Performance measurement: Some conceptual issues

Measures of how well a system is operating are clearly of interest to a wide range of users, from organizational researchers to system managers. The current literatures in such areas as "performance measurement, " "organizational effectiveness, " and the like show little consistency in their definitions of terms or in their methods for generating measures. The present paper attempts a clarification of these issues in the form of a conceptual minimalist position which requires only three basic definitions, and leaves, as far as possible, all remaining issues open to empirical investigation. We first review the literature on "organizational effectiveness" contrasting the organizational goals and systems paradigms, and note the lack of either theoretical or empirical convergence between the two. An examination of the nature of effectiveness statements suggests that this failure of convergence flows mainly from the different criterion sets generated by the two paradigms - and, importantly, that one should not expect convergence on a single measure or set of measures which uniquely define how well a system is performing. One's view of how well a given system is performing is a function of where one stands (either theoretically or in relationship to the system), and pursuit of the one true set of performance measures is a futile exercise. Instead, we propose to redirect attention to the identification of the various individuals and groups ("constituencies") with an interest in system performance, and to the investigation of those items of system relevant information (their "performance measure sets") which do, in fact, change their evaluations of how well the system is performing. This perspective will, we hope, redirect effort from futile theoretical debate to empirical investigations of what measures are used, by whom, and to what effect, in specific settings.