8. Enhancing Performance Management and Sustainable Organizational Growth Through System-Dynamics Modelling

The concept of “planning & control system” dates back to Robert Anthony’s taxonomy (Anthony 1964, 1965). According to Anthony’s framework, the P&C system is identified as a set of functions, consisting of three sub-systems (Anthony and Govindarajan 1998: 6), i.e.: Strategic planning, management control, and operational control. All these subsystems are described as processes aimed at affecting different, but interrelated, functions. In fact, (1) strategic planning focuses on deciding the objectives of the organization, the resources to be used in attaining them, and the policies for governing the acquisition and use of these resources; (2) management control focuses on how “resources are obtained and used effectively and efficiently in the accomplishment of the organization's objectives”; and (3) operational control focuses on how “specific tasks are carried out effectively and efficiently.” Though planning and control are described as different functions, particularly if organizations operate in dynamic complex systems (Lorange and Scott Morton 1974), the processes associated with setting goals and objectives, assigning responsibilities, monitoring results through the use of feedback and feed-forward mechanisms (De Haas and Kleingeld 1999; Nørreklit 2000), motivating and rewarding decision-makers, and reporting performance cannot be conceived as components of isolated systems. An integrated and systemic view of P&C, rather, provides a sound basis for implementing performance management (Otley 1999).

Social capital refers to the connections among individuals and organizations, and to the norms of reciprocity and trustworthiness arising from them (Putnam 2000). Social capital is not just the sum of the institutions in a society; it is rather the glue that holds them together.

Though the “clients-products” framework may seem more compatible to an enterprise than to public-sector and non-profit organizations, the competitive viewpoint also can be effectively applied to such institutions. In fact, just as with businesses, so with a public institution: Strategy is characterized by a set of goals implying the identification of stakeholders (e.g., community, citizens, users) for the satisfaction of whose needs a given ‘service delivery system’ is carried out. Similarly, just as with an enterprise, so too with a governmental institution: A set of strategic business areas can be defined, and the different units of service delivery (e.g., the policies carried out to satisfy groups of community or citizens’ needs) which profile the strategic field where public institutions operate, can be outlined.

An interesting systemic-control model based on a different perspective, in respect to the instrumental view here discussed, has been proposed by Schwaninger (2009: 48).

Though liquidity and equity can also be negotiated through loans and the issue of shares, respectively, a sustainable growth implies that a company is able to increase them through its cash flows and profits.