Introduction

In this chapter the authors address the questions of what performance is and how to create it. The authors develop a series of nine propositions that, taken together, provide an answer to these questions.

After a brief overview of the reasons that led to these questions, and a review of the relevant literature that shows the diversity of meanings of “performance”, the authors develop step by step the process that leads to performance, showing it to be a social construct that results from the identification and the sharing of a causal model. That observation leads to the conclusion that performance is meaningful only within a decision-making context. The concept of performance is, therefore, specific to a given set of decision makers. Creating alignment between decision makers both inside and outside the firm is a prerequisite for performance to occur.

In the last sections of the contribution, the authors show the impact of responsibility assignment and of measurement on the operational definition of performance. All in all, the nine propositions form the basis on which performance can be defined, identified, measured and managed.

Performance

The word “performance” is widely used in all fields of management. In the management control area, terms such as “performance management” (Euske, Lebas and McNair, 1993), “measurement”, “evaluation” (e.g. Bruns, 1992) and “appraisal” are used. Despite the frequency of use of the word, its precise meaning is rarely explicitly defined by authors, even when the main focus of the article or book is performance (e.g. Neely, Gregory and Platts, 1995; Corvellec, 1994).