Research suggesting that certain performance measures are better for measuring organizational performance

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Is there any research suggesting that certain performance measures are better for measuring organizational performance?

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Yes, there is a significant body of research suggesting that certain performance measures are better for measuring organizational performance than others. This research has identified a number of key factors that should be considered when selecting performance measures, including:

  • Relevance: The performance measures should be relevant to the organization’s strategic goals and objectives.
  • Reliability: The performance measures should be reliable and consistent.
  • Validity: The performance measures should accurately measure what they are intended to measure.
  • Timeliness: The performance measures should be available in a timely manner.
  • Affordability: The performance measures should be affordable to collect and maintain.

In addition to these general factors, researchers have also identified a number of specific performance measures that are particularly effective for measuring organizational performance. These measures include:

  • Financial performance measures: Financial performance measures, such as profit, revenue, and return on investment, are often used to assess the overall financial health of an organization.
  • Customer satisfaction measures: Customer satisfaction measures, such as customer surveys and Net Promoter Score, are used to assess how satisfied customers are with the organization’s products or services.
  • Employee satisfaction measures: Employee satisfaction measures, such as employee surveys and employee engagement surveys, are used to assess how satisfied employees are with their work and their workplace.
  • Operational performance measures: Operational performance measures, such as quality, productivity, and cycle time, are used to assess the efficiency and effectiveness of an organization’s operations.

Research has shown that organizations that use a balanced set of performance measures, including financial, customer, employee, and operational measures, are more likely to achieve their strategic goals and objectives.

Here are some specific examples of research that supports the use of certain performance measures:

  • A study by Kaplan and Norton (1992) found that organizations that used the BalancedScorecard, a framework for measuring organizational performance that includes financial, customer, employee, and operational measures, outperformed organizations that did not use the BalancedScorecard.
  • A study by Huselid et al. (1997) found that organizations with high levels of employee satisfaction also had high levels of customer satisfaction and financial performance.
  • A study by Banker et al. (2000) found that organizations with high levels of operational performance also had high levels of financial performance.

Overall, the research suggests that the best performance measures for measuring organizational performance are those that are relevant, reliable, valid, timely, and affordable. Organizations should also consider using a balanced set of performance measures, including financial, customer, employee, and operational measures.

In addition to the research discussed above, here are some other factors to consider when selecting performance measures:

  • The industry in which the organization operates: Different industries have different key performance indicators (KPIs). For example, the KPIs for a retail company will be different from the KPIs for a manufacturing company.
  • The size of the organization: Smaller organizations may have different needs than larger organizations. For example, smaller organizations may not have the resources to collect and maintain a large number of performance measures.
  • The culture of the organization: Some organizations place a greater emphasis on certain performance measures than others. For example, some organizations may place a greater emphasis on financial performance measures, while others may place a greater emphasis on customer satisfaction measures.

Once an organization has selected its performance measures, it is important to track and analyze them over time. This will help the organization to identify trends and patterns, and to make informed decisions about how to improve its performance.

 

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