This paper examines organizational performance assessment as a multi-purpose management tool, outlining its core roles: evaluation, control, budgeting, motivation, celebration, promotion, learning, and improvement. It then applies these concepts in a detailed case analysis of Starbucks Corporation, reviewing the company's history, internal strengths and weaknesses across marketing, customer service, human resources, technology, and finance, and concluding with strategic recommendations drawn from the assessment findings. The paper demonstrates how systematic performance measurement can inform decisions, drive organizational learning, and support sustained competitive growth.
Organizational performance assessment can be defined as a process of evaluating the performance of an organization against well-defined goals and targets. It places much emphasis on the accomplishments of an organization in relation to its mission and stated objectives. In the case of a government department, the assessment would examine major mandates, ambitions, priorities, and performance schedules, and evaluate the progress made toward the accomplishment of those ambitions. In short, it refers to the practice whereby an organization establishes the framework through which programs, acquisitions, and investments achieve the desired results.
The process of measuring performance always requires the use of statistical evidence to determine progress toward the defined objectives of the organization. The basic aim of any assessment is to provide feedback relative to the goals of the organization, which increases its chances of accomplishing stated goals effectively. The assessment gains true value when it is used as the foundation for appropriate decisions. Performance measurement is not simply about knowing how an organization is doing, but about helping it improve (Kotelnikov, 2001). Public organizations are increasingly publishing collections of their own performance measurements (Murphey, 1999).
Organizational performance assessment is used to evaluate how well an agency or organization is performing. In order to conduct the evaluation, managers must determine what the organization should be accomplishing (Kravchuk & Schack, 1996). The evaluation process consists of two variables: the performance data of the organization, and a reference point that creates a structure for analyzing that data. For an organization to assess its performance, it needs standards against which to compare its actual performance — whether against its own previous performance, the performance of similar organizations, or industry benchmarks.
Today, managers do not mechanically control their workforce. They nonetheless still apply measures to control and direct, even while allowing employees a degree of autonomy (Robert & David, 1996). An organization can generate measurement systems that specify given actions it wishes to carry out. There is a need to determine each worker's contribution to the organization. Management should measure worker behavior and compare it against requirements to determine compliance. In a number of instances, these requirements are expressed only as guidelines. Whether guidelines or formal requirements, they serve the purposes of control, and the measurement of conformity with them is the primary instrument of that control.
Budgets are fundamental tools for the improvement of performance. In a number of situations, an increase in budget may be the solution needed to improve organizational performance — for example, purchasing improved technology when existing systems are obsolete and are harming operational processes. Effectiveness is determined by scrutinizing performance output and the outcomes achieved, taking into consideration the number of individuals involved and cost data. Performance budgeting, results-oriented budgeting, and performance-based budgeting are among the names frequently given to the use of performance evaluation in the budgetary process (Thompson, 1994; Holt, 1995–96; Joyce, 1996, 1997; Melkers and Willoughby, 1998, 2001; Thompson and Johansen, 1999; Lehan, 1996; Jordan and Hackbart, 1999).
Motivation involves giving individuals important goals to accomplish and then applying performance measures — including interim objectives — to focus individuals' thinking and work, and to offer an intermittent sense of achievement. Performance aims can also support creativity in developing enhanced ways to accomplish a goal (Behn, 2003). Organizational performance assessment therefore not only motivates improvements but also motivates learning. The overriding reason behind measurement ought to be the output. Managers cannot motivate employees to affect outcomes over which they have little or no control. Once management has motivated significant improvements through output targets, it becomes possible to set outcome targets as well.
Organizations should commemorate their achievements. Such celebrations bring workers together and provide them with a sense of individual and communal relevance. By accomplishing given goals, individuals gain a sense of personal achievement and self-worth (Edwin & Gary, 1984).
Celebrations also help improve performance because they draw attention to the organization, promote its competence, and attract resources. Celebrations attract dedicated employees willing to work for successful firms, and can draw potential collaborating organizations as well. Targets can also be used to motivate. For celebration to be successful and its benefits to be realized, managers must ensure that it creates motivation and, through that, continued improvement.
Organizational performance assessment measures can be applied to validate success and justify additional resources. They can also help the organization win the loyalty of consumers, stakeholders, and staff by making results visible. The organization will gain recognition both internally and externally.
An organization can learn a great deal from organizational performance assessment. By analyzing the information provided by evaluation, an organization can understand the reasons behind its strong or poor performance and correct ineffective methods to achieve success. Benchmarking is a conventional form of performance measurement that facilitates learning by providing an evaluation of organizational performance and identifying potential areas for development. It can facilitate the transfer of expertise from benchmarked firms (Kouzmin et al., 1999). Identifying the key processes within an organization and evaluating their performance is essential to effective benchmarking.
Learning commonly occurs when firms encounter business problems or failures. Firms can improve by critically analyzing their mistakes and searching for solutions. In the public sector, however, failure is often penalized severely, which can lead organizations and individuals to conceal rather than confront it.
For a firm to improve in a targeted area, it first needs to identify what it wants to improve and then develop processes to achieve that. The firm also needs a feedback loop to ensure compliance with procedures aimed at achieving improvements, and to determine whether the processes created actually produce the expected improvements. The process of improvement is closely related to the process of learning, as both involve identifying areas in dire need of attention.
Starbucks is a private company that commenced business at Seattle's Pike Place Market in 1971, with the aim of supplying coffee to restaurants and bars. With the hiring of Howard Schultz as head of marketing and retail in 1982, the firm changed direction. After visiting Italy, Schultz sought to apply similar principles to build a strong café culture. He later leveraged Starbucks' ability to supply quality coffee beans and opened a new store called Il Giornale. By 1987, Il Giornale had acquired Starbucks' assets and was renamed Starbucks Corporation. By year's end, Starbucks had grown to 17 stores and had expanded into Chicago and Vancouver.
In 1990, the firm expanded its Seattle headquarters and opened another roasting plant. By 1995, Starbucks had established its name with the opening of its 676th store. In 1996, the firm continued to extend its reach by entering Japan, Hawaii, and Singapore. By 2000, the company had grown to 3,300 stores and had ventured into markets ranging from Australia to England.
The main strength of Starbucks in recent years has been its unwavering effort to make its product lift up customers' daily lives. Its strategy for expanding operations is to reach consumers at their place of work, shopping, travel, and dining by building relationships with well-known individuals who share its commitment and values regarding quality. The firm has pursued this strategy by moving delivery into grocery stores, department stores, convenience stores, movie theatres, airports, businesses, homes, and schools. Notably, the company does not rely on traditional advertising. Instead, it relies on image advertising such as television and movie placement to promote the business.
"Strengths and weaknesses across functional areas"
"Strategic recommendations based on assessment findings"
In order to compete with potential market threats, Starbucks must push to be a first mover, regularly introducing new products to stay ahead of competitors. Starbucks must remain aware of developments in highly competitive markets. One way organizations counter this kind of competition is through strategic agreements and long-term contracts.
Starbucks stands to gain significant market share by entering markets with smaller populations and lower levels of affluence. Given its strong reputation across the United States, this brand image will help the firm achieve profitability and improved market share in smaller markets as well.
Research and development should continue to emphasize product development. Developing new products will help counteract potential risks, and Starbucks will be able to use revenues from its varied product range to cushion the impact of any decline in core coffee sales.
Staff should remain Starbucks' most significant asset. The company's very low employee turnover rate has greatly contributed to the improvement of its brand image — and a strong brand image is essential to the future success of any expanding company.
In general, Starbucks appears to be a resilient and well-rounded firm. As the leader of its industry, it has built a sturdy brand image that has enabled it to capture a significantly larger share of the market compared to its competitors. Management has fostered a corporate culture that promotes productivity through experienced human resources. Financially, the firm is stable despite its rapid and continuous growth strategy. The firm has also performed well in establishing dependable, long-term relationships with suppliers. Starbucks is performing well across most areas of its business. In areas where it may lack expertise or competencies, it has developed strategic alliances with more competent and capable firms.
Behn, R. D. (2003). Why measure performance? Different purposes require different measures.
Edwin, A. L., and Gary, P. L. (1984). Goal setting for individuals, groups, and organizations. Science Research Associates, Chicago, IL.
Kotelnikov, V. (2001). Performance measurement system.
Robert, S. K., and David, P. N. (1996). Using the balanced scorecard as a strategic management system. Harvard Business Review.
Kravchuk, R. S., and Schack, R. W. (1996). Designing effective performance measurement systems under the Government Performance and Results Act of 1993. Public Administration Review, 56(4), 348–358.
Holt, C. L. (1995–96). Performance-based budgeting: Can it really be done? The Public Manager, 24(4), 19–21.
Jordan, M. M., and Hackbart, M. M. (1999). Performance budgeting and performance funding in the states: A status assessment. Public Budgeting and Finance, 19(1), 68–88.
Joyce, P. G. (1996). Appraising budget appraisal: Can you take politics out of budgeting? Public Budgeting and Finance, 16(4), 21–25.
Joyce, P. G. (1997). Using performance measures for budgeting: A new beat, or is it the same old tune? In K. E. Newcomer (Ed.), Using performance measurement to improve public and nonprofit programs, New Directions for Evaluation 75 (pp. 45–61). Jossey-Bass.
Kouzmin, A., Loffler, E., Klages, H., and Kakabadse, N. K. (1999). Benchmarking and performance measurement in public sectors. The International Journal of Public Sector Management. Pitman Publishing.
Lehan, E. A. (1996). Budget appraisal — the next step in the quest for better budgeting? Public Budgeting and Finance, 16(4), 3–20.
Murphey, D. A. (1999). Presenting community-level data in an "outcomes and indicators" framework: Lessons from Vermont's experience. Public Administration Review, 59(1), 76–82.
Thompson, F. (1994). Mission-driven, results-oriented budgeting: Fiscal administration and the new public management. Public Budgeting and Finance, 15(3), 90–105.
Thompson, F., and Johansen, K. C. (1999). Implementing mission-driven, results-oriented budgeting. In H. G. Frederickson and J. M. Johnston (Eds.), Public management reform and innovation: Research, theory, and application (pp. 189–205). University of Alabama Press.
You’re 67% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.