SUBJECTIVE PERFORMANCE MEASUREMENT: MULTI-CASE STUDY BASED ON CHINESE CORPORATIONS Gao Chen and Tang Guliang Business School, Beijing Technology and Business University, China and Business School, University of International Business and Economics, China Abstract
Subjective performance measurement is a new hotspot in recent year western management accounting and motivation theory study. However, until now, there has been little research regarding the application of this theory in China. In order to bridge this research gap, this paper provides five propositions and four in-depth case studies in Chinese corporations. By the comparison of the application of subjective performance measures in China Minsheng Banking Corporation(CMBC), China
…show more content…
Theory and research proposition
The definition of the subjective performance measure The subjective performance measure is a concept which is brought out compared to the objective performance measure. The objective performance measure refers to a measure method which compares the actual performance with the set performance goal based on some measures and formulas. Objective measures can be applied to legal contracts, because they are totally observable and testable. On the contrary, subjective measure is based on the person’s judgments or subjective measure method based on subjective indications. Being different from objective measures, subjective measures can’t be tested by other people, usually is only observable to the superiors. Besides that, subjective performance measure is used due to some uncertain factors and unexpected accidents. It has many forms, includes subjective determined weight, evaluation system contains some subjective measures and the factors decided by management based on the situations. Of all the forms, the subjective measure is the main one. Theoretical basis and proposition Figure 1 is the theoretical framework of this research paper. This study finds that the application of subjective performance measures in Chinese enterprises are influenced by economic factors as well as institutional factors. Economic factors, such as the nonfinancial measures, strategies and
The Performance Measurement is a way to either measure or give a understandable value to what has been done compared to what was supposed to be done. It applies to all aspects in the working environment, such as procedures, critical activities and processes. In other words, first you set pre-defined goals and give away tasks and responsibilities to other workers, then at the deadline you can compare the achieved results to what the original goal was at the beginning. It is also useful to evaluate not only the final result, but even all the actions taken to get that particular results and the way the actions have been taken as well.
To evaluate the Performance in any organization would simply mean to understand the goals and objectives of the company and how the goals/ objectives are achieved are the means of measurement. Different organization will have different objectives. For some it would mean high revenue, managing resources, customer satisfaction, and strong governance, building
Measuring performance means when a business will measure the quality of the activities that are passing and the quality of the services provided to the customers by employees. It involves creating a simple, but effective, system for determining whether organizations meet objectives. It’s also a process of collecting and reporting information regarding the performance of an individual, group or organizations. It can
The performance evaluation process should support the organizational goals. For instance, the new culture focuses should be on training and development. This should be a major component in the performance evaluation process. Moreover, the performance evaluation process should support career advancement and the employees should clearly understand the link. By instituting these changes, promotion and supervisor satisfaction should improve. These improvements should contribute to positive improvements in overall job satisfaction, which should improve organizational
It is important to view measurements as a way of improvement. Without knowing areas of weakness how can we better our position? The author notes the importance of transformational measurements as making a difference, (Spitzer, 2007). As the organization improves upon their progress, performance measurements are an effective method of capturing progress, when performance improves so does the environment, (Spitzer, 2007). People feel good when they see positive results, (Spitzer, 2007). Measurements are very effective for establishing a steady rate of progression in reaching individual and organizational goals, (Spitzer, 2007). Measurement is life; it is something that occurs in just about everything we do, (Spitzer, 2007). Measurement is more than just numbers it also pertains to how we feel, how we interact socially and our overall health. Organizations need measurement to remain competitive, they measure productivity and marketing skills to improve their position within society, (Spitzer, 2007). In order for management to be effective, their method of measurement must be in line with the objective. The author explains that rewards are great for continued progress and motivation, but when not measured effectively it can be very disastrous, (Spitzer, 2007). Employees are rewarded for the wrong thing, which in turn sends the wrong message, (Spitzer, 2007). An
As stated by Peter F. Drucker, “Management is about human beings. Its task is to make people capable of joint performance, to make their strengths effective and their weaknesses irrelevant.” Performance management is essential to achieving an organization 's mission statement and business goals, and also in attracting, retaining, and motivating qualified employees. There are many benefits and reasons why an organization should execute a performance management system. Performance appraisals establish the basis for qualifying, recognizing, and rewarding employee contributions. In this paper, I will discuss what performance management is, the problems with the current performance management system at my organization, how other organizations have succeeded in their performance management system and how I would advise management at my current organization to improve our performance management system.
Lai, I. K. W., & Lam, F. K. S. (2010). Perception of various performance criteria by stakeholders
Performance appraisals generally involve two-way communications which is not embraced by Chinese culture as the large power distance found in China indicated that to challenge authority of superiors is not considered appropriate for subordinates (Huo 1995). Therefore when conducting a performance appraisal in China it is expected that the evaluated will be more subjective. A straight forward form of appraisal would be better received and employee participation should not be forced.
The Performance Measurement Questionnaire (PMQ) proposed by Dixon (1991) serves as a straightforward, decision-making tool for managers. It is structured in a form of questionnaire that addresses the suitability of a firm’s performance measures in relative to its improvement aims and objectives. This tool also used to evaluate the consistency between the firm’s strategy, corrective actions and measures. The PMQ is divided into four parts. As the first step, it must gather general data to identify and classify the respondents.
Throughout history, PMS clearly have a considerable contribution to evaluate the success of organisations. According to Neely et al. (2002), performance measurement is "the process of quantifying the efficiency and effectiveness of past actions". Moullin (2003) indicates that "PM is evaluating how well organisations are managed and the value they deliver for customers and other stakeholders". The modern accounting framework can be traced back to the Middle Ages and since that time appraisal of performance has primarily been ground on financial criteria (Bruns, 1998).
Performance measurement is a measurement process of employee behaviour in human resource management, which is used the past standard to compare performance record and the process of the performance evaluation results feedback to employees. Mainly related to enterprise staff 's work ability, work attitude, work performance (Neely et al,2005). This process may play a role in inspection and control,according to Murphy(1990)performance is a set of behaviours with a goal in its work related to the organization or unit. Pamenter (2003) points out that should transfer the purpose of the traditional performance measurement to the improvement of employees. But transferred the purpose of the performance measurement to the staff, there is a certain one-sidedness, subjectivity in the evaluation process, the role of the assessment will be
Economic performance is whether the company strategy and its execution have contributed to the ultimate performance. Economic performance is mainly reflected in four aspects: profitability, operating capacity, solvency and ability to resist risks. Economic performance can be shown in the impact of managing cost, the effect of property management, the influence of the distribution of capitals, and the composing of the shareholders ' equity return rate. The standpoint of profitability evaluation is economic added value and the rate of rise (profit). Choosing EVA in the net assets income rate, the return on total capitals and income per share index, this evaluation of enterprise profitability can reflect the condition of capital net income and capital gains, this is also the development trend of enterprise performance evaluation index. Besides, sales revenue (profit) growth rate index is used to measure enterprise growth. Operation ability can promote firms to enhance capital management, increase the service efficiency of property and improve profitability. The primary evaluation indexes are: stock turnover, debt receivable turnover and permanent assets turnover. The strength of the debt paying ability is the economic and fiscal status of a company . Moreover, it is a significant measure of business control. Primary indicators are worth debt ratio, liquidity ratio and acid test ratio. Anti risk capacity is the ability to prevent the adverse effects of various factors in the
He also states that there are two components of performance management system i.e. Performance Evaluation system and Performance Reward system. The success of performance reward system is based on Performance Evaluation System. It is not the absolute performance of the employees that matter but their relative performance. He focused on the three dimensions to measure the performance: growth of business, profitability and
Performance measuring is vital part which assessing value of employee and management. Performance can be measure through employee’s overall impact cost efficiency and effectives. (Anon., 2017)
Job analysis can provide a realistic job preview about what the job will be and therefore reduces early employee dissatisfaction and turnover (Fisher et al., 2003). Job analysis is also important for the assessment of job performance in for example 360 degree feedback since a job analysis can set performance criteria. In this feedback subjective measures are used which are vulnerable to measurement rating errors like halo-effects (Viswesvaran, Schmidt & Ones, 2005). Nevertheless, subjective measures might be very useful to assess organizational effectiveness, especially in relation to HR practices since subjective measures are mainly used to assess HR or organizational outcomes which are more directly related to HR practices (Dyer & Reeves, 1995). Objective measures involve actual percentage figures for sales growth or profitability which measure financial and capital market outcomes and these are more distal and indirectly related outcomes (Dyer & Reeves, 1995).