Abstract

There is a constant demand for improving performance evaluation system of public enterprise in order to ensure better efficiency and effectiveness in public enterprise. Although there has been a lot of efforts to achieve this purpose, many problems remains unresolved. This paper evaluates the suitability of performance measure of the performance evaluation system of public enterprise and provides the guidance for the improvement. Based on the balanced scorecard (BSC) and value based management (VBM) framework, this study provides the good performance measure properties as follows. First, performance measure should have informativeness, and it is optimal to include all (costless or low cost) signals that provide any incremental information about the agents action choice in compensation contracts. Second, it should be precise, sensitive, and verifiable. Next, it should contribute to the goal congruence of the principal and the agent by reflecting relative priorities of the organization's multiple objective. Finally, we need to set targets at a "high but achievable" level to motivate the agent. By this analysis, we expect to contribute to the improvement of the system, and more generally,rectify the problems of managerial inefficiency not only for the public enterprise it self but also for the sake of the public which depend on it.

Keywords

• Performance Evaluation System of Public Enterprise
• Performance Evaluation system
• Performance Measure
• Balanced Score Cards

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