Criticism

Performance Management Theory informing practice

 

Performance measurement at strategic level is very important, having two broad roles:

  • to clarify the objectives of the organization and communicate them in a way that makes the strategy explicit;
  • to measure performance against these objectives to provide feedback as to whether or not the goals are being achieved (Bourne et al., 2010)

 

de Waal (2001) defines performance reviews as the process which “…periodically reviews actual performance, targets, and forecasts to ensure timely preventive and corrective action taken to keep the company on track”.

 

Performance measurement at strategic level is still debated for its implementation in practice. Minzberg (1978, 1985) suggested that strategic management always incorporates emergent information and therefore it creates a constant process of strategy formation due to the distinct stages of strategy formulation and implementation.

 

Studies have shown that performance measurement may have different results than expected. For example, only 30% of workers agreed that their company's review process actually helps employees improve performance, according to a study released by Watson Wyatt (Joyce, A 2004).

 

Performance measurement at strategic level can also generate unintended consequences:

 

  • A great incentive for performance appraisal is considered to be its value in determining raises, bonuses and promotions.  However, benefits to people who receive greater-than-average-awards are usually short term and have little impact on improving their value in the organization.  More important, these awards are de-motivators to the rest of the organization.
  • Measurement reviews can turn into judgment with no impact on improving business or employee’s performance.
  • Performance reviews can lead to gaming targets, indicators and performance results. For example, the Federal Bureau of Investigation ranked Philadelphia 3rd safest city in USA, based on the crime rates reported by the police. However, this result was achieved by police officers downgraded offenses, through recording assaults, rapes and robberies as hospital cases, threats ad investigate persons (Grizzle, G., A, 2002). This is an example of gaming with national performance indicators.

 

References

  • Bourne, M., Martinez, V. & Pavlov, A. (2010), Reviewing performance: an analysis of the structure and functions of performance management reviews, Production Planning & Control, Vol. 21, Iss. 1 January 2010, pp. 70-83.
  • de Waal, A. (2001), Power of Performance Management: How leading companies create sustained value, John Wiley & Sons, Inc., NY, USA.
  • Grizzle, G., A. (2002), Performance measurement and dysfunction. The Dark Side of Quantifying work, Public Performance & Management Review, Vol. 25, No. 4, pp. 363-369.
  • Joyce, A. (2004), Reviews rate a “needs improvement”, available at: http://www.performance-appraisals.org/cgi-bin/links/jump.cgi?ID=4082 (accessed 16 August 2010).
  • Mintzberg, H. (1978), Patterns in Strategy Formation, Management Science, Vol. 24, No. 9, p. 934.
  • Mintzberg, H. & Waters, J., A. (1985), Of Strategies, Deliberate and Emergent, Strategic
    Management Journal, Vol. 6, No. 3, p. 257. 

Strategic : Theory informing practice

 

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