Types Of Performance Measures Research Articles

Performance Measurement in an Era of New Public Management

The last two decades have witnessed a proliferation of scholarly discourse on performance management. This discourse evolved out of a number of forces in the early 1990s from the new public management movement, which called for government to show its efficiency in expending public resources as well as prove that substantive results—or outcomes related to a program’s effectiveness—had been generated by its activities. As federal agencies developed performance standards at the program level as well as in the management and administrative functions, state governments and their localities were compelled to adopt the same measures as a method of assessing their activities and enhancing their reporting mechanism under federal programs and mandates. This analysis examines the literature on performance-based management and offers recommendations on how to implement successful performance measurement system. The analysis begins with a historical synopsis. This is followed by a discussion of applications and types of performance measurement, limitations and benefits, and a comparative analysis of performance measurement efforts in the State of Georgia and the City of Kennesaw, Georgia. Additionally, the analysis offers some implementation challenges and solutions.

The Role of Performance Measures in the Intertemporal Decisions of Business Unit Managers

Accounting performance measures are often argued to lead to short-sighted behavior by managers facing intertemporal decisions. We assess the association between different types of performance measures and the time horizon of business unit managers who have profit responsibility. Our results, based on a sample of 105 managers, indicate that accounting return measures direct business unit managers’ attention toward longer-term activities. Non-financial measures similarly direct managerial attention toward longer-term activities, although not to the same degree as accounting return measures. We conclude that accounting return measures can balance out potential congruity problems associated with the profit measures by directing managerial attention to activities that have longer term consequences on firm performance.

Meta‐analysis of the impact of positive psychological capital on employee attitudes, behaviors, and performance

AbstractThe positive core construct of psychological capital (or simply PsyCap), consisting of the psychological resources of hope, efficacy, resilience, and optimism, has recently been demonstrated to be open to human resource development (HRD) and performance management. The research stream on PsyCap has now grown to the point that a quantitative summary analysis of its impact on employee attitudes, behaviors, and especially performance is needed. The present meta‐analysis included 51 independent samples (representing a total of N = 12,567 employees) that met the inclusion criteria. The results indicated the expected significant positive relationships between PsyCap and desirable employee attitudes (job satisfaction, organizational commitment, psychological well‐being), desirable employee behaviors (citizenship), and multiple measures of performance (self, supervisor evaluations, and objective). There was also a significant negative relationship between PsyCap and undesirable employee attitudes (cynicism, turnover intentions, job stress, and anxiety) and undesirable employee behaviors (deviance). A sub‐analysis found no major differences between the types of performance measures used (i.e., between self, subjective, and objective). Finally, the analysis of moderators revealed the relationship between PsyCap and employee outcomes were strongest in studies conducted in the United States and in the service sector. These results provide a strong evidence‐based recommendation for the use of PsyCap in HRD and performance programs. Theoretical contributions, future research directions, and practical guidelines for HRD conclude the article. Gallup Polls in recent years suggest that Americans are pessimistic about incremental

The Impact of Management on Administrative and Survey Measures of Organizational Performance

We review ninety-two studies of public service performance, and analyse in detail those that model the impact of management on both administrative and survey measures of performance. Our review indicates that administrative data typically reflect the performance judgements of government and regulators, while survey data reflect those of citizens, service users and public managers. Analysis of the eleven articles that use administrative and survey performance measures reveals limited differences in the impact of management variables on both types of performance measure. However, management variables appear to have a stronger link with the performance judgements of service consumers than managers themselves.

Using GIS to develop a performance-based framework for evaluating urban design and crash incidence

Although traffic safety is a concern to many urban residents, the role of urban design on crash incidence is typically not considered as part of the transportation planning and design process. Much of the problem stems from the types of performance measures used to analyze traffic safety; most conventional safety analyses focus either on crash performance at high crash, ‘black spot’ locations, or else examine safety at the aggregate scale of the city of metropolitan region. Such approaches not only fail to consider how urban design may influence crash incidence, they fail to provide a framework through which the safety effects of urban design can be understood. Urban design influences the composition and distribution of traffic through a community, establishes locations where different users interact and influences the speeds at which these interactions occur. The effects of such factors are experienced neither at the level of the individual intersection, nor at the level of the region. Such effects are best understood at the level of the individual community. To better account for the effects of urban design on crash incidence, the authors recently sought to develop a geographic information systems (GIS)-based database of crash incidence and urban form for the City of San Antonio, Texas. This article details how GIS may be used to analyze the relationship between urban form and crash incidence at the level of the individual community, including the data sources available for creating such a database, strategies for assembling these data using GIS and opportunities for using such databases to advance professional practice. It is hoped that the methods and techniques detailed in this article will assist planners and urban designers in systematically evaluating the effects of community design on traffic safety.

Relationship between information systems sophistication and performance measurement

PurposeStudies in performance measurement systems (PMS) seem to receive little attention in the information system (IS) literature. The purpose of this paper, therefore, is to contribute to the stream of research in the fields of performance measurement and ISs.Design/methodology/approachThe paper examines how IS sophistication is linked to PMSs by investigating the use of performance measures in the Malaysian financial services industry. Data were collected from 140 financial institutions through self‐administered questionnaire survey of top‐level executives. A component‐based structural equation modelling, partial least squares, was used to test the research model.FindingsThe results indicate that IS sophistication is a determinant of performance measures. The results also indicate that different dimensions of IS sophistication affect different dimensions of performance measures usage.Originality/valueThe paper significantly extends prior research on performance measures by establishing IS sophistication links to the different types of performance measures. Further, the findings clarify the distinct and important roles of each IS dimension's influence on performance measures.

Empirical loss analysis to support definition of seismic performance objectives for woodframe buildings

Abstract This paper presents an empirical seismic loss analysis procedure for woodframe buildings and examines how it can be utilized to provide input for the development of seismic performance objectives for woodframe buildings in terms of economic loss. This type of performance measure is more directly useful to building owners than qualitative performance levels such as “Life Safety” proposed in first generation performance-based seismic design documents. The procedure combines the PEER loss estimation methodology with the most up-to-date seismic numerical structural models for woodframe buildings and experimental data from full-scale shake table tests. The resulting loss estimates are quite reasonable when compared to observations from the 1994 Northridge, CA earthquake. The procedure is applied to two-story, single-family residential structures to estimate losses as a function of ground motion intensity and building design, and the results are discussed to illustrate how they can be used to help: (1) characterize estimated losses, (2) define performance objectives, and (3) guide design to meet those performance objectives. The study provides the first fully comprehensive application of the PEER methodology to woodframe buildings.

Investigating the effects of innovation and employee performance on the relationship between total quality management practices and firm performance: An empirical study of Turkish firms

The results from studies of the relationship between total quality management (TQM) practices and firm performance and from those on the effects of TQM practices on various types of performance measures are mixed. There is no extensive empirical evidence about the effect of TQM practices on employee performance and innovation performance, and few empirical studies have investigated the mediating effect (indirect relationship) of one type of performance measure on the relationship between TQM practices and another type of performance measure. The objective of this study was to investigate the relationships between TQM practices and multiple performance measures and to examine the mediating effects of employee performance and innovation performance on the relationship between TQM practices and firm performance. The study used a cross-sectional survey methodology—we sent questionnaires to 500 randomly selected ISO 9001:2000 certified firms in different industries in the Marmara region in Turkey in 2005 and 2006 and obtained 373 usable questionnaires. After confirming the validity and reliability of the latent variables with confirmatory and exploratory factor analyses, we tested the model and hypotheses using structural equation modeling. Results of the study support the proposed hypotheses that employee performance and innovation performance partially mediate the relationship between TQM practices and firm performance. The study also provides managerial and research implications, research limitations, and suggestions for future studies.

On the Appropriateness of Performance-Based Compensation for Supervisory Board Members – An Agency Theoretic Approach

Central European countries such as Austria, Germany and the Netherlands require public firms to set up two separate boards: a management board (MB) that manages the firm and a supervisory board (SB) that controls the management. As part of the recent debate on corporate governance, the expansion of performance-based compensation to include members of the SB has been heavily discussed. In this paper we use a two-stage principal–agent model to investigate incentive effects arising from such contracting. The SB is responsible for contracting with the MB and for monitoring it. We allow for two types of performance measures to be available, a possibly biased financial report provided by the MB and the market price of the firm. We obtain the following results: both performance measures are beneficial and equally suitable for contracting with the MB. In contrast, the MB's report is never part of the optimal SB contract. Using the market price as a performance measure for the SB in some settings turns out to be beneficial as compared to a purely fixed compensation but not in others.

Simulation modeling and analysis for production scheduling using real-time dispatching rules: A case study in canned fruit industry

This paper considers a production scheduling problem frequently found in many industries whose raw materials are agricultural products. The study focuses on a production system in processed canned fruit industry as a case study. Common characteristics of the system include: (1) high uncertainties of agricultural raw materials (fresh fruits), both in terms of quality and quantity, which significantly affect the production schedule that is usually planned in advance, (2) multiple types of finished products (can sizes and fruit types), sharing the same resources, thus makes their scheduling interdependent, and (3) the shared resources (retorts) are non-identical which exist to provide services to the bottleneck operation (sterilization) in parallel. The paper has two interrelated objectives: to propose the use of real-time scheduling methods based on dispatching rules for such systems, and to demonstrate the use of computer simulation modeling to imitate the actual production system and how to conduct computational experiment on the simulation model to determine a set of appropriate dispatching rules for the case study industry. Nine real-time, setup dependent, dispatching rules are compared using two types of performance measures: flow time and tardiness. The results show the effectiveness of this approach to supporting the decision-making process in production scheduling of canned fruit products.

Aggregate and Specific Performance Measures and Intra-Firm Interdependencies: Theory and Evidence

We provide theory and empirical evidence on the role of three types of performance measures in the evaluation of business unit managers in response to intra-firm interdependencies. We consider aggregated “above-level” measures (e.g., firm-wide net income), “own-level” business unit measures (e.g., business unit profit), and specific “below-level” measures (e.g., revenues on a product) and analyze variation in their relative incentive weight in response to interdependencies that arise from the focal manager’s impact on other units in the firm or from the impact of other units on the focal manager’s performance. Our theory yields two predictions: (1) the relative weight placed on specific “below” level measures is increasing in the impact of the focal manager on other business unit and (2) both types of interdependencies interact. Empirical evidence based on a survey among 122 business unit managers is consistent with these predictions.

Characterizing Learning by Simultaneous Analysis of Continuous and Binary Measures of Performance

Continuous observations, such as reaction and run times, and binary observations, such as correct/incorrect responses, are recorded routinely in behavioral learning experiments. Although both types of performance measures are often recorded simultaneously, the two have not been used in combination to evaluate learning. We present a state-space model of learning in which the observation process has simultaneously recorded continuous and binary measures of performance. We use these performance measures simultaneously to estimate the model parameters and the unobserved cognitive state process by maximum likelihood using an approximate expectation maximization (EM) algorithm. We introduce the concept of a reaction-time curve and reformulate our previous definitions of the learning curve, the ideal observer curve, the learning trial and between-trial comparisons of performance in terms of the new model. We illustrate the properties of the new model in an analysis of a simulated learning experiment. In the simulated data analysis, simultaneous use of the two measures of performance provided more credible and accurate estimates of the learning than either measure analyzed separately. We also analyze two actual learning experiments in which the performance of rats and of monkeys was tracked across trials by simultaneously recorded reaction and run times and the correct and incorrect responses. In the analysis of the actual experiments, our algorithm gave a straightforward, efficient way to characterize learning by combining continuous and binary measures of performance. This analysis paradigm has implications for characterizing learning and for the more general problem of combining different data types to characterize the properties of a neural system.

Part-machine cell formation in group technology using a simulated annealing-based meta-heuristic

The part-machine cell formation problem (PMCFP) is a crucial step in the design of a cellular manufacturing system and has received considerable research attention over the last five decades. This study proposes a simulated annealing-based meta-heuristic for solving the PMCFP. The effectiveness of the proposed approach is compared to conventional algorithms across a set of PMCFPs available in the literature. Computational results using four types of performance measures show that the proposed simulated annealing-based meta-heuristic is highly effective by comparison with conventional algorithms for PMCFPs on the same test problems.

The Determinants of Performance in Building Infrastructure in Transition Economies

We investigate how contract specificities affect the performance of municipal infrastructure projects in transportation, district heating, water, waste water and solid waste. Using data from projects financed by the European Bank for Reconstruction and Development (EBRD), we look at the effect of involving private parties with different degrees of risk, and involving public parties other than the respective municipality. In particular, central authorities may provide a sovereign guarantee for the funds lent by the Bank. We construct two types of performance measures. First, timeliness of the projects is measured by (i) the total length of delays, (ii) the delays between signing and disbursement of funds and (iii) the occurrence of political disruptions of the projects. Secondly, to measure financial and commercial performance we look at whether (iv) financial covenants and (v) covenants about tariffs for infrastructure use were reached. We find that private participation without commercial risk (for instance, works or turnkey projects) tends to increase project performance. Private participation with commercial risk has no significant effect on project performance. Sovereign guarantees reduce delays but also decrease financial discipline. These effects are robust against potential selection effects, which we control for through instrumental variable regressions.

A Conceptual Framework for Performance Measurement Development in an Intergovernmental Setting: The Case of Intergovernmental Systems in the USA and Italy

Throughout all levels of government, performance measurement remains an important topic among professional managers and elected officials. The evolution of performance measurement in many cases is driven by professional standard setting bodies, research institutes and occupational associations as much as by state government legislative bodies or governors. At the same time, state and national agencies act as oversight bodies or pass through conduits for sending resources to local government agencies that carry out service delivery functions. This is certainly true in the case of medical care, education and public safety in many countries. The performance of government services in these settings represent a particularly challenging environment from which to assess. The development of and quantification of performance measures in an intergovernmental setting remains an open area for research and examination. In such a setting, the conflicts between principals and agents becomes an important component in the process and potential conflicts over determining the types of performance measures to be used and the process of setting numbers to such measures. Those issues can be considered as being components of the so-called Whole-of-Govenrment (WoG) approach, that is the next generation of the New Public Management. Under the WoG perspective, the public administration is studied and managed under a more holistic strategy, where the focus is not on each single organization, but on the entire network of these organizations and on the integration among them (Bogdanor, 2005; Hood, 2005; Christensen and Laegreid, 2007). This paper seeks to identify the conceptual challenges in measuring and quantify performance in an intergovernmental system. It is believed that such a conceptual framework will guide future empirical research into questions that address the performance of services in an intergovernmental context as well as empirical research into the impact of performance measures in an intergovernmental setting. Two cases studies, one from Italy and the other form the United States, will serve to motivate the framework. In the area of court administration, the US National Center for the State Courts has created a new set of performance management tools called CourTools. The State of Michigan is one of the several states in the United States that is seeking to implement such a system. Michigan will serve as a motivating case study behind the development of the conceptual framework. There are several conceptual challenges in designing and compiling data related to the underlying CourTool measures. For the Italian case, the annual quality-of-life ranking of the 107 Italian territorial provinces published in December each year by Il Sole 24 Ore, the leading national business newspaper, will be analyzed. With its about 40 indicators, it is considered as one of the most important disclosure or, say, moment of truth for local elected officials belonging to the several local government operating at the provincial level. But, after more than twenty years since its first edition, criticism about the way performance indicators are chosen - and changed over time - still remains.

Assessing the Performance of Business Unit Managers

ABSTRACTUsing a sample of 140 managers, we investigate the use of various performance metrics in determining the periodic assessment, bonus decisions, and career paths of business unit managers. We show that the weight on accounting return measures is associated with the authority of these managers, and we document that both disaggregated measures (expenses and revenues), and nonfinancial measures play a greater role as interdependencies between business units increase. The results suggest separate and distinct roles for different types of performance measures. Accounting return measures are used to create the proper incentives for managers with greater authority, while disaggregated and nonfinancial measures are employed in response to interdependencies.

The Role of Non-Financial Performance Measures in Compensation Contracts in the Curtailment of Earnings Management

Most executive compensation contracts (specifically bonuses) are based on accounting-related measures such as earnings per share (EPS), growth in revenue, return on stockholders' equity. However, the recent trend of account manipulation and earnings management documented in the literature may lead to inequitable bonus payments to the managers or executives. Alternative performance measures that may be used to motivate managers are stock prices or market returns and non-financial measures. In this paper, I examine firms in the S&P 500 index and examine the type of performance measures they use in their short-term compensation. I expect that firms that use non-financial performance measures will have a lower prevalence of earnings management, since these measures are harder to manipulate. The findings are opposite to expectations. The firms that use both financial and non-financial performance measures actually have higher discretionary accruals, specifically accounts receivable accruals, than the firms that only use financial performance measures. The interpretation of these results is that these firms suffer from low earning s quality which makes the accounting numbers less meaningful.

Strategic Choice and the Configuration of Management Control Systems

This paper examines firms' design of performance measurement systems to support the effective implementation of business strategy, and tests whether different strategic choices are associated with the use of different performance measures. Performance measurement choices analyzed are the extensiveness, purposes and types of performance measures used. In addition, the use of alternative controls, action controls and problem solving teams, is examined. To explain these management control choices, the structural model developed also includes other important contingency variables that are associated with business strategy, including firm competencies, technology and environmental uncertainty. An analysis of 387 survey responses from a cross-section of industries suggests the existence of three broad types of business strategy, relating to innovation, customer-quality and low-cost. The findings suggest that emphasis on different strategies is associated differently with firms' competencies, environmental uncertainty, choice of technology, and use of performance measures. Although more emphasis on low-cost or customer-quality is associated with more extensive use of performance measurement information, each of the three strategies is also associated with use of different types of performance measures. Specifically, firms emphasizing innovation emphasize measures related to innovation, cost & efficiency and market performance (including profit). High emphasis on a customer-quality strategy is associated with emphasis on measures relating to quality and managers. Firms emphasizing low-cost emphasize measures related to cost & efficiency, production (systems) and employees. These firms also use performance information for more purposes than others. The results further show that most firms pursue combined strategies, which, compared to emphasis on a single strategy, is associated with more extensive and intensive use of performance information. This study thus finds support for contingency propositions that different strategic choices are differently associated with environmental and firm-level contingencies and require different configurations of management control systems.

Strategy, Choice of Performance Measures, and Performance

We examine the relationship between quality-based manufacturing strategy and the use of different types of performance measures, as well as their separate and joint effects on performance. A key part of our investigation is the distinction between financial and both objective and subjective nonfinancial measures. Our results support the view that performance measurement diversity benefits performance as we find that, regardless of strategy, firms with more extensive performance measurement systems—especially those that include objective and subjective nonfinancial measures—have higher performance. But our findings also partly support the view that the strategy-measurement “fit” affects performance. We find that firms that emphasize quality in manufacturing use more of both objective and subjective nonfinancial measures. However, there is only a positive effect on performance from pairing a qualitybased manufacturing strategy with extensive use of subjective measures, but not with objective nonfinancial measures.

Assessing the Performance of Business Unit Managers

Using a sample of 140 managers, we investigate the use of various performance metrics in determining the periodic assessment, bonus decisions, and career paths of business unit managers. We show that the weight on accounting return measures is associated with the authority of these managers, and we document that both disaggregated measures (expenses and revenues), and non-financial measures play a greater role as interdependencies between business units increase. The results suggest separate and distinct roles for different types of performance measures. Accounting return measures are used to create the proper incentives for managers with greater authority, while disaggregated and non-financial measures are employed in response to interdependencies.