PERFORMANCE EVALUATION

Performance Evaluation

Abstract

Addresses the question of how to assure effective performance evaluation of a public service strategic unit. Both descriptive and prescriptive approaches are discussed. Based on this analysis a practical model for performance evaluation is developed. The model proposed comprises key drivers of performance, including internal and external factors, as well as both quantitative and qualitative factors, simultaneously. The model has been designed using the Analytical Hierarchy Process (AHP) and tested using the Expert Choice Software. The testing results show that the evaluation outcomes differ as a function of the criteria used, the weight assigned, and the meaning given to each criterion. Using the same criteria with a different weighting scheme results in different outcomes for the same performance. This counter-intuitive finding has important implications for management practice(Aerts, 2005).

Performance Evaluation

Introduction

Performance evaluation is perhaps the most powerful management tool for strategic deployment in both private and public settings. This paper focuses on how to effectively evaluate performance for public service units, such as municipalities, police units, fire stations and/or public utility services. The difficulty of measuring strategic performance in these cases arises from the fact that each service provided is quite distinct, and the primary goal sought is not profit. It is mainly providing the best possible service to the community and the public at large. Additionally, many stakeholders are involved; each category has different interests and goals that are in conflict. The individual stakeholders' expectations may be different as well. Furthermore, the services provided result in both tangible and intangible outcomes, which may be hard to measure(Albuquerque, 2009).

To evaluate strategic business performance in such cases, our plan starts with a brief review of current literature followed by a discussion of the main drivers, and conditions of effective performance evaluation systems. Based on this discussion, a model design is developed. The proposed model synthesizes and extends current views, and makes use of the analytical hierarchy process (AHP) approach. The model is then tested for municipality services using Expert Choice Software. We conclude with a summary of the testing results and discussion of their policy implication for management practice.

Despite continuous and rapid changes in business environments, measures used to evaluate strategic business performance have not kept pace with these changes. The prevailing financial indicators of business performance focus on past achievements. Yet in highly dynamic decision environments, the past performance of a business firm may not be indicative of, nor is a guarantee for, its future success. Furthermore, financial measures are insufficient and may be misleading in service environments, since the primary business goal is public service, and not profit maximization. New measures that address the impact of current strategies and actions on future business performance and on sustainability of business growth are required. Measures that reflect both effectiveness in managing change and the intangible factors involved are needed(Amabile, 2007).

Current literature has addressed the problem of interest in a piecemeal way, using different views, as well as different directions. Research studies on strategic performance systems can be classified by orientation, in two ...