Applied either at organisational level or individual level, one of the key functions of management is measuring and managing performance. Between idea, action and results there is a journey to take. And perhaps the most used term in everyday life to reflect the progress of this journey and its results is “performance” (Brudan, 2010).
Defining “performance” is mostly difficult due to the various interpretations of its meaning.
As in the case of management, the term performance can be used at various levels (personal performance, individual performance, team performance, organisational performance), to express general achievement (such as performance in sport), or to reflect a benchmark against peers. A current view of the term “performance” as abridged from the Merriam-Webster’s English dictionary reflects its polyvalent nature:
2. the fulfillment of a claim, promise, or request: implementation;
4. a: the ability to perform; b: the manner in which a mechanism performs;
5. the manner of reacting to stimuli: behaviour;
Performance in management research literature
Management research literature contains at least three in-depth articles that analyse the term “performance” and its use: Lebas (1995), Wholey (1996) and Folan, Browne et al (2007).
Lebas (1995) characterizes performance as future oriented, customized to reflect particularities of each organisation / individual and based on a causal model linking inputs and outputs. A “performing” business is one that will achieve the objectives set by the managing coalition, not necessarily one that has achieved the objective. Thus, performance is about both capability and the future (Lebas, 1995).
For Wholey (1996), measurement is necessary as performance is not an objective reality, out there somewhere, waiting to be measured and evaluated, but a socially constructed reality that exists in people’s minds, if it exists anywhere at all. It has diverse interpretations and it may include: inputs, outputs, outcomes, impacts and relate to economy, efficiency, effectiveness, cost-effectiveness, or equity. Both Lebas (1995) and Wholey (1996) consider performance as being subjective and interpretative and ultimately linked to cost related headings.
The meaning and content of the term performance in business performance research is comprehensively discussed by Folan et al (2007), who outlines three priorities or governance objectives of performance.
- First, performance needs to be analysed by each entity in the boundaries of the environment in which it decided to operate. For example a company’s performance needs to be analysed in the markets the company operates and not in the ones that are not relevant to its operations.
- Second, performance is always linked to one or more objectives established by the entity whose performance is analysed. Thus, a company is evaluating its performance based on the objectives and targets set and accepted internally and not by the ones used by external bodies.
- Third, performance is reduced to characteristics that are relevant and recognisable. For example, characteristics such as “the ability to use office stationary” are irrelevant and unrecognisable. To create optimal conditions for the achievement of desired performance, these priorities need to be interrelated, in alignment.
- Brudan, A. (2010), Rediscovering performance management: systems, learning and integration, Measuring Business Excellence, Vol. 14, No. 1, pp. 109-123.
- Folan, P., Browne, J. & Jagdev, H. (2007), Performance: Its meaning and content for today's business research, Computers in Industry, Vol. 58, Nr. 7, pp. 605-620.
- Lebas, M., J. (1995), Performance measurement and performance management, International Journal of Production Economics, Vol. 41, Nr. 1-3, pp. 23-35.
- Merriam-Webster Incorporated (1994), Merriam-Webster’s Dictionary of English Usage, Merriam-Webster Incorporated Publishers, Springfield, MA.
- Wholey, J., S. (1996), Formative and Summative Evaluation: Related Issues in Performance Measurement, American Journal of Evaluation, Vol. 17, Nr. 2, pp. 145-149.