16 - Performance Measurement and Management

Summary

INTRODUCTION

Academics and HR practitioners have long been absorbed with constructing the perfect performance measurement system. In the hidden depths of many leaders’ minds lies the “Shangri-la” of the definitive approach to performance management. It has been re-awoken in the last decade by the resurgence of strategy-driven methodology, the process improvement culture of re-engineering, value-chain management and six-sigma, to the extent that measurement is swiftly acquiring a Nirvana-like status and becoming an additional discipline in the guise of economic value addedness (EVA), balanced scorecard, activity-based costing (ABC) and enterprise performance solutions.

The present interest in performance is therefore justified when we see that “measurement managed” companies outperform others (Schiemann & Lingle 1999).

Performance measurement and appraisal is probably the most researched area within human resources management. Agreeing on an effective method, however, has been like searching for the lost city of Atlantis i.e., hard to find. The pavements of literature are littered with discarded approaches to finding the elixir to managing employee performance.

As a result, the scroll of managing performance in the twentieth century unfolded, vacillating between setting specific directions through objectives and measuring what has been accomplished or by making a judgement on how staff has performed using traits or performance factors.

However, in the New Economy this means Out with boring achievement terminology such as MBO (Management by Objectives) and goals and In with hyped up New Economy KPIs (key performance indicators) and metrics. This also means a kick in the pants for terms that designate how we achieve success, such as Performance Factors and Traits, and kudos for new kids on the block terminology such as competencies and key actions.