Introduction 3 The Changing Role of Organizational Performance Management 4
Organizational Performance Measurement Approaches: Balance Scorecard 7
Benefits and Shortcomings of Balance Scorecard 9
Five Key Organizational Performance Measures 10
There has been considerable amount of theoretical and empirical work conducted on the organizational performance management system. One of the most researched areas of organizational performance management system has been on determining what organizational variables or metrics should be measured in order to gauge the true performance of an organization. In the pursuit of developing most appropriate organizational performance management system, many organizational performance management systems have emerged, making it difficult to choose the best organizational performance management system.
The paper reviews the published literature on organizational performance management, and discusses the shift from traditional to new performance management system framework. Also, Balance Scorecard, which is one of the most commonly used approaches in measuring organizational performance, is discussed. Finally, five most important factors in designing organizational performance management are addressed.
In increasingly competitive market, it is imperative that organizations design and implement an effective organizational performance management system to gauge their competitive advantage in the market. An Organization Performance Management System includes multiple activities that help in establishing the goals of the organization, and monitor the progress towards the target. It is used to make adjustments to accomplish goals more efficiently and effectively.
Organizational Performance Management System can be best understood through considering the definitions of the words "performance" and "measurement" according to the Baldrige Criteria (NIST, 2001):
Performance refers to output results from processes, products and services that permit evaluation and comparison relative to goals, standards, past results, and other organizations. Performance might be expressed in non-financial and financial terms.
Measurement refers to numerical information that quantifies input, output, and performance dimensions of processes, products, services, and the overall organization (outcomes). Performance measures might be simple (derived from one measurement) or composite.
Underlying performance management at both the organizational and employee levels is a set of performance measures. Performance measures with respect to organizational performance are an instrument to assess progress against stated program and organizational objectives. With respect to individual performances it is to assess progress against stated performances objectives, or “results to be achieved” for individual employees or teams of employees (Good & Carin, 2004). The objective of such system would be to increase the efficiency, effectiveness and performance at both organizational and employee level.
The challenge for organizations today is how to match and align both organizational and individual performance measures with business strategy, structures and corporate culture, the type and number of measures to use and how to deploy the measures so that the results are used and acted upon. To address these challenges, organizations have been continually...