Performance by Objectives

Different types of goal-oriented performance models are anlyzed in this document. The models mostly differ in their level of focus: some are about reaching a future state, while others concentrate on immediate operational goals.

The performance by objective typically relates to the first option, which provides guidance for the organization.

After the orientation and objectives are established, performance can be assessed by developing criteria to measure how well the objectives are achieved, first at the overall level, then at the level of individual units, and finally at each position. From this perspective, the organization emphasizes outcomes rather than processes. It is viewed as a logical setup of indicators designed to achieve goals. The organization’s ultimate objective is divided into multiple team and individual performance indicators.

The idea that a company be organized by a set of objectives is widely accepted by theory. However, this idea is easily challenged as being insufficient and incompatible with the broader meaning of performance and efficiency. Considerations of other models can tell. In any case, there is little agreement among different objective-based models and other models regarding the variables being used. The typical way to progress with the objectives-based model is to identify the most powerful stakeholders and ask them to express their goals. Once the objectives are negotiated, criteria to measure the achievement of these goals must be defined in operational terms, with the validity of the criteria possibly needing to be established.

By analogy, the way to measure an organization’s performance is by establishing a catalog of organizational objectives that meet three criteria: (1) they must be concrete and observable actions that the organization takes, (2) the conditions under which the organization must achieve them must be specified, and (3) the degree to which each objective can be achieved must be clearly specified. Different models can relate to performance based on objectives. Five are discussed below.

The cost-benefit analysis model

This method measures the relative performance of multiple actions or programs against a specific goal. It involves evaluating several options and using expert judgment to establish a standard of achievement, which allows for comparison of the cost/benefit ratio. Two principles are implicit in this model: (1) the numerator and denominator components can be combined into a single composite score for each, and (2) the ratio itself possesses the properties of interval scales.

Management by objectives

The primary performance criterion is whether the organization has actually completed the work it previously identified as necessary. Performance consists of measurable, concrete, and specific achievements or failures. This definition of performance is unique to each organization. Achievements are detailed for each organization and for a specific time period. The performance report indicates whether objectives have been met. Incorporating this view of performance also establishes a comprehensive system of planning and control.

The Individual Criteria Model

In this approach, performance is determined by a set of individual criteria established through systematic job descriptions. Decisions about hiring, promotion, end of contract, etc., are made by an expert based on measurements of these criteria. The criteria measured are directly controlled by the individual, and differences in results between people or over time reflect personal performance rather than external factors. Performance refers to tangible and observable actions people can take. This performance can be evaluated by each person's contribution to their position's objectives within the organization. Performance criteria can be developed in various ways, including the critical incident technique or other methods.

The Behavioral Goals Model

In this model, behavioral goals are set based on performance evaluations and are used to guide behavioral development. The term "behavioral goals" is used individually. All the changes that the program intends to produce are listed and described in clearly observable terms. "Terminal behaviors" refers to the specific skills the person should be able to demonstrate when the program ends.