (1957) concludes that people are motivated to reduce
dissonance by changing or modifying their attitudes and behaviors.
One negative way to resolve the dissonance is to create defensive reasoning for not to do
anything about it (Argyris, 2004). Senge (2006) describes the same phenomenon so that
organization learns harmful defensive routines which prevent problem solving and
organization learning; “Defensive routines are so diverse and so commonplace, they usually
go unnoticed” (Senge, 2006). A team's success depends on its ability to face the problem and
to overcome defence mechanisms that surround the problems (Argyris, 2004; Senge, 2006).
Self recognition and performance
Another important issue to understand and surpass in management and organization
development is the knowing-doing gap (Pfeffer and Sutton, 2000). The nature of the
organization development is so that employee participation in planning and implementation
will create sustainable productivity growth were quality of working life is improved along
with performance (Ramstad, 2009). Organizations should not try to implement other
organizations best practices but rather find out their own best value practices (Pfeffer and
Sutton, 2000). Employees have ideas for optimal performance improvement. Succeeding in
implementing these ideas to practice will create positive feelings. At Losada and Heaphy
(2004) research the team performance seems to correlate with members positive feelings
against negative. Positive/negative feelings ratio (P/N) exceeding 2.9 (Losada line) will speed
up the team performance. In high performance teams the members experience positive
feelings five times more than negative. In those teams the individual gets as much attention as
team itself. (Losada and Heaphy, 2004).
Building a learning organization
Practical improvement actions at collective level are needed for development a learning
organization. These actions need to come from the knowledge of the team members while
optimal improvement actions arise from the team needs and situation (Hunt, 1992). Team
members have both, the tacit and explicit knowledge. Tacit knowledge can be converted to
explicit knowledge and can facilitate social interactions among the team members (Nonaka
and Takeuchi, 1995; Nonaka and Konno, 1998). Social constructive communication produces
dialogue, discussion and observation that speeds up the knowledge creation process and
activates team learning.
Monitoring and control of team competencies
Kaplan and Norton have pointed out that there has been lacking good company specific
measures for the learning and growth perspective. They note that absence of specific
measures indicates that the company is not linking its strategic objectives to activities for reskilling employees, supplying information, and aligning individuals, teams and organizational
units to the company’s strategy and objectives (Kaplan and Norton, 1996). Tacit Signals
measurement and improvement actions follow-up makes it possible to measure organization
learning and growth.
A holistic tool for organizational performance
To overcome above mentioned organization development obstacles the effective methods and
proper tools are needed. It seems that organization can convert these problems in to great
possibilities by developing every working unit’s performance so that the whole organization
productivity will improve (Welch and Welch, 2005; Kesti and Syvajärvi, 2009). Tacit signal
development process with effective IC-tools have been proven to be effective in
organizations continuous development (Kesti and Syväjärvi, 2009). With the help of
systematic development process the leaders can learn to solve team problems and challenges
in a constructive way and team members learn that problems can be turned to possibilities.
TACIT SIGNAL MEASURING AND ANALYZING PRINCIPLE
Research indicates that measured level of core competencies (leadership and culture)
correlate with organization business performance (Kesti and Syväjärvi 2009). Improving
competencies foresee better business performance. (Kesti and Syväjärvi 2009; 2010).
Employee competencies, engagement and knowledge have great affect on internal process
and business performance and they are critical in the organizational development process
(Chareonsuk and Chansa-ngavej, 2009).
Tacit signal eHRM aims at providing clear overall view of the entire human resource
competencies of the company. The competencies of a company in relation to its goals can be
presented clearly and reliably for the resources allocation and relating decision making at
management level.
The working principle of e-Tacit Signal System
Measuring the competencies can be done by survey studies relating to their improvement
needs. Each group member has personal performance potential for doing the issues described
by the competence attributes. Each person gives their personal feeling on the amount of
efforts should be input or level of advancement should be made on a particular competence
attribute. Personal competence is then calculated from potential (P) and the direction of the
development need (Figure 1).
Figure 1: Personal competence measurement principle, where competence attribute is shown
using vector that direction is according the person’s opinion.
Each member’s individual competence is measured based on the intensity of development
needs (Value, S) on the particular competencies. The development value S of competency is
represented by the angular vectors shown on the semicircular scale. Individual competency
values would be then stored into the corresponding database.
Figure 2: Analyzing group collective competencies at semicircular scale (Kesti and Syväjärvi,
2010).
The tacit signal values are visualized by analyzer that supports both ASP- and Javatechnology and the handling of html-files. Figure 2 shows the competence values presented
with the aid of analyzer.
Development need values at collective level are then calculated by taking the average value
of the summed up values of the entire group being measured. The mathematical formula for
balanced total competence for the entire group is illustrated in Eq.1 as follows (Kesti, 2002).
Nx

i 1
8
C R1   ( Pi  sin(
where
C
P
Si
π/8
α
Nx
Nx
 S i ))   ( Pi  sin(  ))
i 1
(Eq. 1)
= Group competence
= Group member competence potential
= tacit signal guiding opinion from the inquiry, Si  (0 … 8)
= angle interval at the semicircle opinion scale
= angle of the potential segment of a line (0  α  π)
= number of group member answers
Tacit signal method is based on inquiry where individual gives development need for each
competence attribute. Competence consist attributes of human performance drivers that are
typical for high performance team emotional intelligence (see Goleman et al., 2008).
Measurement can be seen as personal feeling of situation in pressure-performance curve. This
inverted U-curve is originally invented by Yerkes and Dodson (Yerkes and Dodson, 1908).
Goleman (2007) points out that stressed people become defensive and too high stress
hormone levels causes mistakes and disables learning new things.
PROJECT BASED LEARNING AS ORGANIZATIONAL LEARNING VEHICLE
Organization project action learning (PAL) framework is comprehensive for organizational
learning and development (Law & Chuah, 2004). Organization systematic development can
be seen as multiplied and repeated development projects for improving organization
intangible assets. Built on the theoretical foundations of action learning (Revans, 1982), PAL
is a practical OL solution that uses goals and project setting to drive both individual as well
as team learning in a systematic way. Earlier research of Law & Chuah (2004) has identified
that four supporting pillars, namely as Policy and Strategy, OL Facilitation, Technology and
Resources, and Performance Management, are crucial to the PAL implementation success.
Integration of tacit signal HR system and PAL framework
Performance management concerns essential components of business excellence such as
management, team factors and processes. There have been a number of frameworks
developed striking for optimization of performance management, PAL is one of these, an
effective measuring and monitoring tool for organizational performance is thus needed.
In this project, a comprehensive HR performance management system is development by
integrating the tacit signal method into a development framework based on organizational
learning concept (PAL).
The proposed tacit signal e-HRM system is anticipated to produce valid data for decision
making, strategic planning, resource allocation and learning facilitation. Pfeffer and Sutton
(2000) point out that it is essential to overcome the knowing doing gap that usually prevent
learning. Performance improving learning comes from doing the right actions based on the
existing knowledge of the organization (Pfeffer and Sutton, 2000). Therefore, knowing the
current situation is the foremost task for further implementation of optimal improvement
actions.
The PAL-tacit signal performance (PAL-TSP) system is applied throughout the entire PAL
process, it facilitates, collects, measures, analyzes tacit competencies for the performance
management (Figure 3).
The PAL framework embedded with e-tacit signal system facilitates the human resources
performance goal setting, measuring and monitoring. The performance goals are well defined
and agreed and thus can be further measured according to the human related performance
quantifiable metrics like absence, turnover rate and competencies. Competencies are specific
and are measured by tacit signals at different pre-set milestones throughout the PAL life cycle.
Research studies indicate that tacit signal competencies can present organization performance
in a systematic and quantifiable manner (Kesti and Syväjärvi, 2009; 2010). Some intangible
indicators such as learning goals at collective levels can be measured with reference to the
predefined performance indicators.
Figure3: The PAL-tacit signal performance (PAL-TSP) framework.
The PAL-tacit signal performance (PAL-TSP) framework is a comprehensive organization
sustainable performance management framework with systematic and effective project action
learning development process. Human capital can be seen as the capacity of an organization
to use resources and human capabilities in order to achieve their organizational goals (Ulrich
and Brockbank, 2005; Gratton, 2004). Human capital performance is analysed and the goals
are set at strategic level. These goal settings form sustainable development goals that are
based on human capital development strategies for three to five years time span. The strategic
scenarios illustrate how the human capital development pay pack in better business
performance (HCROI = Human capital return on investment).
Systematic and effective strategy is the key for human capital performance improvement. In
the proposed framework, human resource development goals are developed based on the tacit
signals analysis at team level, which provide the baseline for development process. This
HRD development process aims at activating the individual learning as well as at team level
learning.
ILLUSTRATIVE CASES OF TACIT SIGNAL E-HRM SYSTEM
To testify the effectiveness of the proposed system, case studies have been carried out at eight
different SMEs at Finland. Study supports that tacit signal projects produce useful
innovations at every company. Systematic development method with IC-tools speeds up
learning process at teams. Teams have succeeded to carry out average three practical
improvements in ten months follow-up time. These actions were collectively chosen and
implemented in each group.
Table 1: Case study in 8 SME companies on tacit signal implementation.
Size
Teams
Business branch
Going on
Chemical industry
No. of
Ideas
61
Ideas per team
30
Carried
out
11
50
6
10
1
Trade and services
23
5
4
32,0
60
8
Tourist industry
63
29
28
15,0
54
5
Production industry (consumer)
53
10
19
16,4
46
3
IC industry
56
12
5
24,3
63
4
Production industry (B2B)
23
7
14
11,0
130
5
Rehabilitator
80
28
14
24,4
152
5
Hospital
56
29
13
19,6
565
37
Total
415
150
108
18,2
17,0
Figure 4. Summary of case studies illustrating how the proposed system supports learning
and innovation.
In effective team the members must be able to adapt, learn and perform as a team (Law and
Chuah, 2004). PAL development project reinforces the team level innovativeness to solve
problems and improve operation proactively. Management needs balancing feedback to be
able to implement strategy optimally (Senge, 2006). With the proposed e-HRM system better
decisions can be made for optimal improvements. These actions, better understanding and
decision making, are most optimal and contingent to the team performance excellence (Hunt,
1992).
CONCLUSION REMARKS
This paper presents an integrative infrastructure developed for effective performance
management in innovation-oriented learning organizations. The integrative design embraces
both the concepts of project-based action learning (PAL) - driven organizational learning and
tacit signal based performance management. The effectiveness of the proposed integrative
infrastructure is verified by empirically grounded real company case studies. Case studies, in
the form of tacit signal based action learning projects, were carried out in eight different
SMEs at Finland.
Results obtained from the case studies are very promising, and shows the proposed system
supports innovation and learning. Teams are shown to have significant improvements in ten
months. It seems evident that organizations can utilize their tacit knowledge better by
implementing systematic and effective development process. It is essential that organization
learning is properly managed so that the development is part of the organization sustainable
performance improvement.
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