Performance Measurement System
This section of the assignment summarizes an article titled “Moving from performance measurement to performance management” by Amaratunga and Baldry (2002). The primary objective of the article is to establish baselines for a transition from performance measurement to performance management for a facilities management organization. Amaratunga and Baldry (2002) stated that this transition requires completion of two tasks, namely, effectively use the results of performance measurement, and develop a methodology for an anticipated strategic change in the organization.
Amaratunga and Baldry (2002) emphasize that performance measurement is a key tool that is used by an organization to assess how well it is achieving its objectives as well as identify areas of strengths and weaknesses. Performance measurement information should be used to effect changes in an organization that would be targeted at improving organizational performance. The process of initiating these positive changes is known as performance management. Facilities management organizations need to know how to make the transition from the first to the second.
The authors stated that in order to make a transition from performance measurement to performance management, facilities management organizations need two important components: organizational structure that facilitates usage of performance measurement results and capability to use these results to introduce changes to organization. A performance management programme in facilities management organizations should consist of the following components: involvement of organizational leaders in the process of designing performance management and measurement systems; open communication between organizational stakeholders; accountability of results; rewards that are connected to performance measures; organizational targets that are linked to rewards.
The authors emphasize that the process of installing performance management systems is complex and thus requires the following additional steps to be undertaken by a facilities management organization: ensure active communication at all levels; establish strategic goals; remove barriers to creating a learning organization; implement best practices based on benchmarks; adapt corporate culture.
In my point of view, I believe that this article makes a very important point that is crucial in contemporary organizational management. Many organizations believe that having installed a corporate performance measurement system they are likely to introduce necessary changes to corporate culture and thus improve organizational performance. Furthermore, they consider that these changes will happen automatically. Indeed, the terms “performance management” and “performance measurement” (that actually means “appraisal” according to Griffin and Moorhead (2009)) are often confused. However, as authors pointed out, performance measurement is the key element of performance management cycle which is in line with other sources on the subject (for example, McDavid & Hawthorn (2006)); however, it is not the single sufficient element to make the transition to strategic performance management. As the authors stated, the goal of strategic performance management is to create a learning organization that adapts to changes in its internal and external environment.
While Amaratunga and Baldry (2002) made an important point concerning the necessity of the transition from performance measurement to performance management or appraisal, their article is more of an attempt to cover a wide range of topics in limited space. They try to establish a connection between holistic approaches to management, the necessity of developing an adequate performance measurement system, and the need to shift towards performance management in facilities management organizations. However, the authors fail to provide detailed information concerning key performance indicators (KPIs) that are important for facilities management organizations. Furthermore, their article lacks examples and case studies that would demonstrate how their suggested model fits to practices commonly applied by facilities management organizations. In addition, I believe that their article is irrelevant to facilities management; rather, it is applicable to any type of business that seeks excellence in performance. Amaratunga and Baldry (2002) failed to provide clear examples of applying their strategy and did not state clearly what a learning facilities management organization is. Their approach to making a transition from performance measurement to performance management is focused on the organizational aspect of management; they fail to account for these processes from an individual point of view.
To conclude, the article that is being analysed makes an important statement and attempts to illustrate steps that are to be taken by an organization to make a shift from measuring to managing performance. Despite the fact that the article lacks practical examples and is not tailored to facilities management organizations while being more of a general business nature, the authors emphasize a crucial point and thus make a valuable contribution to contemporary business literature.
I am deeply convinced that the analysed article helped me gain understanding of the important practices that are concerned with managing organizational performance and creating a learning organization. Authors of the article helped me understand baselines of the system that can be named “performance management and measurement” and is best defined as the system that has “the role of collecting, integrating and analysing performance measures for enhancing decision making processes, verifying strategies and creating alignment” (Taticchi, 2010). Although the methodology that was described by the article is very general, it is still possible to apply it at the workplace. However, I believe that the processes of installing performance measurement systems and initiating performance management cycle should happen simultaneously.
Therefore, I believe that correctly applying performance management cycle at the workplace would result in the following measures taken to install performance management system in an organization:
- Set clear goals and objectives (translate mission and vision of the organization into a set of clear and well-defined performance objectives)
- Share these goals and objectives with key stakeholders of the organization (such as clients, customers, employees, management and shareholders)
- Design policies and programs that stem from organizational objectives and define resources that are necessary to implement these policies and programs
- Design tools that would be used to assess implementation of these programs
- Design tools and indicators that would be used to evaluate overall organizational health
- Evaluate programs (internally and externally) and report evaluation results
- Define major drawbacks and consistently implement improvements
However, there is one important drawback in the scheme outlined above. This scheme is normative; it outlines what should happen in an organization when it implements a performance measurement and management system. The scheme does not take into account psychological aspects of implementing changes in an organization; neither does it take into account organizational culture. The framework above is technocratic; it assumes that once an organization overcomes external challenges and finds necessary resources and information to incorporate into performance management strategy, a learning organization will emerge. Therefore, correct application of the principles and methods outlined above requires accounting for organizational culture and the nature of internal organizational communications. Successful performance management should also involve understanding of people, their motivation and goals as well as concern itself with structuring correct incentives.
To conclude, it should be stated that the framework proposed by Amaratunga and Baldry (2002) can be applied at organizational level. However, its application should be done in context of installing a performance management system. Furthermore, it can only be applied when it takes into account organizational culture, its people, their motivations, goals, and ability to respond to incentives provided by management.