Question

explain the tradeoffs between broader, more inclusive performance metrics and narrower, more focused performance metrics as they relate to the four dimensions listed below.

explain what is meant by the dimension and then explain its infleunce on the choice of performance metrics.

1. distortion

2. manipulation

3. controllable risk

4. uncontrollable risk

Answer 1

Solution -

The trade-off between the inclusive performance metrics and focused performance metrics are as below -

1. Distortion - The broader and inclusive performance metrics are applicable across the organization while focused performance metrics allow for customization of performance metrics and this narrows any aspect of differential interpretations and hence focused approaches ensure leased distortions of performance metrics.

2. Manipulation - Now differential interpretations of inclusive performance metrics leads to certain manipulations while focused performance metrics allow for lesser room for differential interpretations but again over customization can in itself lead to manipulation by various departments as per their convenience.

3. Controllable and Uncontrollable Risks - now inclusive performance metrics targets at the broader risks and usually hit out to mitigate controllable risks while focused and narrow performance metrics looks to also take measures for uncontrollable risks and this leads to stringent performance metrics system and at times become conservative in nature

4. Management Effort - For implementation of inclusive performance metrics the management effort is less as it is easier for the management to introduce organization wide metrics. For focused performance metrics there is a lot of customization required and hence such an implementation requires more management effort and have to exercise more discretion.

The dimensions of performance metrics are effectiveness, efficiency, efficacy and implementation. These dimensions ensure that such performance metrics are brought in that ensure that they are acceptable, implemented easily and ensure the effect as per the goals and objectives of the organization. These dimensions also dictate the review of the existing performance metrics so that their coverage is increased and are clear to all employees of the organization. Qualities like subjectivity and objectivity are evaluated to ensure that performance metrics are efficient.