Exploratory performance assessment

Scholars and practitioners working with performance assessment have long been concerned with how to build the perfect performance measurement system. Despite great efforts undertaken on a global scale, some fundamental problems remain in most enterprises. Performance measurement systems often: provoke mutually opposing decisions and behaviour among different functions or networks within the same enterprise; bias a proper balance between short-term and long-term focus in reflection and action; and impose ambiguity in feedback to management and workforce due to a high degree of non-integrity embedded in the system. We believe that many of these problems may be resolved by paying more attention to the very purpose of performance measurement. Hence, a more careful alignment of the WHY (function and benefits) to the HOW (structure and means) of performance measurement is emphasised as a key to success. A new model (VODI) is introduced. Along with the concept of coherence it will provide a powerful instrument for analysing the appropriateness of different performance assessment initiatives in an organisation. Performance assessment is introduced as complementary to performance measurement, stressing analysis of cause and effect relationships across an enterprise as well as behavioural issues. These are believed to be key issues for development of viable management systems for the future. Based on three case studies, a number of practical issues concerning the application of the VODI model and the coherence condition are discussed. The article is based on action research performed primarily within Bang & Olufsen, a Danish manufacturer of high quality Audio/Video products, in collaboration with Aalborg University.