IMPACTS OF PERFORMANCE MEASUREMENT IN DECISION MAKING
Impacts of Performance Measurement in Decision Making
Organizations today are increasingly inclined to ensure client satisfaction, effective employee performance, and profits to provide their investors and stakeholders satisfied. One of the main reasons behind the use of performance measurement for organizations is to deliver reliable information that would allow organizations to make the right decisions. In performance measurement expertise, data is used by the management for strategic purposes. Martinez (2005) defines strategic performance measurement as the process where organizations continuously monitor their long-term plans, goals, and achievement. Grafton et al. (2010) research suggested that PMS could influence decision making in organizations positively. Also, it shows that performance measurement metrics can positively affect individuals’ productivity at an organization’s operational level. Therefore, it is crucial for companies to ensure that they have the right performance measurement tools at their disposal so that employees and organizational departments for productivity improvement can use them.
Performance measurement in organizations
Innovating better performance measurement metrics and models at an organization can be of great benefit since they help organizations deliver strategically aligned measurement metrics that facilitate effective decision-making within the organizations’ ranks. Performance measurement can provide crucial decagons making support systems, tools, and frameworks (White 2019,p.43). These frameworks should include multiple measures that will enhance the evaluation process. Recent studies suggest that companies and businesses have been aggressive in implementing innovative changes in customer demand. These adjustments have been made to accommodate performance measurement systems within the organizations. Research has shown that most organization’s decision making tends to be derived from either expert knowledge and less accurate data or information technology based systems. These tend to give inaccurate data to support decision making in the organizations appropriately. Organizations seeking to improve quality continuously have recognized the need to integrate performance measurement systems in their decision-making (Du 2017, p.49). Quality improvement in organizations is gained by organizations adopting a continuous process of assessment and improving areas they consider weak. The same process is vital in the attainment of total transparency within the organization. This is all achievable with performance measurement tools. The impact of performance measurement systems cannot be understated. For instance, in an organization, a manager has to supervise, observe, and control junior employees’ activities. It requires the same manager to monitor the performance constantly (White 2019, p.43). This allows the manager to take any corrective measures in case of deviations in desired results and putting systems into place so that the variations do not occur in the future. It is vital to note that performance measurement is an ongoing improvement operation within an organization (Pirozzi and Ferulano 2016, p.55). The advantages of a performance measurement system with an organization are that it allows for improved performance within an organization and continually provides for the growth of the organization’s productivity by reducing costs and increasing efficiency within the organization.
Thus, an effective performance management system allows the organization to have a method of understanding, managing, and improving the overall functioning of their state of business organization. If implemented correctly and efficiently, it becomes a significant driver of success in an organization. In a recent study, PMA (Performance Measurement Association) found out that 40% of FTSE 100 companies have used a performance measurement scorecard (Storto and Goncharuk 2017, p.57). Other studies have found out that between 30% to 50 % of fortune 500 companies have attempted to use at least one performance measurement system (Saunila 2017p.90). These present significant changes from the past, where companies employed only financially based performance measurement metrics. When companies implement PMS in their organizations, it can help improve their communication within teams. For instance, the use of constructive feedback can motivate managers to translate various strategies into operational tasks and therefore enhance decision-making (Baird 2017, p.57). Another impact of performance measurement is it affects behavior, where a working PMS can increase the levels of psychological empowerment and provision of feedback, which enhances intrinsic task motivations.
In short, a performance measurement system can be used to decide two ways the first method is by higher-ranking managers to evaluate lower-level manager’s performance and construct decisions based on the outcome (Kearney 2018, p.43). The second route, where managers use PMS in an organization, is where they use a performance measurement system to provide business-related information to support effective decision making by resolving uncertainties. Through innovations in a better PMS model, organizations can benefit from aligned metrics that improve data accuracy and efficiency in the organization’s decision-making process (Saunila 2017, p.34). It is crucial to note that a well-created performance measurement system will be essential to an organization towards meeting its strategic goals. Some of the benefits of a functional performance measurement plan include increased employee retention, employee loyalty, effective communication across departments, better productivity, and improved efficiency (Jordão 2017, p.57). Additionally, managers’ working performance plan will lead to better decisions, such as improvement in overall job satisfaction for the manager. A company should essentially identify and come up with a strategy that will enable it to achieve its goals.
Application of Performance measurement strategies in healthcare services
Previous studies have suggested that performance measurement tools are vital in the improvement of the processes of healthcare. PMS tools are used to improve quality in healthcare services. Healthcare organizations can implement macro and micro changes to their use of performance measurement tools to support their decision-making processes. Macro changes refer to the application of performance measurement systems to detect and control spending in healthcare institutions. (Asiaei, Jusoh and Bontis 2018, p.43) PMS can enable an organization in the healthcare sector and the public healthcare system to manage spending and monitoring performance within the organization. This allows the organizations to make better decisions hence lead to better healthcare services for every person.
On the other hand, micro-changes for performance measurement at the micro-level involve managers putting measures to collect, monitor, and analyze information through a specified PMS. The changes lead to enhanced healthcare services (MacLean, Kerr, and Qaseem, 2018, p.76). PMS can support better management decisions within healthcare systems if well implemented with the right strategies. Previous studies have supported the application of PMS in addressing the issue of processes of care.
Performance measurement has increasingly become necessary due to increasing healthcare expenditures in most parts of the globe. It is because performance measurement has become core to ensuring accountability in the spending of the health expenditures, especially in not for profit organizations. In the past, healthcare services’ responsibility was determined through traditional business processes such as annual reporting and contracting. Still, in recent years a better sense of accountability has emerged, emphasizing the achievement of stipulated goals effectively and efficiently (Taheri, Bititci, Gannon and Cordina 2019, p.94). PM implementation in healthcare services mostly involves four stages, namely conceptualization, strategy, selection of measures, data collection, and analysis (Bourne, Melnyk, and Bititci, 2018, p.54). This can occur in different levels of organizations and systems.
PMS drives enhanced decision-making in healthcare systems (Maestrini et al. 2017, p.54). Despite healthcare workers perceiving performance measurement as a constraint, in their decision-making freedom, PMS use in most cases delivers overall improvement in quality healthcare systems (Smith and Bititci 2017, p.78). Through the provision of evidence-based metrics, PMS helps in overcoming quality bottlenecks in healthcare service delivery.
Performance Measurement Strategies in Healthcare services
One of the popular tools and strategies for implementing a healthcare organization’s performance measurement system is with a non-financial measurement tool. An excellent example of such a device is the Balanced Score Card (Harbour, 2017. p.90). This tool can be used with good results in healthcare organizations. A balanced scorecard can be used by a healthcare organization to gauge whether it has achieved its goals, improve service delivery and inform decision making depending on the balanced scorecard (Micheli and Mura 2017, p.45).
Another important strategy to implement performance measurement is to manage the healthcare organization prioritizing their objectives, and the government focusing their attention on those objectives. The reason is that in healthcare organizations, prioritization of critical decisions is vital because they involve two main dimensions namely; the financial dimension where the use of public resources is critical and the outcome related dimension that concentrates on issues to do with public health and quality of care (McDavid, Huse, and Hawthorn 2018, p.98). Healthcare management should use strategic non-financial PMS tools to enhance the capability to excel in critical decision-making. Increased PMS strategic use leads to more empowerment of healthcare staff, hence improving the overall service delivery in the sector.
Another strategy in determining the best PMS approach to consider in healthcare organizations is where managers are given the most autonomy to make their decisions (Landy, Zedeck and Cleveland 2017, p.56). The self-determination theory explains that when managers are given more independence, they are more motivated to perform in their respective roles.
Conclusion
To conclude, it is vital to note that to adapt in an increasingly competitive environment in today’s business world, adopting performance measurement strategies would enable an organization to make the right business decisions to compete effectively. The concept is also applicable in the healthcare sector, where the innovation of quality processes and accountability is key to an efficient healthcare system’s overall outcome. PM tools are very crucial in the documentation of improvement. When used effectively, the culture of continuous improvement and achievement of performance leads to quality performance. PM frameworks should be instituted in organizations to effect change improvement and enable managers to make better and well-informed decisions for the organization’s betterment. They should be combined with data systems, effective leadership, and efficient management to effect the desired changes in an organization,
References
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