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MDC individual Report

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........ 5 1 ................................................................................................................................................................................. Example of the Problem Elicited by Gaming................................................................................................................. 5 Appendix....................................................................................................................... 3 5... 2 2. Possible solutions.................. 2 1.......................................................................... 2 4..................................... Problem of Gaming......................................................................................................................Dysfunctional Performance Measurement Content Executive Summary................................................................... 2 3............................................ 4 7...................................... Dysfunctional Consequence................................................... Source of Problem.................... Conclusion.............4 6............................................................................................ Introduction.......................... 4 Reference List........

Moreover. and it definitely cost the resource and time for a company (Goold & Quinn. Introduction Currently many managers tend to state the management of companies in the way of various variables which are associated with management. Source of Problem Applying strategies in an organization itself is a type of gaming. Besides. Also. However. Problem of Gaming In this modern day it is worthwhile to review the influence from the performance measurement in theory. This report will define a problem inside a dysfunctional performance measurement in theory and make discussion about it. the result can be revealed easily as this performance measurement is not that complicated. some managers may just use this tool as a booster of the performance for a short period in order to concur some hard time. The problem and drawback of gaming can be revealed more obviously in the cases of applying single-criteria performance measurement as the strategy is too simple and sometimes cannot adapt a new 2 . 2. Of course performance measurement in theory is ultimately useful compared with some traditional management methods. which means solely one quantity is considered and measured in an organization. the profit gained and the development of the thought can be derived into numbers and calculated with formulae. This is gaming. this report will focus on one type of the measurement. since the managers are risking their organizations in terms of resource in order to achieve higher performance via some tool. Therefore without doubt. performance measurement is a type of gaming. which only includes one criteria. The progress of a project. 3. there have been studies about the dysfunctional results elicited from performance measurement for some companies. sometimes there are phenomena of success after applying some performance measurement but after that. This can be regarded as a phenomenon of gaming.Dysfunctional Performance Measurement Executive Summary This report focuses on the topic of dysfunctional consequence of performance measurement in different organizations. Because there is existence of risk. in a long period that method cannot work and the managers still waste time and resource on that method in order to get the chance of success. Mostly profit or output is the target. This has resulted in the invention of the performance measurements in theory. 1. Performance measurement in theory will be quantitative and for all levels inside an organization. as the result is unknown. there is probability of failure. Most of the managers in small organizations may consider this strategy since it is easy to establish and control (Oliver & Qu 1999). Some researchers have indicated that improper harness of performance measurement or wrong application of the counterpart can result in unexpected consequence and waste of resource. which is just more obvious. To be specific. This report will also conduct a real-world case study to demonstrate the drawback of performance measurement. it is capable to cover the management of performance of a divided manager who is critical in making profit in a decentralized organization. Hence the problem of gaming is obvious. which means judicious harness of this tool is necessary. 1990). The aim is to define the problem and find the source of the problem.

This always happens in the application of multiple criteria or composite criteria performance measurement. which can adapt to complicated conditions and give the company more opportunities to earn profits. The managers may try to get the opportunities of success via gaming of applying the performance measurement. In some cases. and may be wasted along with the managers’ seeking the savings of wooden money. without considering that the limit is based on a vibrated series of aspects containing the employee and changeable environment of business. Of course. the employees may suffer from the stress elicited from the performance measurement. 3 . However. Some content of the consequence has been mentioned. According to most cases where the composite criteria performance measurement was applied. banking or public relations. This can be also regarded as gaming as normally the dysfunctional results are elicited by mangers’ not increasing the degree of composite criteria performance measurement or replacing it with a new strategy. or the management level of a company. the manager in this condition will assume that the employee will definitely contribute its effort. However. 1992). or leaving a series of problems which involves treatment and repairing as a waste of resource in the future. since there are different factors motivating the employees to contribute their effort. without considering the principals of balanced stress and objectives. It can be predicted that the management may think that the increased goal has not reach the limit of the strategy. Therefore. Mostly the consequence is the waste of resource or time (Neely & Wilson. motivating the employees to fully effort (Neely Gregory & Platts 1995). while the degree of applying the methods is not increased. the unit of effort or resource will definitely yield on the path of achieving the certain goals in different fields. 2003). 4. research. However. more advanced performance measurement can be multiple measurements or composite measurements. since this method has been derived. the attentions can be drawn away which will be far away from the expected goal of a company. including production.Dysfunctional Performance Measurement environment of business. resource and attentions on the current goals in a series of steps which will lead to those goals in order to enhance the over-all performance of an organization. This advanced performance measurement can last long enough for an organization to earn great value or increasing the efficiency in a new level. the principal of single-criteria performance measurement. Whether the performance measurement focuses on the employee in the critical level. there are still unexpected results from the organizational performance. the goals of the organizations have reached a new level. Without the single-criteria performance measurement. However. cannot last long. Composite criteria performance measurement is a type of more advanced performance strategy when different factors are weighted and then added or averaged in the end. there is still a phenomenon of gaming which leads to a dysfunctional consequence for an organization (Ittner &Larcker. construction. which are all suggested areas with applying the performance measurement. it most have some degree of value as it still exists and applied in some conditions. Dysfunctional Consequence The last section has discussed the source of the dysfunctional consequence of performance measurement in different conditions. the theory is based on certain variables including the unit of effort or resource and how it will react corresponding to the certain environment. In terms of the multiple criteria performance measurement.

but it is a type of gaming. after a certain period. However. This is a typical single criteria performance measurement. the point is that the manager did not change the plan as it believed that the strategy could work for the second time as it did in the first time. 5. First of all. as there were more interviewers just increasing the number of interviews. However. Example of the Problem Elicited by Gaming Single criteria performance measurement is widely operated among various types of organization as it is easy and efficient. the performance measurement only focused on one criteria which is only on one aspect of the activity. Hence more strict performance measurement had been applied. Or. and it worked for a small period. In order to improve the performance of this public employment agency. Conclusion 4 . who were the main operators in the agency. the solution can be to apply a new performance measurement which can focus on the workers. the performance measurement did not focus on the workers who are the target of the service. 7. the source of the problem can be easily explained. So in the end the agency went into a mess. and eventually the workers began to complain about the low efficiency of this agency. However. the management decided to motivate the interviewers. Possible solutions For the real world case above. part of the interviews were focusing on increasing the number of workers they interviewed. after a single criteria performance measurement as gaming. Under this way the balance will definitely break and the workers will turn their effort to lower the burden and achieve better goals in other ways. The manager in this case chose to the option of gaming instead of analysing the true problem beside the phenomenon of low efficiency. Also. which is just the point of gaming in the dysfunctional consequence of performance measurement. the management can try some composite criteria performance measurement which may be complicate. but it is worthwhile to setup multiple targets to motivate employees to contribute their effort in different ways. There was a public employment agency whose responsibility was to help workers search for job opportunities and also help employers search workers. but in most cases. via praising them according to the number of interviews they had successfully established. 6. such as the repairing of machines. which can be estimated as a phenomenon of gaming. In this case. the management still thought that the problem was because of the low degree of applying this strategy. or lacking of resources as the goals will reach a higher level. such as the number of workers who had successfully found a job opportunity. there may be problems left behind. but this time the consequence was not as expected.Dysfunctional Performance Measurement In terms of the waste of physics. But the most serious problem is that the mangers may still think that the strategy works under a new period or a new condition. not finding enough jobs for the interviewed workers. without arranging sufficient time on searching jobs for the workers. the performance measurement cannot last long. This section will demonstrate a case which is associated with this topic and analyse its problem.

International Journal of Operations & Production Management. Turney. 441-460. "Cost of quality reporting: Some Australian evidence". A. for instance. Reference List 1. 8. Suomala P. lack of validity. pp. and Wilson. U. Mostly gaming exists in the managers’ insisting one strategy without increase the degree or change the strategy as they neglect the negative influence from the new strategy. 1995. 9. pp. Vol. Harvard Business Review. "Quality costing: a management review".. Oliver. ‘Coming Up Short on Nonfinancial Performance Measurement’. M. M. Sloan Management Review. C. 1992. 2-10. & Larcker D F. Williams. International Journal of Management Reviews. pp. 2. 2. Varila M & Jokioinen I. 3. A. K. J.. The original description is as followed: “The agency’s responsibility was ‘to serve workers seeking employment and employers seeking workers. G. (1999). M B. 11. and Platts. International Journal of Operations & Production Management. B. 7. and Quinn. 1989. pp. Azzone. No. 3. and Bertelè. G. van der Viele. 1991“Design of performance measures for time-based Companies”.R. 1999. Neely. 2 No. “The paradox of strategic controls”. pp. and Anderson. Institute of Industrial Management. J. 37-48. 30 No. “Measuring product goal congruence: an exploratory study”.. 4. edition 3. and Dale. "Performance measurement system design: A literature review and research agenda". 45-52. Strategic Management Journal. 15 No. A.Dysfunctional Performance Measurement This report generally reviewed the topic dysfunctional consequence of performance measurement in the aspect of gaming by analysing the source of the problem and a real-world case. International Journal of Applied Quality Management. vol. pp. but not to spend 5 . Appendix The case referred in this report is described in the book of The Dynamics of Bureaucracy. 11 No. 1 No. Vol. 2. Ittner D C. R.. 2003. 4. Tampere University of Technology. Vol.. pp. Vol. ‘Validity problem in performance measurement: a conceptual analysis with an illustrative case on quality cost measurement’. pp. J. P. Gregory.. 5.D. Because the resource is limited. Vol. Masella. 233-250. Neely. 4.B. 10. further study is recommended on this topic in a different angle.. B. 1990. Peter. Goold. Chicago. A. 11. “Accounting for continuous improvement”. W." Employment interviewers were appraised by the number of interviews they conducted. Cost management Center. T. Vol. The Dynamics of Bureaucracy. 43-57. 80-116. and Qu. International Journal of Operations & Production Management. 6. 77-85.B. 12. Finland. 1955. Thus the interviewer was motivated to complete as many interviews as he could. Vol. 4.J.

The organization's goal of placing clients in jobs was not given primary consideration because the measurement device applied to only one aspect of the activity.” 6 .Dysfunctional Performance Measurement adequate time in locating jobs for the clients.