Citation:

Bramantyo Djohanputro. "Risk-Based Performance Management as a Trend and a Must" International Research Journal of Economics and Management Studies, Vol. 3, No. 4, pp. 94-105, 2024.

Abstract:

The terminology of performance management is very familiar to most leaders and they are responsible for conducting performance management on their own units and their subordinates. The current concept and practices of performance management, however, need to be reviewed and modernized due to VUCA, volatility, uncertainty, complexity, and ambiguity, or TUNA, turbulence, uncertainty, novelty and ambiguity, that potentially leads the deviation of execution and performance from the plan. This paper explores the new development of the models as well as empirical observations of the struggle by various organizations to combine risk management and performance management. As a result, this paper comes up with the proposed operationalization of risk-based performance management as a model for business and public organizations in order to enhance their probability of executing their plans and reaching their objectives.

References:

[1] Aguinis, H., 2014, Performance Management, 3rd edition, Pearson New International Edition.
[2] Armstrong, M., 2000, Performance Management: Key Strategies and Practical Guidelines, 2nd edition, Kogan Page.
[3] Bennett, N. and Lemoine, G.J., 2014, What VUCA Really Meen For You, Harvard Business Review, accessed at What VUCA Really Means for You (hbr.org).
[4] Campbell, J. P., McCloy, R. A., Oppler, S. H., & Sager, C. E., 1993, A theory of performance. In E. Schmitt, W. C. Borman, & Associates (Eds.), Personnel selection in organizations (pp. 35–70). San Francisco: Jossey-Bass.
[5] Chen, J. M., 2021, Capital Asset Pricing Model, Encyclopedia, pp. 915–933, available at https://doi.org/ 10.3390/encyclopedia1030070
[6] Committee of Sponsoring Organization for the Treadway Commission, 2017, Enterprise Risk Management: Integrating With Strategy and Performance, Volume 1, pp. 46 – 54.
[7] Creelman, J., and Smart, A., 2013, Continuous Turbulent Time: The Case for Risk-based Performance Management, Risk-Based Performance Management: Integrating Strategy and Risk Management, Palgrave Macmillan, pp. 1 – 22.
[8] Everson, M.E.A., Chesley, D.L., Martens, F.J., Bagin, M., Katz, H., Sylvis, K.T., Perraglia, S.J., Zelnik, K.C., Grimshaw, M., 2017, Principle 11: Assess Severuty of Risk, Enterprise Risk Management: Integrating with Strategy and Performance, Committee of Sponsoring Organization for the Treadway Commission, pp. 72 – 78.
[9] Everson, M.E.A., Chesley, D.L., Martens, F.J., Bagin, M., Katz, H., Sylvis, K.T., Perraglia, S.J., Zelnik, K.C., Grimshaw, M., 2017, Principle 6: Analyzes Business Context, Enterprise Risk Management: Integrating with Strategy and Performance, Committee of Sponsoring Organization for the Treadway Commission, pp. 46 - 54.
[10] Gao, J., Campbell, J., and Lovel, C.A.K., 2006, Equitable Resource Allocation and Operational Efficiency Evaluation, International Journal of Healthcare Technology and Management, January, pp. 142 – 167.
[11] Geamanu, M., 2011, Economic Efficiency and Profitability, “Studia Universitatis Vasila Goldies” Arad, Economic Series, accessed at https://www.researchgate.net/publication/265814327
[12] Marcetti, 2012, Enterprise Risk Management Best Practices: From Assessment to Ongoing Compliance, John Wiley and Sons.
[13] Potocan, V., 2006, Business Operations Between Efficiency and Effectiveness, Journal of Information and Organization Science, January, pp. 250 – 262.
[14] Johnes, J., Thanassaoulis, E., and Silva, M.C.A., 2017, Efficiency in Education, Journal of the Operational Research Society, April, pp. 330 – 338.
[15] Murphy, K. R. 1989. Is the relationship between cognitive ability and job performance stable over time? Human Performance, 2, 183–200.
[16] Palermo, T., 2017, Risk and Performance Management: Two Sides of the Same Coin?, LSE Research Online, London School of Economics.
[17] Palmer, S., and Torgerson, D.J., 1999, Definitions of Efficiency, BMJ, National Library of Medicine, 378 (7191), accessed at Economics notes: Definition of efficiency – PMC (nih.gov)
[18] Rahman, H.U., Kodikal, R., Nawaz, N., and Hariharasudan, A., 2021, Effective Information System and Organizational Efficiency, Polish Journal of Management Studies, December, pp. 397 – 413.
[19] Smart, A., 2021, The Risk-Based Performance Management Methodology, White Paper, accessed at https://www.researchgate.net/publication/355203066
[20] Sonnentag, S. and Frese, M., 2005, Performance Concepts and Performance Theory, Psychological Management of Individual Performance, John Wiley and Sons, pp. 3 – 26.
[21] White, J., and Haghani, V., 2021, No Place to Hide: Investing in World With No Risk Free Asset, Elm Partner, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3903372

Keywords:

Risk Management, Performance Management, Risky Performance, Risk Appetite, Key Performance Indicators, Key Risk Indicators.