PERSPECTIVES
7. Which are the main challenges of Performance Management in practice today? It is a complex area. There are lots of dimensions of Performance Management. Clearly organizations of different types should not be doing everything the same way. There are even multiple good alternatives for organizations of the same type (“equifinality”). And it is difficult to measure success. So practice in this area is guided by judgment and intuition, rather than by hard scientific findings. Perhaps some of what is being done is merely folklore, not fact. It is hard to sort it all out.
Interviewee name: Kenneth Merchant Title: Deloitte & Touche LLP Chair of Accountancy Organization: University of Southern California Country: USA Continent: North America 1. What does the term Performance Management mean to you? It’s a broad term. I would include anything that is done to bring about the desired performance. 2. What drives interest in Performance Management? I am not sure there is a lot of interest in Performance Management, per se. I don’t see that term used a lot. But there is a continuing interest in many of the topics that would be included under the Performance Management rubric, and interest in some of them (e.g., Balanced Scorecards) has swelled at particular points in time.
as environmental (social responsibility) performance. 5. What aspects of Performance Management should be explored more through research? There are lots of possibilities here. The topic I would put on the top of the list is how to build a combination-of-measures system. Financial measures, by themselves, are insufficient. With what measures should they be supplemented in various settings, and how should all the various measures included be weighted in importance? 6. Please provide some examples of organizations which you would recommend for study due to their approach to Performance Management and achievements. It is difficult to say which organizations are doing the best job in this area. I would suggest studying organizations that are generally recognized to be well-run, such
8. What do you think should be improved in the use of Performance Management tools and processes? I think there is a rush to pushes of new products being sold by consulting firms (e.g., balanced scorecards, beyond budgeting) without a firm understanding of the phenomena underlying them. We need a lot more scientific research. 9. What would you consider best practice in Performance Management? What the best-run companies are doing. It’s a mix of financial and nonfinancial measures and short-run and long-run incentives, with clear goals and useful feedback. It is hard to say more than that.
3. What are your thoughts on the 10. Which aspects of Performance relationship between Performance Management should be emphasized Management at organizational, during educational programs? departmental and individual level? Many educational programs emphasize This is one of the great unknowns that memorization of terms and practice on very deserve much more academic study. How simple problems. Instead, I think do the financial measures used predominantly at the corporate There are lots of dimensions of we should be trying, first and foremost, to help students cope level get translated to and from the more operational measures Performance Management. There are even with what they will face in the that are used to manage at the multiple good alternatives for organizations complex real world. Throw real, complex problems at them. Help lower levels of the organization? of the same type (“equifinality”). And it is them develop their abilities to sort 4. What are the 2012 difficult to measure success. So practice is through the complexity—their problem finding, critical thinking key trends in Performance Management from the guided by judgment and intuition, rather and problem solving skills. There are trade-offs to almost perspective of your knowledge than by hard scientific findings. every approach. Students should and experience in this field? There has been a lot of progress as the “most admired” list that is published practice understanding those trade-offs. in understanding which nonfinancial in the U.S. I would also suggest studying 11. What are the barriers to measures of performance are leading organizations that are doing something indicators of financial (and stock market) different—the outliers—as they might be achieving higher levels of proficiency performance. There is also a broader developing the innovative practice that will in Performance Management among practitioners? conceptualization of Performance lead us to something better. I think the most important one, Management, to include specific goals, such Performance Management in 2012
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