Concepts related to performance management and measurement

Performance

According to Lebas and Euske (2002), the word performance is commonly used in all fields of management. However, the authors argue that, despite the common use of the term, its precise meaning is rarely clearly defined, even in the studies that are related to different aspects of performance. Lebas (1995) further states that the term itself might be challenging to define and that there does not exist a common consensus on what the term means: the meaning can change from efficiency, to return on investment, or to many of the other definitions, which have never been precisely articulated. Tangen (2005), in turn, presented the term performance as an umbrella term that can cover all different concepts related to success of organizations. Lebas and Euske (2002) have presented two different propositions for the term performance. The first proposition suggests that performance can only be expressed as a set of measures and indicators that are complementary, and that describe the processes and actions through which different outputs and results are achieved. The second proposition for the term suggests that, in order to understand the meaning of the performance, the causal model that describes how current operations affect outcomes of the future must be identified. As such, Lebas and Euske (2002) state that performance is not a one-time event. The authors further argue that the term

performance reflects the sum of the organizations’ processes which lead to outcomes and results.

In this study, term performance refers to outputs and outcomes that are reflecting the aims and goals of the university-industry collaborations. Outputs are considered the results of the collaborative activities between universities and other societal organizations, which are realized and can be evaluated directly after the collaborations are finished. Outcomes are those results of these collaborations, which are realized and can be evaluated only after a certain time.

Performance management

Performance management, as a concept, refers to formal management practices through which organizations manage their performance. Such practices may include the selection of the organizations’ strategic goals and practices to refine and improve development activities (Amaratunga and Baldry, 2002; Ferreira and Otley, 2009; Pavlov et al., 2017). According to Lebas (1995), performance management can be considered as a philosophy of an organization, which is supported by performance measurement. Lebas (1995) further states that performance management creates the context for – and the measures of – performance. As such, performance management can be considered as a management philosophy that is supported by performance measurement. In other words, performance management refers to the use of information provided by the proper application of performance measurement to be able to make correct and positive changes in organizations’ businesses and processes, as well as in their organizational culture (Amaratunga and Baldry, 2002). Bititci et al. (1997) determined that the performance management process can be considered as the formal process by which organizations manage their performance in line with their corporate and functional strategies and objectives. More precisely, the performance management process defines how organizations use different systems and processes to manage performance (Bititci et al., 1997).

In line with this, Amaratunga and Baldry (2002) argue that, in order for organizations to be able to use performance measurement outcomes effectively, they must be able make a shift from performance measurement to performance management.

In this study, performance management is considered as the formal management practices of university-industry collaborations, which are used and pursued by representatives from different participating organizations. As this study focuses on operational level activities of the university industry collaborations, performance management refers to management practices of the persons involved in operational level activities, such as university project managers and researchers, participants from industrial organizations, and financier delegates.

Performance measurement

As a part of the organizations’ performance management practices, performance measurement is considered as actions to provide necessary information to support management practices.

According to Lebas (1995), performance management and measurement follow each other in an iterative process: performance management both precedes and follows performance

measurement, and thus provides the context for its existence. Like performance and performance management, according to Neely et al. (1995), performance measurement is a topic which is often discussed but rarely defined. Neely et al. (1995) further argue that performance measurement can be considered as a process of quantifying organizations’

actions, where measurement is the process of quantification and action leads to performance.

Moreover, Neely et al. (1995) have noted that one of the most commonly used definitions for the concept of performance measurement is the following: “Performance measurement can be defined as the process of quantifying the efficiency and effectiveness of action.” As such, Michele and Mari (2014) argue that research on performance measurement has often focused on frameworks and tools that are used to provide information in order to improve the efficiency and the effectiveness of organizations (e.g., Franco-Santos et al., 2007).

As a phenomenon, performance measurement has evolved from the use of traditional quantitative and financial measures to more comprehensive measurement practices, and the traditional accounting-based philosophy of performance measurement has been replaced by the performance measurement practices that are also focusing on the non-financial aspects of organizations’ actions. Related to contemporary operating environments of the organizations, Michele and Mari (2014) argue that the need to develop connections between organizations’

planning, decision-making, operational activities and their results has increased the interest in the measurement of organizational performance.

In this study, performance measurement refers to operational level measurement and evaluation activities of university-industry collaborations. By leaning toward the definition of Neely et al.

(1995) of the process of quantifying the efficiency and effectiveness of actions, efficiency in this study refers to measurement and evaluation of research and development activities during the collaboration activities between universities and other organizations. Thus, the effectiveness of the collaborations is reflected in measurements and evaluations of the outputs and outcomes of these collaborations.

Performance measurement system

Even though there exists a large number of different definitions for a performance measurement system, in general, a performance measurement system can be considered as a framework, tool, or a set of measures that is used to gather and provide information to support performance management practices. There also exist different ways that the performance measurement systems can be categorized, and Speckbacher et al., (2003) state that there does not exist a single definition that can capture the complex nature of the contemporary performance measurement systems. Since Kaplan and Norton (1992) devised the most famous, cited, and applied performance measurement system/framework – the balanced scorecard – which is implemented and used to translate strategic objectives into a set of actions and performance measures, scholars from different areas of management research have widely examined the aspects related to design, building, implementation, and use of the performance measurement systems (Hall, 2008; Henri, 2006; Ittner et al., 2003; Michele and Mari, 2014; Neely, 1999).

According to Bititci et al. (1997) and Neely et al. (1995), a performance measurement system can be seen and defined as the information system or as the set of measures which enable the performance management processes to function effectively and efficiently in organizations.

Lebas (1995) states that a powerful performance measurement system is built on the measures that support the cause and effect relationships, empower, involve, and give autonomy to individuals, and create environments and facilities for continuous improvement. As a performance measurement system is used to operationalize performance measurement processes, it provides an important part of organizations’ management systems (Neely, 2005), and typically consist of a number of individual measures creating a functional entity (Neely et al., 1995).

Most recently, the utilization of a performance measurement system as part of the organizations’ management activities is connected to facilitating strategy implementation and enhancing organizational performance (Santos et al., 2012). According to Franco-Santos et al. (2012), the contemporary performance measurement systems include both non-financial and non-financial measures that are linked to organizations’ business strategies. In other words, the contemporary performance measurement systems are frameworks o and tools that use a balanced set of quantitative and qualitative measures that are applied to deliver a comprehensive picture of the organizations’ operations. According to Franco-Santos et al.

(2012), contemporary performance measurement systems typically utilize balanced scorecards (Kaplan and Norton, 1992, 1996, 2001) and different types of key performance indicators (Hall, 2008). Properly implemented performance measurement systems can also promote organizational learning by acquiring, storing, interpreting, and distributing data and information about an organization’s performance (Garengo et al., 2007). Even though performance measurement systems are designed and implemented to turn strategic objectives into practice, the measurement should also occur and be related to other hierarchic levels of organizations, such as the operational level (Braz et al., 2011).

In this study, the performance measurement system refers to a framework/tool that is used to evaluate and steer the collaborative research and development activities between universities and other societal organizations. The utilization of the performance measurement system is intended to make the research and development activities flow effectively and to evaluate and capture the outputs and outcomes. As such, the performance measurement system in this study mainly refers to the above presented (Neely et al. 1995) definition of performance measurement system.