The concept of ‘Best practice’ is interesting because it mirrors the inner values of an entity. It highlights the subjective nature of judging performance outside of hard financial data.
If the best practice culture of your organization is constantly strive for to be the very best and this is coupled with a culture of learning and development then innovation may be fostered. Whereas if best practice is actually a code word for a set of strict rules and employees are discouraged to think beyond this then it is likely innovation will not occur. Similarly, organizations sometimes are uncertain to take on something new and so they fall back to the “old and familiar.”
Hence, in creating suitable performance Evaluation and Measurement, the inclusion of financial and non- financial results are important feedback processes to improve a business’s future performance associated to CSR or sustainability related risk management. De Nahlik suggests ‘best practice’ can lead to ‘dysfunctional effects’ if performance management is not regularly evaluated and improved to the changing environments. The lack of intangible accounting resources means the absence of performance measurement systems, where competitive advantage in the Resource Based View (RBV) of the firm can be at risk.
While acknowledging controversy around performance management, the writers consider there is a disconnection between practice and concept development that affects performance management stakeholders in the ‘real world’. Factors such as labour, supply chains, global media, and multinational distribution channels all influence the range of stakeholders that have potential to influence the performance of an organization and as such require clear thought and management.
In conclusion, the writers are realistic about the fact that there is a need for performance management within organizations, but, the larger implications are for balanced purpose. Uncertainties around performance management ‘dysfunctional effects’ could assist in maintaining an understanding of the broader stakeholders to considering change and innovation in the mainstream performance management literature into significant extents, for example organizational development and change management. Besides, collective values can be achieved in the process with collective contributions from different disciplines to addressing some of these concerns to reiterate and strengthen performance management.
Good to know!
Great article.