Setting Performance Targets Research Articles

Managing the asset time bomb: a system dynamics approach

For organisations responsible for managing the UK's national infrastructure, particularly those that are tightly regulated, a major challenge today is how to maintain performance of their infrastructure assets within the constraints of both limited budgets and externally set performance targets. This problem becomes more acute when significant members of an asset base approach an end-of life state at the same time. Resolving this problem has often proved difficult as it doesn't readily lend itself to exploration with traditional analytical and forecasting tools. This paper discusses how system dynamics methods and tools have been successfully used to develop a new approach to asset and infrastructure planning which builds simulation models that both give insight into the nature of the asset time bomb threat but, more importantly, enable the development of asset management polices and strategies that will eliminate the threat. The paper includes a description of system dynamics showing the detailed structure of the models developed. A case study of a leading European electricity distribution network operator who used system dynamics to understand and solve the asset time bomb threat is described including the outcome which resulting in a fundamental change in asset management strategy.

Beyond the contract: Managing risk in supply chain relations

As a consequence of the development of intensified relations with suppliers, for many firms the supply chain has become a significant source of risk exposure. In this paper we examine firms’ use of control practices to manage risks associated with intensified collaboration with supply chain partners. Specifically, we examine how buyers manage risks associated with interfirm transactions through their choice of supply partner, in terms of perceived goodwill and competence trust, and their use of multiple interrelated supply chain management (SCM) control practices. These control practices include contractual contingency planning, performance target setting, operational reviews, information sharing, supplier support and joint problem solving. We collect survey data from Japanese manufacturing firms about their relations with part suppliers to test hypotheses about the associations between transaction risks, selection of trusted suppliers and use of SCM practices. Our results support that transaction characteristics that are at the basis of transaction risks significantly affect the selection of trusted partners to collaborate with as well as their use of various control practices to manage relationships. We also find that in particular competence trust facilitates the use of control practices to support effective SCM.

Lightweight Acoustic System Performance Target Setting Process

Lightweight Acoustic System Performance Target Setting Process

Information Asymmetry and the Choice of Financial and Non-Financial Performance Targets During an Economic Downturn

Prior studies examining how firms use multiple performance measures when evaluating their managers rarely recognize that managers may be privately informed about how well different measures reflect their effort. We extend the standard multi-tasking model to allow performance measures to be affected by the information asymmetry between the firm and its privately informed manager. We show that reducing the information asymmetry component of one measure reduces the corresponding information rent and consequently increases the relative incentive weight on that measure. This result guides our empirical inquiry of performance target setting using survey data on 2,136 entities collected before, during, and after the 2008-2009 recession. We predict that the recession made it more difficult for managers to understand how their effort translates into financial results and thus reduced the information asymmetry affecting financial performance measures. Consistent with our theoretical result, we find using various regression and matching estimators that financial performance targets are substantially more difficult to achieve (afford managers less slack) and at the same time account for a greater part of managerial incentive compensation during the recession than during our control periods.

Beyond the Contract: Managing Risk in Supply Chain Relations

As a consequence of the development of intensified relations with suppliers, for many firms the supply chain has become a significant source of risk exposure. In this paper we examine firms’ use of control practices to manage risks associated with intensified collaboration with supply chain partners. Specifically, we examine how buyers manage risks associated with interfirm transactions through their choice of supply partner, in terms of perceived goodwill and competence trust, and their use of multiple interrelated supply chain management (SCM) control practices. These control practices include contractual contingency planning, performance target setting, operational reviews, information sharing, supplier support and joint problem solving. We collect survey data from Japanese manufacturing firms about their relations with part suppliers to test hypotheses about the associations between transaction risks, selection of trusted suppliers and use of SCM practices. Our results support that transaction characteristics that are at the basis of transaction risks significantly affect the selection of trusted partners to collaborate with as well as their use of various control practices to manage relationships. We also find that in particular competence trust facilitates the use of control practices to support effective SCM.

A Methodology for Setting State and Local Regression-Adjusted Performance Targets for Workforce Investment Act Programs

Beginning with PY2009, the U.S. Department of Labor’s Employment and Training Administration (USDOL/ETA) adopted a regression-adjusted approach for setting national targets for several federal workforce development programs, including WIA Adult, Dislocated Worker, and Youth programs. Prior to that time, national targets were based on past performance and the desire to encourage continuous improvement in the workforce programs. The continuous improvement approach typically increased target levels from year to year without a systematic way of accounting for changes in economic conditions or the ability to meet previous targets. The onset of the 2007–2009 recession drew into question this practice, and the Department of Labor and the Office of Management and Budget (OMB) sought to develop a target-setting methodology that would take into account the effect of changes in labor market conditions on program outcomes. The USDOL/ETA also decided to extend the regressionadjusted approach for setting performance targets so that it also could be used for determining state and LWIA targets. Before the change, state targets were set through negotiations between the state and the USDOL, and LWIA targets were set through negotiations between the state and the LWIAs. This document provides an overview of the methodology for the development of state and local PY2011 performance targets for the three Workforce Investment Act (WIA) programs.

Researchers and Practitioners Carry the Quality Flag

Researchers and Practitioners Carry the Quality Flag

Relative Performance Evaluation and Target Setting

It is well known that compensation contracts can improve risk sharing by incorporating information about peer performance ex post, i.e., once the performance of a unit as well as its peers is observed. In this study, we examine whether peer performance is also used ex ante, i.e., when setting performance targets at the beginning of a period. We analyze data on 2008-2010 performance targets from 354 units of a national agency responsible for reintegration of the long-term unemployed into the labor market. We find evidence that a target for a performance measure is strongly positively associated with past peer performance on the same measure as well as past peer performance on a different measure. Thus, performance targets are lower whenever past peer performance is weak on at least one of its dimensions. We also find that the relative weights on different measures of peer performance are proportional to their capacity to filter out common risks. We conclude that using information about past peer performance improves risk sharing and alleviates adverse incentive effects associated with setting targets based on a unit’s own past performance.

Measuring and reporting on system performance across the Canadian cancer control continuum.

254 Background: The Canadian Partnership Against Cancer’s System Performance initiative is a national, collaborative effort, aimed at reporting pan-Canadian system performance indicators across the cancer control continuum to inform system-wide quality improvements. Methods: This work involved prioritizing indicator development to address quality and cancer continuum dimensions, defining and adopting standardized methodologies, and collecting validated, comparable data from provincial and national sources. Results have been disseminated though a number of general and special topic reports and have been used by policy makers and planners to identify and interpret gaps, variations, and trends to inform quality improvement strategies. An independent evaluation of the impact of this work was conducted in 2012. Results: The Reports, published annually since 2009, include a broad range of performance indicators on prevention, screening, diagnosis and treatment, research, patient experience, survivorship, supportive care, and long-term outcomes. Results show notable differences in performance by province, age and gender, geography (urban/rural), and socio-economic status, including significant variations in clinical practice patterns and concordance with evidence-based surgical, radiation, and systemic therapy guidelines. These are examined along with population risk factors, screening rates, and wait times, to assess relationships with outcome measures, including patient reported outcomes. Special studies, including chart reviews, have been conducted to explain variations, set performance targets, and to help focus quality improvement efforts. The impact evaluation identified substantial uptake of system performance information across the country and a range of specific initiatives informed by the work. Conclusions: This work represents one of the most comprehensive efforts of its kind involving all provincial and national jurisdictions in the sharing and dissemination of standardized performance results, the development of evidence-based national performance targets, and coordinated efforts to use this information to inform system-wide quality improvements in cancer control.

Use of a Pan-Canadian indicator to measure treatment rates relative to evidence-based guidelines for rectal cancer.

177 Background: As part of the Canadian Partnership Against Cancer’s (CPAC) System Performance initiative, indicators measuring treatment practice patterns across the country are now available, offering the ability to compare against evidence-based guidelines. We report on the percentage of patients with stage II and III rectal cancer receiving pre-operative radiation treatment (RT) based on an analysis of Canadian administrative data. A retrospective chart review was conducted to examine reasons for non-treatment with RT, set performance targets, and inform quality improvements. Methods: Data on the percentage of stage II and III rectal cancer cases receiving preoperative RT were obtained from five provincial cancer registries using a standardized methodology for 2,854 cases diagnosed between 2007 and 2008, with 2009 data soon to be available. A retrospective chart review was conducted in five provinces on a random sample of 383 patients diagnosed in 2008 to examine reasons for non-referral and non-treatment. Results: Based on administrative data, an average of 45% of cases received RT preceding surgical resection for stage II or III rectal cancer, ranging from 36% to 48% across provinces. Preoperative RT rates were similar for men and women, but were lower in older patients. From 2007 to 2008, the percentage of patients receiving pre-operative RT increased in all provinces. Results from the chart review showed that, of those who did not receive preoperative RT, 33% were not referred by a surgeon to an oncologist. The most common documented reasons for non-referral were co-morbidities (26%) and patient choice (7%). Among patients referred to an oncologist, 42% were treated with preoperative RT, 30% were treated with post-operative RT and 28% received no treatment. Among those receiving no treatment, 29% were seen only by a medical oncologist, and 18% were not treated due to patient choice. Conclusions: Findings are being used to develop national targets for treatment rates and, working with national oncologist associations, to develop quality improvement strategies, including patient education efforts to promote informed decisions on treatment options.

Determining Performance Targets

ABSTRACTPerformance targets direct organizational participants toward firm strategy, provide guidance for allocating effort, and induce effort toward performance goals. Key aspects of the setting of performance targets are how specific they should be and at which levels they should be set. We develop a structural model that aims to explain the specificity of targets set for subordinate managers and the information sources used to set target levels for defined performance dimensions, which sources include past performance, future planning, and benchmarking information. An analysis of 364 survey responses provides support for our expectations that both target specificity and the use of information sources to determine target levels vary with firms' environmental dynamism and task uncertainty, and with the intensity of financial incentives provided to subordinate managers. In addition, the results show that in response to these contextual variables, firms typically combine information sources to determine adequate target levels, instead of treating them as substitutes.

DECISION MAKING UNDER UNCERTAINTY USING A VEHICLE MULTILEVEL MODEL: APPROACH TO TARGETS ALLOCATION

In this paper, we consider setting performance targets for a vehicle design. The vehicle is modeled by a multilevel hierarchical tree structure. We have considered that each leaf of the structure may have several characteristics, and that for each characteristic a target is defined. Experts’ opinions are expressed with uncertainty regarding the feasibility of achieving these targets. Experts’ opinions are given in the form of intervals associated with their subjective beliefs for the possible values of characteristics. The collected information is propagated in the model to determine the plausibility and the belief for characteristics at the vehicle level. Using this information, five target allocation approaches are discussed which can be applied to three vehicle design strategies.

Manufacturing performance measurement and target setting: A data envelopment analysis approach

Manufacturing decision makers have to deal with a large number of reports and metrics for evaluating the performance of manufacturing systems. Since the metrics provide different and at times conflicting assessments, it is hard for the manufacturing decision makers to track and improve overall manufacturing system performance. This research presents a data envelopment analysis (DEA) based approach for performance measurement and target setting of manufacturing systems. The approach is applied to two different manufacturing environments. The performance peer groups identified using DEA are utilized to set performance targets and to guide performance improvement efforts. The DEA scores are checked against past process modifications that led to identified performance changes. Limitations of the DEA based approach are presented when considering measures that are influenced by factors outside of the control of the manufacturing decision makers. The potential of a DEA based generic performance measurement approach for manufacturing systems is provided.

It Depends What You Mean by 'Confident': Operationalizing Measures of Public Confidence and the Role of Performance Indicators

Centralized performance frameworks for the police in England and Wales have been the subject of considerable debate. Evidence from both the British Crime Survey and local force surveys shows that setting performance targets for public confidence in the police based on single indicator survey measures can have conceptual and practical difficulties. Specifically, such measures can misrepresent the views of some respondents and might underestimate public support for the police. We argue in favour of local public attitudes surveys reconfigured to measure aspects of procedural fairness, police legitimacy, and public intentions to co-operate.

From cognition to docition: The teaching radio paradigm for distributed & autonomous deployments

We advocate for a novel communication paradigm of docition which facilitates distributed and autonomous networking at minimal control overhead and maximal performance. We consider that the nodes in foreseen networks are intelligent radios able to learn and thus self-adapt to prior set performance targets within a given surrounding environment. We briefly review the state-of-the-art of purely distributed learning algorithms, and we identify the most appropriate approaches allowing for self-adaptation to particular system dynamics. In such distributed settings, however, the learning is typically complex, imprecise and slow due to mutually-impacting decisions resulting in non-stationarities. The docitive paradigm proposes a timely solution which encourages more knowledgeable nodes to teach surrounding nodes to speed up the development of their cognitive state. We advocate for different degrees of docition, such as teaching at start-up or run-time, and demonstrate that this improves the convergence speed and precision of known cognitive algorithms. We evaluate the docitive paradigm in the context of a femtocell network modeled as a multi-agent system, where the agents are the femto access points, implementing a realtime multi-agent reinforcement learning technique known as decentralized Q-learning. We propose different docitive algorithms and we show their superiority to the well know paradigm of independent learning.

Setting Performance Targets in Recessionary Times: Survey Evidence of a Discontinuity in the Distribution of Earnings Targets

Setting Performance Targets in Recessionary Times: Survey Evidence of a Discontinuity in the Distribution of Earnings Targets

Beating the Target: A Closer Look at Annual Incentive Plans

This paper documents the performance metrics used in annual incentive (bonus) plans for chief executive officers (CEOs). Our detailed analysis using earnings per share (EPS) shows that at the time of plan approval, in general, EPS growth targets are set lower than earnings expectations such as EPS growth implied by analyst consensus and the historical EPS growth of the firm and that of the firm’s industry over various horizons. A lower EPS target in the annual incentive plan increases the probability of achieving the target and enhances the ex-ante value of the annual incentive payout for the CEO. However, the slack in setting performance targets is small. Moreover, we find that performance targets are more challenging at firms with strong corporate governance and when the performance measure is more important. Interestingly, while not linked to subsequent performance or risk-taking at the firm, an easy performance target increases the amount of the ex-post payout for the CEO.

Assessment of Traffic Signal Maintenance and Operations Needs at Virginia Department of Transportation

Budgeting for the maintenance and operations (M&O) of traffic signal assets can be done in many ways. Systematic, data-driven approaches are applied to various extents in transportation agencies. However, little has been documented regarding signal resource allocation practices. A traffic signal needs assessment framework recently developed by the Virginia Department of Transportation to support signal M&O funding allocation is presented. The framework offers the potential for incorporating several performance measures into the needs assessment process, including mean time between failures, mean time to repair, average signal component service life, average remaining service life, and share of preventive maintenance costs with respect to overall maintenance costs. Through adjustment of related parameters, the needs assessment framework allows users to set performance targets against key signal system performance measures and compare needs for meeting various performance scenarios.

Methodological issues in achieving school accountability1

Test‐based educational accountability is widely used in many countries, but is pervasive in the US. Key features of test‐based accountability required by the US No Child Left Behind Act are discussed. Particular attention is given to methodological issues such as the distinction between status and growth approaches, the setting of performance targets, compensatory and multiple‐hurdle approaches, and the disaggregation of results. The strengths and limitations of growth and of value‐added models are discussed. It is concluded that school accountability results are best thought of as providing potentially valuable descriptive information rather than supporting strong inferences about school quality.

Effective utility functions induced by organizational target‐based incentives

AbstractMany companies set performance targets for their divisions to decentralize the decision‐making process and communicate with outside investors. This paper analyzes the effects of performance targets on the decision‐making behavior of the divisions. We introduce the notion of an ‘effective utility function’—a function that a division should use in its selection of projects if it wishes to maximize the probability of achieving its targets. We show that many target‐based incentives induce S‐shaped utility functions and discuss the organizational problems they may pose. We then show how an organization can set targets that induce expected utility maximization. Copyright © 2008 John Wiley & Sons, Ltd.