Teoría Molecular de la Presión

In recent years, the means and methods of measuring performance has become an important topic of research for both organisations and academics (Folan and Browne, 2005). A large multitude of articles have been published on PM in the late nineties, with Neely (1999) reporting an upward of 3500 articles being published during 1994, 1995 and 1996. With such a vast scholarship available on PM, it would be easy for one to assume that the field of PM has been de- fined clearly, and that all its characteristics have been clearly linked. However, this is not the case.

Neely et al. (1995) and Folan and Browne (2005) write that disparity exists among published information on PM as it was generated by various researchers in different organisational and functional silos. Further complications exist re- garding the PM literature, according to Folan and Browne (2005). They state that PM is not owned by academics in any discipline, and this resulted in the traditional functional boundaries being left behind when research on PM was carried out. This, Folan and Browne (2005) say, resulted in PM information being produced in isolation and created the possibility of the information be- ing duplicated, or worse, being contradictory in character.

Even though the aforementioned does plague research being conducted into PM, Bititci et al. (2000) identified characteristics that are deemed necessary of PM; they are:

• Sensitivity to an organisation’s external and internal environmental changes. • Initiate the review and re-prioritising of internal objectives when said

• Ensuring constant organisational alignment when changes are made to internal objectives and priorities by initiating corrective change to the critical organisational parts.

• Maintaining progress achieved through improvement programmes. PM is constantly changing and growing to meet the requirements of organ- isations’ new realities according to Folan and Browne (2005). Because of this, the concept of performance, and how it is measured and assessed, is continu- ously in metamorphosis. This, therefore, suggests a suitable starting point for this study in understanding PM and PMa. An adequate understanding of the concept performance with respect to this field is deemed necessary. As Lebas (1995) writes, when managers speak of PM and PMa, it raises the question “what is performance?”.

2.3.2.1 Understanding and defining performance

The term performance is found often in management and engineering litera- ture. Although there exists similarities between the performance perceptions from the management and engineering sectors, there are differences that make it difficult for the majority of people to agree what performance actually means. As Lebas (1995) explains, performance can mean various things; from efficiency or return on investment, to robustness or resistance.

The following discussion aims to define performance, following the guidance of Lebas (1995) and a path similar to the one taken by Otley (1999). In order to achieve the aforementioned, it is necessary to first discuss measurement; understanding why we want to measure, and what is to be measured, will better our understanding of performance. This sections refers to performance measures in its discussion, a topic which is discussed in Section 2.4.

Why and what to measure

The quote below provides a convenient and detailed description of mea- surement as it is thought of in the context of PM and PMa.

“measuring means transforming a complex reality into a se- quence of limited symbols that can be communicated and that can be, more or less, reproduced under similar circumstances.” - (Lebas, 1995)

From that definition, a hidden complexity is notable with regards to mea- suring. In general, a measure must capture enough information about what is being measured. However, more importantly, an adequate understanding of the “complex reality” is mandatory for the measure to at least capture the

significant core information, increasing the value of the captured data. How- ever, this does not guarantee that the data can be reproduced under similar circumstances (Lebas, 1995; Otley, 1999).

This suggests that a deeper understanding of the measure must exist; what is expected from it and what exactly is being measured. Measuring and its “unseen” characteristics, therefore, needs to be investigated briefly with regard to PM and PMa. According to Lebas (1995), there are two key questions that managers and performance evaluators must ask themselves concerning measuring. These two questions are:

1. Why do we want to measure? 2. What do we want to measure?

Lebas (1995) comments on both of these questions. With the first question, he states that measures are not defined outside of the organisation. They are the result of choices made inside the organisation, with a purpose in mind, which has motivation as a driving factor. Adequately understanding the moti- vation behind the need and desire to measure allows an organisation to better understand what information a measure needs to capture.

Regarding the second question, Lebas (1995) says the purpose of the mea- sure is insufficient to define what is to be measured to capture the desired data, and that these two questions go hand-in-hand. They follow a logical progression, and they are difficult to answer. In addition, they will always yield unique answers depending on who formulates the answers.

The importance of the causal model in defining performance

Lebas (1995) believes that in order to establish the conditions of PM and PMa, organisations must first understand what causes performance, regardless of how it is defined. Furthermore, the concepts of performance, and indeed the corresponding causal models, must be mutually understood among all stake- holders or involved partners to add to business success.

Considering the accounting view of performance, it may be viewed as con- strained to the general view of net profit (the difference between sales and cost). However, Lebas (1995) notes, sales themselves are generated and influ- enced by performance factors such as customer satisfaction, quality and cost. In continuation, costs are the result of these performance factors being created (Lebas, 1995).

There are different levels of performance factors, or performance affected units. Sales figures, for instance, are the result of performance factors such as

Figure 2.7: Customer satisfaction with influencing performance factors

customer satisfaction. However, customer satisfaction is also influenced by its own performance factors. Consider the simple example of a causal model as shown in Figure 2.7.

Figure 2.8: Performance causal model over multiple organisational levels of respon- sibility

Adapted from Beischel and Smith (1991)

Lebas (1995) states that the only way to define the measures that lead to action, is through understanding the underlying performance processes. Un- derstanding the steps that comprise these processes will allow an organisation to identify inadequacies and corrective actions. Lebas (1995) warns that if

performance is viewed in the most aggregated way, specifically net profit, the lack of detail allows no corrective actions to be identified.

Comprehending the performance generation process, according to Lebas (1995), promotes the recognition of adequate measures and corrective actions, allowing strategy to be deployed at all the respective levels of responsibility in the organisation. Figure 2.8 depicts a simple causal model example taking multiple responsibility levels of an organisation into consideration.

In the example shown in Figure 2.8, performance is defined by three param- eters on the corporate level: return on assets, market share and profit growth. This example shows that each of the corporate level parameters are comprised of more descriptive measures at various levels of responsibility found in an or- ganisation. Beischel and Smith (1991) state that if each of the three measures at each level of responsibility are properly managed, it will guarantee that the measure on the corresponding, higher level will be properly managed as well.

Only at this point, Lebas (1995) believes, the definition of performance is adequately understood. The definition of performance is completed in the following section.

Defining performance

Lebas (1995) defines performance:

“Performance is about deploying and managing well the compo- nents of the causal model(s) that lead to the timely attainment of stated objectives within constraints specific to the firm and to the situation.” - (Lebas, 1995)

To reiterate, performance is case and decision-maker specific. After follow- ing the research and logic proposed by Lebas (1995), this study considers the proposed definition of performance to be an adequate, context-applicable def- inition. This definition serves the desired purpose of this study, as it includes the causal model which inherently considers performance measures found on various organisational levels and in various organisational departments. How- ever, understanding what performance means does not equate to an effective PM and PMa. To do this, implemented systems are required.