Performance measurement and management: theory and practice

 

Performance measurement and management plays a critical role in the operation of any organization.  As noted by Magretta and Stone (2002), performance measures are critical because they enhance communication – they enable the organization to address the following critical question – “Given our mission, how is our performance going to be defined?” Yet, it should also come as a surprise that in spite of this longevity of focus, this topic is still surprised by a great deal of confusion and conflict.

The review of employee performance, and the management of its collective contributions to organizational effectiveness, have been perceived as a combination of informal and formal techniques which together have the potential to contribute to the motivation of individual employees and their work groups, to evaluate the efficacy of all human resource management (HRM) functions, and to provide organizations with a strategic advantage in their ongoing pursuit of competitive goals and imperatives.

Success or failure in performance management depends on organizational philosophies, and the attitudes and skills of those responsible for its implementation and administration, together with the acceptance, commitment and ownership of appraisers and appraises (Lawler 1994; Hedge and Teachout 2000).

The work on processes and procedures for the layout and implementation of PMMS initially adopted the three tests on feasibility, usability and utility before considering the fulfillment and failure of the layout to implementation segment and the nice of implementation. It is possible to theories about the design and implementation phases but in reality, these are as much about the implementation of change as anything else. There have also been interesting insights into the formal approaches to refreshing measurement systems (Kennerley and Neely, 2003) and more recently addressing the issue of how to keep measurement systems up to date (Melnyk et al., 2014), but we strongly suggest that there is now a compelling need to develop theory around the continuing use and emergent development of PMMS.

Performance measurement: benefits, limitations and shortcomings

Several researchers have demonstrated that appropriate measurement and Management of performance can facilitate:

• Formulation, execution and review  of   organizational   strategy
• Communication   of the results  achieved   to  stakeholders,  and  strengthening   of   brand  and reputation
• Strategic alignment, motivation of employees at all levels, creation of a performance Improvement culture, and organizational learning

However, despite considerable resources invested PM related initiatives can often fail to deliver on their promises and if done poorly, they can be not only ineffective, but harmful and indeed destructive. Therefore, it is crucial   to   understand   under   which   specific   conditions performance measurement   and management practices can actually enable performance improvements.

Towards one theory of performance measurement and management

The Ferriera and Otley (2009) framework described above assumes that PMMSs are systems. In reality, they may be “systems of systems” but this framework does align with a recent call to take a more systemic approach to developing theory in performance measurement and management. These systems operate through practices and routines in organizations and it is to this subject we turn next.

In reality, organizations have more than one condition wherein overall performance is reviewed. These can be formal board meetings, operational making plans meetings, income control meetings, venture control meetings, etc. Decisions may be made by individual decision makers performing on their own (despite the fact that we might recommend that this takes place some distance extra once in a while than one might surmise from the focal point of studies within side the control literature) however enforcing motion forever calls for regarding others. This suggests (in all however the smallest businesses) a sequence of hyperlinks among people at extraordinary degrees of the organization.

The area of overall performance size and control maintains to expand and, if overall performance size and control evolve to enable us to control new and emerging forms of organizations in new and emerging contexts, then it's going to usually hold to do so. The improvement of exciting new frameworks and know-how primarily based totally on the use of idea to mirror on exercise and exercise to tell improvement of idea.

 

References

Magretta, J. and Stone, N. (2002), What Management is? How it Works, and Why it’s Everyone’s Business, Free Press, New York, NY.

Lawler, E. 1994. Performance management: The next generation. Compensation and Benefits Review 26(3): 16–20.

Hedge, J., M. Teachout. 2000. Exploring the concept of acceptability as a criterion for evaluating performance. Group and Organisation Management 25(1): 22–44

Kennerley, M. and Neely, A. (2003), “Measuring performance in a changing business environment”, International Journal of Production and Operations Management, Vol. 23 No. 2, pp. 213-229.

Melnyk, S.A., Bititci, U., Platts, K., Tobias, J. and Andersen, B. (2014), “Is performance measurement and management fit for the future?”, Management Accounting Research, Vol. 25 No. 2, pp. 173-186.