Monday, 4 January 2010

Organisational/individual performance assessment

Organisational performance assessment is often critised for creating bureaucracy and perverse incentives. I suggest: that performance assessment of individuals is less prone to creating bureaucracy and perverse incentives; and that an organisation in which all the members are performing well is likely to be performing well. Thus, organisation performance assessment can be de-emphasised and individual performance assessment strengthened.

For example, a hospital may have an organisation performance metric of waiting list length. This creates the perverse incentive of not offering treatments to patients to avoid putting them on the waiting list. The appropriate individual performance metrics are for doctors are the number of treatments performed and their quality.

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