Controversies in Contemporary Performance Management -Part 2

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Indeed, there were some pressures of globalization and increased regional competition, expectation of a more cooperative industrial relations setting would have encouraged employers to redesign their performance management systems. Although performance management systems are still challenging, there are some organizations supportive of the Balanced Scorecard system is positive.  This encouragement would help employers reflect their competitive requirements, and to enable key stakeholders to achieve organizational objectives and outcomes.  But, “there are interesting implications for Transnational corporations (TNCs) who operate globally across geographic and culture borders.”

 

As highlighted in De Nahlik the use of global standards and metrics may create a common language in business which may be useful, however, it may result in valued practices from other cultures being excluded. Also, when all managements function in the same method using the same standards and language i.e. best practice it can also fail innovation and expansion.

 

An associate compares his workplace to what de Nahlik notes around the multiple levels of performance management that “performance management as something to be considered at the individual level and linked to a judgement of the adequacy of the individual’s performance as a member of the organization”.

 

So, the question is whether “we see organizations, especially firms, compared using financial ratios… but are these most relevant indicators for the organization’s purpose? Or do the most powerful (financial) stakeholders drive and determine the measurement agenda and metrics.  He agrees to the second part of the question in his experience though, but the idea of the supreme stakeholder is a concern perception of the preferred but ambiguous objective function of ‘maximize shareholder value’.

Additionally, he supports the importance of financial metrics indicator of an organization’s success, but, the financial mindset seems embedded in management thinking. Since his organization’s employees are encouraged to relate all their activities to a financial result when undertaking their own evaluations.

 

He believes this can shift the focus away from the non-financial benefits of their activities. For example, as a member of the Culture and Social Committee in his department and their work has a direct impact on lifting levels of engagement, but, he was unable to link this directly to a financial benefit (unable to quantify how this may have impacted productivity) thus it had much less relevance to his measurement of individual performance.

 

Nevertheless, a supporter says “even if one were to argue that financial data does provide enough information to understand an individual or organization’s performance it would need to be conceded that the information is historical in nature i.e. the data is reporting on events that happened in the past and does not necessarily provide information on what might occur in the future which might be important when developing a strategic plan.”

 

Fortunately de Nahlik  argues in favour of utilizing time, effort and resources (including capital) in managing a broader range of stakeholders and that there is a growing body of “governance literature relating to performance management of stakeholder requirements”. For example, Companies’ Triple Bottom Line (now GRI4 and is currently the most globally recognized work) reporting which is defined by Elkington  as measuring “economic, social and environmental value added [activities]”.

 

Despite this, he is still yet to see these other measurements get translated into their own personal scorecards. Although in practice, performance management was labelled as biased and challenging, suggesting a range of existing theoretical frameworks remained unclear .

 

Triple Bottom Line reporting is becoming more common for large organizations as is public commitments to the environment; these are obvious ways in which performance can be measured that do not automatically separate financial information.

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