Strategic performance evaluation: descriptive and prescriptive analysis
| Pages | 390-399 |
| DOI | https://doi.org/10.1108/EUM0000000006169 |
| Published date | 01 November 2001 |
| Date | 01 November 2001 |
| Author | Germaine H. Saad |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Strategic performance evaluation: descriptive and
prescriptive analysis
Germaine H. Saad
Widener University, Chester, Pennsylvania, USA
Introduction
Performance evaluation is perhaps the most
powerful management tool for strategic
deployment in both private and public
settings. This paper focuses on how to
effectively evaluate performance for public
service units, such as municipalities, police
units, fire stations and/or public utility
services. The difficulty of measuring
strategic performance in these cases arises
from the fact that each service provided is
quite distinct, and the primary goal sought is
not profit. It is mainly providing the best
possible service to the community and the
public at large. Additionally, many
stakeholders are involved; each category has
different interests and goals that are in
conflict. The individual stakeholders'
expectations may be different as well.
Furthermore, the services provided result in
both tangible and intangible outcomes,
which may be hard to measure.
To evaluate strategic business
performance in such cases, our plan starts
with a brief review of current literature
followed by a discussion of the main drivers,
and conditions of effective performance
evaluation systems. Based on this discussion,
a model design is developed. The proposed
model synthesizes and extends current
views, and makes use of the analytical
hierarchy process (AHP) approach (Saaty,
1994). The model is then tested for
municipality services using Expert Choice
Software (Expert Choice, 1995). We conclude
with a summary of the testing results and
discussion of their policy implication for
management practice.
Despite continuous and rapid changes in
business environments, measures used to
evaluate strategic business performance
have not kept pace with these changes
(Eccles, 1991; Saad et al., 1994; Horngen et al.,
1997). The prevailing financial indicators of
business performance focus on past
achievements. Yet in highly dynamic
decision environments, the past performance
of a business firm may not be indicative of,
nor is a guarantee for, its future success.
Furthermore, financial measures are
insufficient (Hayes and Wheelwright, 1984;
Porter, 1985) and may be misleading in
service environments, since the primary
business goal is public service, and not profit
maximization. New measures that address
the impact of current strategies and actions
on future business performance and on
sustainability of business growth are
required. Measures that reflect both
effectiveness in managing change and the
intangible factors involved are needed.
Current literature has addressed the
problem of interest in a piecemeal way, using
different views, as well as different
directions. Research studies on strategic
performance systems can be classified by
orientation, in two main categories:
descriptive and prescriptive studies. The
descriptive category comprises studies which
emphasize either the ``design'' or the
``implementation'' aspects of strategic
evaluation systems. Those focusing on design
include: Adams et al., 1995; Atkinson et al.,
1997; Saad, 1997, 1998; Banker et al., 1996;
Eccles and Dyburn, 1992; Kaplan and Norton,
1996; Pieterse, 1998. Examples of those who
have focused on systems' implementation
issues include: Brancato, 1997; Fisher, 1992;
Hunt et al., 1992; Grady, 1991; Johnson, 1998;
Mardell, 1997; Saad and Sybrandy, 1991; Tarr,
1996; Lingle and Schiemann, 1996; Vitale and
Manina, 1995. Those focusing on systems
design have used either a sequential or a
simultaneous approach.
The leading work using the sequential
approach is the Balanced Score Card (BSC)
developed by Kaplan and Norton (1996). The
BSC has been used successfully in both
industrial and in service organizations. The
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[ 390 ]
Industrial Management &
Data Systems
101/8 [2001] 390±399
#MCB University Press
[ISSN 0263-5577]
Keywords
Business analysis,
Performance monitoring,
Performance measurement,
Strategic evaluation
Abstract
Addresses the question of how to
assure effective performance
evaluation of a public service
strategic unit. Both descriptive
and prescriptive approaches are
discussed. Based on this analysis
a practical model for performance
evaluation is developed. The
model proposed comprises key
drivers of performance, including
internal and external factors, as
well as both quantitative and
qualitative factors,
simultaneously. The model has
been designed using the
Analytical Hierarchy Process
(AHP) and tested using the Expert
Choice Software. The testing
results show that the evaluation
outcomes differ as a function of
the criteria used, the weight
assigned, and the meaning given
to each criterion. Using the same
criteria with a different weighting
scheme results in different
outcomes for the same
performance. This counter-
intuitive finding has important
implications for management
practice.
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