Theory of Organizational Performance Management


Performance management is a set of techniques used to measure success in meeting goals in a business context. Performance management can be used to evaluate specific processes and systems, the performance of deparments or the performance of individual employees. The theory of organizational performance management, known as OPM, applies this approach to an organization as a whole, assessing progress toward goals and identifying and adjusting factors which hinder progress. It is a widely taught management tool.

A Proactive Approach

OPM is characterized as a proactive approach to promoting progress toward goals in a business environment. Reactive approaches respond to crises as they arrive, fixing broken systems, replacing failing management and redefining unmeetable goals. Where an OPM approach is in place, techniques for monitoring progress, including the performance of systems, subsystems, departments and employees, are an integral part of the conduct of business. OPM runs recurring analyses of systems and makes improvements wherever possible, with the intention of avoiding performance gaps that may impact the achievement of defined goals.

Analyzing Performance

OPM is based on analyzing aggregates of performance data in order to measure progress toward defined goals. Top management must set the goals-for example increased earnings, increased overseas sales, higher productivity, reduced cost or improved safety. OPM identifies the data relevant to progress toward such goals. To take a simple example, in the case of increased overseas sales, relevant data will include historic and current sales data, and possibly future projections. An OPM approach will analyze such data not once, but recurringly as a matter of routine procedure.

Identifying Improvements

OPM will search proactively for possibly improvements to systems. Such improvements may be incremental and low-risk -- redefining sales areas or improving communications -- or they may be dramatic -- introducing new product lines or rethinking pricing. OPM solicits suggestions not only from managers and employees engaged in the relevant processes, but also from customers and other stakeholders. It also conducts an ongoing review of best practices in the field, including new technological developments. Data analysis will be used to identify weakly operating systems where improvements are most urgently needed.

Implementing Improvements

After the process of analysis and validation (for example, by pilot tests), improvements are selected for implementation. These may be improvements to system, technical or staff performance. Managing implementation may include training programs, consultation with staff affected, safety reviews if the improvement calls for changes in the workplace environment, and a generally controlled and measured release of the planned changes. It should also include preparation to monitor the effectiveness of the improvement once it is in place.


OPM has been criticized for vagueness and imprecision. It has been suggested that the performance of the organization is sometimes defined not in terms of tangible, measurable goals, but as Barbara Czarniawska-Joerges and Pasquale Gagliardi put it, "more like a platonic ideal." Others such as Steven M. Jex have argued that it is problematic to impose a performance management and reward system on an organization, as such systems were originally designed with the performance and behavior of individuals in mind.

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  • "Handbook of Organizational Performance"; C. Merle Johnson et al.; 2001
  • "Narratives We Organize By"; Barbara Czarniawska-Joerges and Pasquale Gagliardi; 2003
  • "Organizational Psychology"; Steven M. Jex; 2002
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