Design and construct a performance measurement ...

Design and construct a performance measurement system in sports organizations – English Version – Abstract Purpose – The purpose of this study is to design and develop a performance measuring prototype system that sports clubs can use to assess their performance in order to keep their transient advantage. Design/methodology/approach – The methodology adopted in this research uses critical literature reviews and an empirical work with two random samples and two questionnaires. Both questionnaires have strong internal consistency and they are legitimized by the statistical technique principal component factor analysis. Findings – The main finding of this study is a performance measuring prototype system for sports clubs with 18 indicators that provides outstanding management information and covers strategic and operational areas. Research limitations/implications – As the present study was focused on developing a prototype system, it adopted two cross-sectional surveys; however, relationships and correlations are developed continuously. As such, the survey/data should be longitudinal in nature. Another factor to consider is the measurement system proposed, and its indicators. They cannot be considered an "umbrella” or “one-size-fits-all" because, a measurement system should consider the peculiarities of each club. Practical implications – The outcomes from this performance measuring prototype system will help managers in sports clubs to analyze performance measures and relate them to the strategic and operational activities of the organization, thus supporting their process of continuous improvement. Originality/value – The major contribution of this study is the investigation and development of a performance measuring prototype system for sports clubs. The study highlights the necessity of a performance measuring system suitable for sports organizations, and suggests 18 indicators that cover their needs and characteristics which are divided in two blocks: “Learning and Improvement" and "Stakeholders and Compliance". Key words: Performance, Performance measurement,

Measurement,

KPI, Sports

management. How to cite: Arraya, M. 2016. Uma proposta de sistema de medição de desempenho para a organização desportiva. Revista Intercontinental. Gestão Desportiva, Vol 6 (3): 288–320.

Arraya, M. 2016. Uma proposta de sistema de medição de desempenho para a organização desportiva. Revista Intercontinental. Gestão Desportiva, Vol 6 (3): 288–320.

Introduction All sports clubs - for-profit or non-profit - need to have some sort of performance measuring system. As Kaplan and Norton (2001) mentioned, if performance is not being measured, it is not being managed. On the other hand, the results of the organization/club are subordinate to strategy, execution, efficiency and effectiveness of resources and capabilities (Leinwand and Mainardi, 2011; Winand et al, 2010), and competence to read and understand the results. Furthermore, to support strategic and its related implementation process, there must be a system which is able to provide information about the organization’s internal and external environment, and her critical success factors and capabilities. When measured, assessed and monitored, these elements are critical to achieving organizational strategic goals, efficiency, and effectiveness. It then becomes necessary to evaluate the performance of strategic and operational execution in order for managers to study what happened and how, and what can be done to obtain continuous improvements (Marr, 2010). For that purpose, a measurement system is needed to portray the organization’s strategy and objectives through quantifiable indicators that can be compared with past outcomes and recognized standards, in order to produce desirable and technically feasible paths (Kaplan and Norton, 2001; Marr, 2010). In other words, the performance measurement system must be a vital navigation instrument that helps the organization to understand whether its activity or business is on the right track or not (Marr, 2012). To this effect, it is necessary to provide the sports manager with a tool to help him/her make decisions in a timely fashion with minimal risks, and targeted at stakeholders. With this purpose, we intend to present a prototype for performance measurement system for the sports club, which in turn provides the organization’s management team and its stakeholders with useful, immediate, transparent and simple information, considering a set of indicators that focus on tangible and intangible variables, in line with strategic management. It also intends to contribute to the literature on performance evaluation in sports organizations/clubs and its operational relevance. The system presented, which is derived from Marr’s (2009) constructs allows application in areas where high levels of service are required, and reflects the organization’s “state of art”. Relevance and research design The sports industry is an important economic sector in terms of fund transfers, employment, and especially attracting human and financial capital (Adcroft and Teckman, 2009). Its development requires the adoption of technology that increases efficiency and makes 2


organizations more competitive in the face of good-to-excellent transformations (Masteralexis et al, 2008). Operations in sports clubs - due to their own characteristics - give greater emphasis to human resources, which reduces the power to control, and also increases the degree of variability and uncertainty of events (Marr, 2009). Thus, the level of services depends mainly on the quality of the human factor, but also in the ability to invest in facilities, equipment’s and logistics. Only a few studies have specifically investigated - particularly the researcher Mathieu Winand - the performance measurement system for sports organizations. We performed a search using the keywords: “sports kpi”, “sports management indicators”, “sports management measurement” and “sports clubs indicators” at Business Source Complete, Emerald, Palgrave, ProQuest, SAGE Premier, Taylor and Francis, Wiley Online Library, and we found only five research/conceptual papers. We believe that this lack of studies represents an opportunity for research in this field. Thus, we propose a prototype for a performance measurement system in sports clubs. In order to meet the goals of the investigation, we proposed a positivist approach - following a model based on literature review - to reach an understanding of the topic under investigation, and a quantitative research based on a perception survey where the system is validated. The research is organized as follows: After the introduction, the second section provides a literature review. The third section presents the conceptual framework. The fourth section illustrates the overall research methodology. The fifth section deals with results. The sixth section includes the discussion and conclusions. The last section describes the limitations and potential future research. Literature Review Performance management definition Performance management is considered a means to improve organizations (Cummings and Worley, 2001). According to McNamara (2010), performance management is intended to remind us that "busy people" do not generate outcomes because they must do the right things at the right time, and individual organizational activities do not provide sustainable results. Performance management focuses on producing results and redirecting the organization’s efforts from being "busy" to “being effective”. With this purpose, all outputs from process, functional, individual, etc., should be properly aligned in order to provide a positive influence on the overall performance outcomes (McNamara, 2010). Bititci et al (1997:524) defined performance management as "[...] the process by which a company manages its performance 3


in line with its corporate and functional strategies and objectives [...]". Winand et al (2014:124) complemented Bititci et al.’s definition when they defined performance management as “ […] the acquisition of necessary resources and their efficient use through organizational processes to achieve relevant and targeted goals, as well as a high satisfaction of the organization’s stakeholders.” This investigation follows these definitions. Measurement and the importance of performance management Performance management literature mentions its organizational importance; however, if a measurement system wants to support and improve decision-making and performance, some issues require further studies (Marr and Schiuma, 2003; Santos et al, 2001). In performance measurement, financial and non-financial measures are essential (Kaplan and Norton, 2001), and this system must consider the context particularities in which it operates, the values and preferences of the decision makers, and the linkage of strategic and operational objectives (Bortoluzzi, 2009). In this scope, the system should be concerned with the holistic aspects of measurement. Instead of adopting indicators dissociated from each other, they must be integrated and related to the organizational strategy, which is based on customers’ relationship, core and organizational capabilities (Bititci et al, 1997; Kaplan and Norton, 2001; Leinwand and Mainardi, 2011). This is mainly due to changes in the organizational environment where the organization’s intangible aspects greatly reflect on performance (Jarvis et al, 2000). In general, performance measurement should be integrated with stakeholder’s expectations, especially as regards organizational goals achievement (Grote, 2002). Measurement is related to the organization’s control system, which is aimed at performance information which refeeds and allows managers to compare planned results with the actual ones, and then decide what to do with any deviations, discrepancies or problems that may be detected (Hampton, 1992). Thus, performance management is intertwined with the organization’s daily management to the extent that actions are directed to the achievement of outcomes. In this sense, the performance measurement system becomes particularly important to support management’s development which is required in today's organizations facing increasing management complexities (Garengo et al, 2005). According to Tadachi and Flores (2005), indicators are quantifiable ways of characteristic representation of processes and products or services. They are used by the organization to monitor and improve the quality and performance of their processes and products or services. According to the quality assurance, the indicators are linked to the characteristics of the 4


process and the product or service. According to the customer’s perspective, the indicators are associated with product or service benefits (Zucatto et al, 2009). An indicator can be defined as a parameter that measures the difference between the current situation and the desired situation, i.e., indicates the position at the time of measurement (Grote, 2002). The use of indicators is related to the need to make decisions on facts, and ensuring a management process on the organization’s internal and external variables (Zucatto et al, 2009). Rummler and Brache (1995) reported that an important determinant of the organization’s effectiveness-management is the selection of indicators associated with the related goals. If an organization wants to achieve the various aspects in which the strategy and operations are taking place, there is no possibility to reduce this complexity to a single performance indicator (Slack et al, 2002). As such, it is crucial to apply a multi-dimensional measurement system. Di Kamp (1994) mentions that performance measurement can improve the organizations’ efficiency, lead to stakeholder’s advantages, and allow the organization to obtain: a) greater employee motivation and a better understanding of their capabilities; b) the ability to identify the best way to train staff in accordance with organizational needs; and c) the power to control the organization’s internal environment. Consequently, the ability to effectively measure the organization’s performance is vital to their survival and efficient management of operations (Maltz, 2001), and, the greater the complexity and volatility of the market, the greater the relevance (Spitzer, 2007). However, Marr (2009) notes that the use of performance measures for reliable information is only useful if it helps making decisions and as well improving performance. This, according to the author means that, if managers do not learn anything from the management’s information collected and it does not improve anything, then the organization is wasting time and effort. To prevent this situation, the key is to involve everyone in the organization’s measurement activities (Marr, 2009). Measurement in sports clubs The concept of organizational performance in sports organizations is generally understood as the combination of effectiveness and efficiency (Winand et al, 2010). There are various types of sports organizations and they can be cataloged into three major groups: sports governing bodies (e.g., federations and regional associations), non-profit organizations (e.g., sports clubs), and for-profit organizations [e.g., health clubs, sports clubs as public limited companies (e.g., AS Roma, Borussia Dortmund, Manchester United) or franchises (e.g., New 5


York Knicks)]. However, this investigation is just about sports clubs non-profit and for-profit organizations. Some researchers (Drucker, 1990; Sawhill and Williamson, 2001) identified specific characteristics of non-profit organizations, which can be found in regular sports clubs. According to Winand et al. (2010), these features have some impact on the definition of organizational performance. Firstly, their missions are mostly intangible and therefore, are difficult to measure. Organizational effectiveness is a difficult construct to define and measure, and the third sector (where most sports clubs belong) is admittedly even more problematic (Bradshaw et al, 1992; Knox and Gruar, 2007). Secondly, sports clubs must meet their heterogeneous stakeholder’s expectations and objectives; particularly those with influential abilities. Thirdly, financial resources are limited and sometimes come from public authorities. Finally, human resources are the professional employees and volunteers, which both have to manage the club, which could result in stress between them (Shilbury and Moore, 2006). Therefore, the inner working of the regular sports club is frequently less straightforward than in private organizations. Madella (1998) and Bayle (2000) identified the main missions that sports organizations or clubs have to achieve, which are related to the stakeholders expectations: a) the need to achieve good sports performance or develop elite programs; b) sports for all, which incorporates the development of activities for the whole community; c) human and social development of participants; d) the impact of sports institutions on society. However, Madella (1998) noted the role of sports organizations in educational services, and Bayle (2000) focused on the social legitimacy of the activities. These missions conceptualized strategic goals in two constructs: sports performance, and the customer or beneficiary. The first construct includes the goals of elite sports and sports for all, and the second includes sport values, service to the community and member’s development. Madella (1998) and Bayle (2000) also mentioned two constructs outside pure sports: a) the importance of financial performance, according to different aspects: the management of financial resources, which refers to the acquisition of the necessary resources to achieve the goals, and the proper use of these resources; and, the financial survival, which refers to the organizations’ dependence on public authorities and their capacity for self-financing; b) to focus on the human resources’ skills/competencies and internal operation quality, which refers to the club reactivity and planning, the organizational climate and internal communication. These four constructs fit into the measurement system designed in this research.

6


In sports organizations which desideratum is competition and entertainment, like the American sports franchises [e.g. National Football League (NFL), National Basketball Association (NBA), Major League Baseball (MLB), National Hockey League (NHL)] or clubs working as public limited companies (e.g. Manchester United, Borussia Dortmund, Sporting Portugal, etc.), the sport performance measurement is effected by giving more emphasis to financial indicators (Moore and Levermore, 2012), sports outcomes indicators (Espitia-Escuer and Garcia-Cebrian, 2006), and customer satisfaction [which could include fans, supporters, or others; (Brunzell and Söderman, 2012)]. The empirical work of this study will fill in the gap in sports clubs performance measurement, offering a prototype framework. Developing a system for performance measurement in sports clubs According to Igarashi, Ensslin, Ensslin, and Paladini (2008), the construction of a measurement system should consider the particularities of each organization. Thus, the manager must know what will be measured, because, each organization has its culture, mission, vision and strategy, and these characteristics should be mirrored in the system. This means that, the measurement system should have a holistic insight (Bond and Carpinetti, 2010; Otheitis and Kunc, 2015; Pike and Roos, 2001). The measurement system should be the following: a) it must suit the needs of information; b) associate financial and non-financial indicators; c) the model should reflect reality; and d) it must have pragmatism and organizational alignment, and results should allow practical knowledge for immediate or future action. On the other hand, maintaining competitiveness depends on the organization’s strategic alignment (Muller, 2006). Thus, the performance measurement system should enhance the processes of the organization's strategies and objectives, which links the goals and organizational execution (Lynch and Cross, 1991; Kaplan and Norton, 2001; Keegan, Eiler and Jones, 1989; Waal, 2003). A major challenge of the system is the organizations struggle for evaluating intellectual capital and changes (Neely et al, 2002). Conceptual framework This study follows Neely et al.’s (2002:63) definition of performance measurement system: “[…] a set of metrics used to quantify the efficiency and effectiveness of past actions […]. Performance management enables informed decisions to be made and actions to be taken because it quantifies the efficiency and effectiveness of past actions through the acquisition, collation, sorting, analysis and interpretation of appropriate data […]”; which is expressed in 7


Figure 1. This research also follows the postulates of Carpinetti and Bond (2010), and Pike and Roos (2001), and also chose Marr’s (2009) constructs “Learn and Improve” and “Stakeholders and Compliance” for its proposal. Thus, i.

Measuring to report externally and demonstrate compliance (“Stakeholders and Compliance”; Marr, 2009): these measures are used to inform external stakeholders and to comply with regulations relating to external reporting and information requests (Torres et al., 2005). When the purpose of the measurement are the external reporting and compliance, all reports and associated indicators tend to be produced on a mandatory basis, such as annual financial statements and balance sheet, and on a voluntary basis, for example, environmental impact reports. The open and reliable measurement data and performance information to external stakeholder’s is an idea that makes a case for better communication and understanding (Spitzer, 2007). It also allows organizations in the same sector to perform benchmarking. Disclosure of performance assessment can also facilitate learning (Marr, 2009).

ii.

Measuring to learn and improve performance (“Learn and Improve”; Marr, 2009): these measures are used to qualify human resources and to sensitize them about their need to learn in order to make decisions which result in improvements. In this context, measures are used as the evidence-base to make informed management decisions; to challenge strategic assumptions, learning and continuous improvement.

In his work, Marr (2009) pointed out that “Learning and Improvement” presents the most natural way to use measures and performance indicators, because it provides greater improvements in performance. This is due to the fact that the collected information shows the internal and external environment, and the outcome from the use of this information guides decisions and learning. Research Methodology This study focuses on worldwide individuals operating in the sports clubs; we chose this segment because they are the ground floor of sports industry. Instrument Design The instrument for gathering information is the questionnaire, which will be answered by a random sample. For this research, questionnaires were divided into two phases: the pilot questionnaire - for indicators prequalification; and a validation questionnaire. The pilot questionnaire is the preliminary phase which ensures that only appropriate indicators, according to the questionnaire participants, have the attributes for the measurement system. 8


Because data reliability is of great importance, the validation questionnaire will be answered by a new random sample for bias caution. These two questionnaires were submitted for prior validation to three university professors, and after some corrections, the final versions were reached. Sample and data collection A random sampling procedure using LinkedIn members from sports management groups was applied on both questionnaires. Members without sports management experience were excluded from the sample. The web-based cross-sectional questionnaire targeted both management and employee levels of sports organizations (Gosselin, 2005; Kianto, 2009). The pilot questionnaire custom invitation was sent by email to a total of 19,000 people, between May 24th and July 19th 2013. Amongst these invitations, 1,148 participants initiated their questionnaire participation, out of which 477 completed it, reflecting a 2.51 percent (%) response rate. The validation questionnaire custom invitation was sent by email to 5,000 different people between September 20th and October 20th2014. Because data reliability is important, the participants who had replied to the initial questionnaire were asked not to participate this time. Amongst these invitations, 265 participants initiated their questionnaire participation and 133 completed it, reflecting a 2.66 percent (%) response rate. In both questionnaires, the first question was eliminatory, because it would select potential participants: Do you work as a professional or volunteer as a sports club manager or staff member? The data obtained was analyzed in two phases through statistical software SPSS Version 19, and Microsoft Excel 2007. The analytical methods used at first phase were mean, standard deviation, weightings and ranking. In the second phase we made use of mean, standard deviation and principal component factor analysis. The reliability of the measures was assessed through Bartlett test of sphericity, Kaiser-Meyer-Olkin measure and Cronbach’s α coefficients. To test whether there is any differences between groups’ chi-square test were performed. This test is normally employed as test of independence, according to Ott (1993) the chi-square test may be used to determine the significance of differences between two independent groups on categorical variables. Results of the chi-square (χ2=2.37, p=0.971) revealed no statistically significant association between the two variables.

Phase I - Pilot Questionnaire

9


A list of 23 potential indicators for measuring the sports organizations performance are proposed by the author on the basis of literature review (Appendix B, Table 1), and they are classified into two constructs (Marr, 2009): “Learn and Improve” and “Stakeholders and Compliance”. To further qualifier the list of indicators, a pilot test was undertaken by club sports managers and staff members, who were our target population and who were not included in the validation questionnaire, with the purpose of achieving a sports performance measurement system. The questionnaire has a single perception question "how important do you think the following indicators are to measure the success of your club?". All items were assessed using a 5-point Likert scale with anchors of 1 (not important at all) and 5 (very important). Most of the performance indicators in this questionnaire are supported by authors from the mainstream management (Table 1). Participants were also requested to rank the top three indicators; following Simon (2010; Appendix), a weighted score was calculated for each of the indicators in order to obtain a clear ranking. To simplify the calculation and distinguish the difference between indicators and their influence in the measurement system, their weightings are standardized as regards the questionnaire results. The formula for standardization follows Lin, Shen, Sun, and Kelly (2011; Appendix). Place Table 1 about here Phase II - Validation Questionnaire The validation questionnaire was answered by a new random target population, and the focus was to validate the performance indicators chosen by the prequalification; for that, the participants had a main question: Is the list of performance indicators completed? The new participants were asked to check the prequalification list of performance indicators to see whether there were any other indicators missing from the list or any indicator in the list that are not important in their opinion. This questionnaire had five sections and four questions: Section 1: "Do these indicators ensure information about the performance of your sports club activity?"; Section 2: "Does the data provided by these indicators help develop the sports club?"; Section 3: "Do these indicators fulfill the measurement requirements of sports club?"; these three sections were assessed using a 5-point Likert scale with anchors of 1 (strongly disagree) and 5 (strongly agree). Section 4: "In your opinion, should any of these performance indicators be included in the performance measurement system of your sports club?" This section uses a scale that 10


expresses "No", "Neutral", "Yes" and "Required"; all indicators in this item had a mean below the average at the first questionnaire. The fifth section refers to participant demographics.

Results Phase I - Prequalification Questionnaire The participants were mostly from Europe (61.01%). The pre-qualification sample had 477 participants; “males” were the majority: 78.62%. The participant’s average ages are just over 38.92; and their average years working in sports management are 11.53. Most of the participants (54%) have a high educational degree. Of these, 34% (n=164) had a University Degree, 12% (n=56) had a Masters Degree, and 8% (n=37) had a PhD Degree. The work position “Director” (30.82%) leads this questionnaire. Requalification Indicators The indicator’s average, the weighting and ranking (Table 2) classified the order of importance of each indicator in the performance measuring system, and allows observing participants’ coherency. In this study, average or mean is the measure of the participants’ central tendency; the weighting is the influence -according to participant’s answers- of each indicator for the measurement system; and the ranking is the indicator classification. The averages range from 3.415 (SD=0.986) for "Number of new services / products launched" to 4.369 (SD=0.833) for "Increased customer retention." The average value for all indicators listed in the survey is 3.877 (SD=0.254), which means that, the participants weighted the indicators, on average, as “important”. The remaining 11 indicators are above neutral (3 from the Linkert scale) and below the average cut, and because of these, they were not excluded in the second phase where they will have the opportunity to be chosen for the final list (Table 2). Place Table 2 about here

According to Lin et al. (2011) and Simon (2010), the weight and rank of each indicator was subjected to weightings formulas in order to obtain clear results (Table2). Highlight for the indicator "Increased customer retention" from construct "Stakeholders and Compliance" was 10, which happened to be the utmost weighting. This construct also records the second and third place with "Customer satisfaction with range of products and services" (9) and "Increased global customer satisfaction” (8). “Increased innovation” from “Learn and Improve” construct with a weight of 8 is ranked fourth.

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The indicators ranking presents an inconsistency regarding average and weighting, because some of the key indicators selected through these techniques have a low rank weighted score. The explanation for this may lie in diminished attention and concentration of each participant in the selection of the three indicators, in the order of importance. However, of the 12 indicators selected for the validation stage, eight are within the top ranking, including the first and second indicators. With regards to the internal consistency of the questionnaire, the Cronbach α has a value of 0.936 which is considered good (Churchill, 1979; Cortina, 1993). Figure 1 demonstrates the prequalified indicators. Place Figure 2 about here Phase II - Validation Questionnaire The participants were mostly from Europe (61.65%). The validation sample had 133 participants; “males” were the majority: 78.95%. The participant’s average ages are just over 37.90 years; and their average years working in sports management are 12.70 years. Most of the participants (89%) have a high educational degree. Of these, 41% (n=54) had a University Degree, 41% (n=55) had a Masters Degree, and 7% (n=10) had a PhD Degree. The work position “Technical or Management Staff” (27.82%) leads this questionnaire. Indicators validation The primary objective of the validation activity was to validate the performance indicators identified by the previous questionnaire. Another objective was to refine the performance indicators. As regards the question "Do these indicators ensure information about the performance of your sports club activity?", the participants agree with the proposed indicators (M=4.018, SD=0.091). With regard to the question "Does the data provided by these indicators help in developing the sports club?", the participants consider that this will contribute to the organization’s development (M=3.981; SD=0.078). For the question "Do these indicators fulfill measurement requirements of sports club?", the participants agree that all indicators should integrate the system (M=4.005; SD =0.080). About the question "in your opinion, should any of these performance indicators be included in the performance measurement system of yours sports club?", the participants considered the following (Table 3): (a) the indicators "Increased growth revenues", "Number of customer complaints", "Cost reduction - quality product improvement", "Percentage of Investment 12


Increase in sports development programs", "Total costs per customer" and "Percentage of Investment Increase in Human Resource development programs” should be part of the measurement system. These six indicators show a cut above the average (M=2.882, SD=0.756); (b) within the group of indicators presented was any "required"? Place Table 3 about here After the validation and refining of the performance measurement system, it was constituted with 18 indicators. These final indicators were subjected to a principal component factor analysis (PCFA), followed by a varimax rotation to seek their relationship (Lin et al., 2011; Warraich, Awais, Parkash, and Ahmad, 2014). The sample size is an important element in the PCFA, and according to Byrne (2010), 133 participants is acceptable. Previous research about “key performance indicators” using small or acceptable samples can be found in the literature (Cheung et al, 2009; Lu, Shen and Yam, 2008). The PCFA allowed extracting three components with eigenvalues greater than 1, and indicators with loadings greater than 0.5 were considered. The sum of the three components extracted represents 60.39% of the variance. It can be argued that the components properly represent the two constructs of the data. Thus, the result of the PCFA is composed of three components shown in Table 4, where component 1 and 3 belong to the same construct of the measuring system (“Stakeholders and Compliance”): i.

Component 1: “Cost reduction - quality product improvement”, “Total costs per customer”, “Increased Return On Investment”, “Increased growth revenues”, “Customer satisfaction with range of products and services”, “Increased customer retention”, “Increased global customer satisfaction” and “Increase rate of customer products/ services quality’s satisfaction”. These indicators belong to the construct "Stakeholders and Compliance" and represent 43.96% of the explained variance.

ii.

Component 2: “Increased innovation”, “Percentage of Investment Increase in HR development programs”, “Increased learning and training”, “Improved employee skills”, “Improved teamwork”, “Employee satisfaction ratings”. These six indicators belong to the construct “Learn and Improve” and represent 9.91% of the explained variance.

iii.

Component 3: “Percentage of Investment Increase in sports development programs”, “Annual percentage of sports specific objectives achievement”, “Annual percentage of managerial specific objectives achievement” and “Number of customer complaints”. 13


These indicators belong to the construct "Stakeholders and Compliance" and represent 6.42% of the explained variance. Place Table 4 about here

The estimates of internal consistency were calculated using the Cronbach α coefficient, which demonstrated good estimates of reliability for this data [0.964; (Churchill, 1979; Cortina, 1993); Table 4]. The Bartlett test of sphericity is 4494.458 and the associated significance level is p=0.000. Similarly, the value of the Kaiser-Meyer-Olkin measure of sampling adequacy is 0.919, which is greater than 0.7, and hence, considered good. The results of these tests show that the sample data is appropriate for PCFA. Discussion and conclusions “What gets measured gets attention” (Eccles, 1991:131) / “If you cannot measure it, you cannot improve it” (Hamel and Prahalad, 1994:269) The purpose of this study was to present a proposal of a performance measurement system for the sports organization, whatever its segment is, and that generally represents organization’s performance (Ferreira et al, 2011) based on performance indicators that align with the organization's strategy and processes (Franco and Bourne, 2003; Kaplan and Norton, 1992, 1996; Neely et al, 2002). The selected and qualified indicators provide relevant information that allows sports managers to examine processes and behaviors within the organization, thereby facilitating organizational effectiveness and improvement (Trkman, 2010; Lima et al, 2011). Apart from the measuring system, assisting organizational change is particularly important in sports environments that meet the challenges of globalization (Bititci et al, 2006). As mentioned, the measuring system presented here (Figure 3) is based on Marr’s (2009) constructs: "Learn and Improve" and "Stakeholders and Compliance." As regards the construct "Learn and Improvement", the system features six indicators that address three areas of high sensitivity for the organization’s present and future: i.

The indicators "Percentage of Investment Increase in HR development programs", "Increased learning and training", "Improved employee skills" and "Improved teamwork" reflects the importance of the acquisition and exchange of knowledge in organizational

strategy and performance,

by improving the

human capital

(qualifications, skills and abilities) through learning and training programs. The 14


implementation of these programs and the consequent transfer of knowledge to the workplace creates a work culture that supports continuous effectiveness, improvement, creativity, innovation, and also fosters growth. The relevance and importance of these indicators are confirmed by several authors, as Arraya (2014), Basadur and Gelade (2006), Cespedes-Lorente and Valle-Cabrera (2005), Drucker (1992), Ervin and Hogan (2013), Jerez-Gomez et al. (2001) and Ram (2000). ii.

The incremental or disruptive innovation is the key for organizations to achieve sustainable development, because in its essence, the organization needs to innovate and reinvent the way it relates with their multiple stakeholders. The indicator "Increased innovation" expresses the implementation of new ideas, processes and products/services that promote continuous improvement, innovation and usefulness; it also contributes to the monitoring of organizational sustainability. The study from Ayuso et al. (2011) emphasizes the usefulness of this indicator.

iii.

The "Employee satisfaction ratings" indicator demonstrates and enhances the employee’s “mood” towards his/her job and the organization at large. This psychological behavior may affect the degree of the stakeholder’s satisfaction. The investigation of Choi and Jeon (2012) states that: there is a positive influence between human resources’ satisfaction and customer’s satisfaction, i.e., when workers are pleased with the organization, there is an improvement in customer’s satisfaction. Authors such as Judge et al. (2001), Organ (1988) and Saari and Judge (2004) also share the relevance of measuring employee’s satisfaction.

The "Stakeholders and Compliance" construct presents 12 indicators which can be divided into four areas: i.

The indicators "Customer satisfaction with range of products and services", "Increased customer retention", "Global increased customer satisfaction", "Increase rate of customer products/services quality's satisfaction" and "Number of customer complaints" are the sealers of the old management maxim: the customer is king and the organization’s raison d'être. As a matter of fact, the wealth of an organization is outside its walls, i.e. in customers; this in respect only produces costs. This means customer satisfaction positively affects value creation, economic stability and generation of cash flows in the organization (Drucker, 1992; Gruca and Rego, 2005). On the other hand, in a competitive market, customers’ satisfaction is a crucial differentiator and an integral element of corporate strategy. By virtue of allowing the construction of allegiance and loyalty, customers become an evangelist for the product/service and simultaneously an 15


influencer (Tripathi, 2014). Therefore, customers involved with the organization have a greater predisposition to long-term relationships, thus, avoiding the costs of acquiring and beginning a new relationship (Varki and Wong, 2003). The indicators related to customer satisfaction are vital to the organization, especially those operating in the service sector (Allscheid and Schmit, 1995). ii.

The organization always has an economic and financial side; it needs constant fundraising, revenues, budgets, debt customers, or suppliers, risk and opportunities in generating more value; it then becomes urgent to propose economic/financial indicators for the measurement system of the sports organization such as, "Increased revenues growth", "Increased Return on Investment", "Total costs per customer" and "Cost reduction - quality product improvement ". The relevant economic/financial information should influence the quality of management decisions, identify strategic initiatives, and should

not

focus

solely on

"costs"

(Shields

and

Shields,

2005).

These

economic/financial indicators increase profitability through a proactive approach in which the big question is "what to do to grow?" instead of "what should be done to reduce costs?" (Garengo et al, 2005). This is the case as regards the proposed indicators. iii.

The true essence of most sports organizations is the development of mass sports participation, which contributes to the improvement of social, educational and health factors on populations. Thereafter, the competitive edge of the organization emerges where those who are concerned solely with the sports competition and economic benefits may be tempted not to fulfill their social and ethical responsibilities. Therefore, it is important to measure and consider the indicator "Percentage of Investment increase in sports development programs."

iv.

In the concept of organizational performance in sports organizations, the ability of an organization to achieve its goals, i.e., its effectiveness, has immense importance (Winand et al, 2011). On the other hand, the setting of realistic, measurable, specific and achievable goals is a motivating and guiding factor (Arraya and Pellisier, 2013). Thus, the indicators "Annual percentage of sports specific achievement objectives" and "Annual percentage of specific managerial objectives achievement" contributes to assessing the holistic effectiveness of work teams, the degree of assertiveness objectives, and to provide information for strategic management, in case second-level indicators need to be used.

The problem in the digital age is that managers are enticed to collect and report data which is easy to use. However, this data does not generate useful information because it does not give 16


information and answers about what managers need to know. The indicators presented in this prototype system are key metrics that interpret the important aspects of sports organizations, they give a robust base of knowledge and they identify organizations’ strengths and weaknesses. This prototype system will be a helpful navigation instrument for managers and decisions makers who want to keep the organization on the right track. Whatever the segment in which the sports organization operates, it is crucial for managers to monitor and administer the organization’s performance by looking out for its capabilities effectiveness and efficiency, processes, resources and human capital. The implementation of indicators and respective measures and set targets reflect the objectives and strategic goals of the organization. Management teams that build and trust in the measurement system can use it in the development process, thereby avoiding the "pain" of growth, and the corrective actions in case of underperformance. The organizational sports performance measurement prototype system which has been presented in this study helps to focus the efforts of the management team in performance areas critical to all stakeholders. If someone considers the majority of stakeholders as internal customers, their satisfaction is influenced by organizational performance (Bayle and Robinson, 2007; Winand et al, 2010); mitigating the importance of stakeholders is to limit its institutional, financial and social support (Papadimitriou and Taylor, 2000). The external customer - as the main revenue generator - is also a stakeholder due to the influence that the behavior/sports performance of the sports organization he/she supports has on his/her social participation in the community, and in his/her emotional and health status. Therefore, his/her participation in sports activity (either as a participant, athlete, fan, spectator or other) is directly related to his/her degree of satisfaction with the overall or specific performance of the organization. In summary, the main conclusions of this research are in line with previous studies, and the performance measurement system proposed can be considered innovative in sports management. The measurement system has 18 indicators and it is divided into two constructs: "Learn and Improvement" and "Stakeholders and Compliance". The construct "Stakeholders and Compliance" has two dimensions. The multidimensionality of the system makes it a valuable tool for sports organizations to measure their performance in accordance with their strategy, goals and peers. It also allows them to evaluate the organization’s continuous products/services improvement and working processes, reinforcing the stakeholder’s relationship in order to effectively and carefully manage the financial flows, and above all, to guarantee the future of the organization. The statistical technique Principal Component 17


Analysis ensures the system’s multidimensionality. We highlighted the importance assigned by participants to indicators related to human resource management, management of customer/stakeholder and economic/financial management. Finally, the principles of management, both in developing and in implementing activities depend and vary given the type of organization, culture, people and context (Chiesa and Frattini, 2007). This means that, the measurement system tends to be specific and adaptive, as it must reflect the particular characteristics of each sports organization and the need for information about the organization's strategy. Place Figure 2 about here

Limitations and potential future research Although this research contributes to the measurement of performance in sports organizations, it has some limitations, thereby leaving some areas for future research. i.

Methodology - This study adopts two cross-sectional surveys; however, relationships and correlations are developed continuously. As such, the survey/data should be longitudinal in nature. Another factor to consider is the size of the samples; greater participation would create greater awareness, reliability and probably different results.

ii.

Causality - There should be some caution and parsimony in the constructs’ interpretation shown in this study: (a) it only considered two of the three constructs advocated by Marr (2009); (b) authors such as Kaplan and Norton (1992), Neely et al. (2001), and Winand et al. (2014) presented in their approaches not only other constructs and dimensions, but also as to how they relate to different degrees of complexity, which in turn creates a reasonable doubt: what if we considered other approaches?; (c) randomness is best interpreted via longitudinal surveys.

iii.

Generalization - The measurement system proposed in this study, and its indicators, cannot be considered an "umbrella” or “one-size-fits-all" for the different sport industry segments (e.g. sports federations, clubs, franchises, health clubs, etc.). The measurement system should be adapted to each case and segment. Another limitation of this generalization is that the samples come from the social network LinkedIn. With this samples source, there is a risk of having members of this social network with more advanced educational status, and thus, have updated management concepts and habits.

iv.

Future research - a) Few authors have investigated the issue presented here; therefore, there is the necessity to deepen the knowledge in sports organizations as regards the 18


indicators that best measure their performance, putting into consideration the inherent specificity, namely, sports federations and clubs that are different from health clubs; b) In future research, other systems should be considered, such as systems of measuring sports organizations that explore and enhance the understanding of motivators and inhibitors of organizational performance; c) in future research, it would be interesting to analyse whether people have focused on some indicators (or dimensions), depending on their characteristics: male/female, socio-economic background, organizational position, etc. Despite the above considerations, it launches the invitation to the scientific community to contribute with new research as regards performance measuring in sports organizations.

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Zucatto, L. C., Sartor, U.M., Beber, S., and Weber, R. (2009), “Proposição de indicadores de desempenho na gestão pública”, ConTexto, Porto Alegre, Vol. 9 No. 16, pp. 1-24. Figure 3. The prequalified indicators Organizational sports performance measurement system - Indicators

     

Learn & Improve Increased innovation Improved employee skills Increased learning and training Improved teamwork Employee satisfaction ratings

Stakeholders & Compliance  Increased customer retention  Customer satisfaction with range of products and services  Increased global customer satisfaction  Increase rate of customer products/ services quality’s satisfaction  Increased Return On Investment  Annual percentage of managerial specific objectives achievement  Annual percentage of sports specific objectives achievement

Figure 4. Organizational sports performance measurement prototype system Organizational sports performance measurement prototype system

     

Learn & Improve Employee satisfaction ratings Percentage of increase in investment in HR development programs Increased learning and training Improved employee skills Improved teamwork Increased innovation

Stakeholders & Compliance

 Percentage of increase in investment in sports development programs  Increased customer retention  Customer satisfaction with range of products and services  Increased global customer satisfaction  Increase rate of customer products/ services quality’s satisfaction  Number of customer complaints  Increased growth revenues  Increased Return On Investment  Cost reduction - quality product improvement  Total costs per customer  Annual percentage of managerial specific objectives achievement  Annual percentage of sports specific objectives achievement 27


Table1. Performance Indicators and Authors Constructs Marr (2009) Stakeholders & Compliance (S&C)

Indicators

Increased cash flow Increased profit Increased growth revenues Total costs per customer Cost reduction - quality product improvement Increased Return On Investment Increased global customer satisfaction Increased customer retention Customer satisfaction with range of products and services Employee satisfaction ratings

Learn & Improve (L&I)

Number of customer complaints Number of new services/products launched Increase rate of customer products/ services quality’s satisfaction Improved innovation cycle times Percentage of increase in investment in sports development programs Annual percentage of sports specific objectives achievement Percentage of sponsorship revenue compared to total Annual percentage of managerial specific objectives achievement Improved employee skills Increased innovation Improved teamwork Percentage of increase in investment in HR development programs Increased learning and training

Authors

Marr (2012), Simon (2010)

Mohamed, Hui, Kamal, Rahman & Aziz (2009) Simon (2010) Marr (2012) Mohamed et al, (2009) Simon (2010) Mohamed et al, (2009) Simon (2010)

Simon (2010)

Simon (2010)

28


Table2. Participant’s geographic area

Africa Central America North America South America Asia Oceania Europe

Participant’s geographic area 1th Survey 2th Survey 11 2.31% 5 3.76% 1 0.21% 0 0.00% 96 20.13% 10 7.52% 37 7.76% 24 18.05% 25 5.24% 8 6.02% 16 3.35% 4 3.01% 291 61.01% 82 61.65% 477 100% 133 100% Table 3. Participant’s demographics Participant’s Demographics 1th Survey

Are you? 1. Female 2. Male Age 1. Female 2. Male 3.General Years in sports management 1. Female 2. Male 3.General Education qualification: 1. High School 2. Graduate 3. Master 4. PhD 5. Other Organization level 1. Consultant 2. Administrative 3. Technical or Management Staff 4. Director 5. Member of the Board 1. Other

2th Survey

102 21.38% 28 21.05% 375 78.62% 105 78.95% 477 100.00% 133 100.00% Mean SD Mean SD 36.28 8.52 36.75 8.76 39.00 9.82 39.36 11.85 38.92 10.05 37.90 10.20 Mean SD Mean SD 8.82 6.64 10.786 8.31 12.29 9.33 16.06 9.69 11.53 8.96 12.705 9.09 200 164 56 37 20 477

42% 34% 12% 8% 4% 100%

8 6.02% 54 40.60% 55 41.35% 10 7.52% 6 4.51% 133 100.00%

55 36 128 147 37 74 477

11.53% 7.55% 26.83% 30.82% 7.76% 15.51% 100%

22 16.54% 14 10.53% 37 27.82% 31 23.31% 11 8.27% 18 13.53% 133 100.00%

Segment 29


1.School 2.Sports Club 3.Health Club & Wellness 4.National / Regional association 5.Municipal sports 6. Others

48 102 46 91 34 156 477

10% 21% 10% 19% 7% 33% 100%

12 9.02% 30 22.56% 14 10.53% 30 22.56% 8 6.02% 39 29.32% 133 100.00%

Table 4. Performance Indicators. Mean, Standard weightings and Ranking

Construct Performance Indicators S&C Increased customer retention Customer satisfaction with range of S&C products and services S&C Increased global customer satisfaction L&I Increased innovation Increase rate of customer products/ services S&C quality’s satisfaction L&I Improved employee skills L&I Increased learning and training L&I Employee satisfaction ratings L&I Improved teamwork S&C Increased Return On Investment Annual percentage of managerial specific S&C objectives achievement Annual percentage of sports specific S&C objectives achievement S&C Increased growth revenues Cost reduction - quality product S&C improvement S&C Number of customer complaints Percentage of increase in investment in S&C sports development programs Percentage of increase in investment in HR L&I development programs S&C Increased cash flow S&C Increased profit Percentage of sponsorship revenue S&C compared to total S&C Improved innovation cycle times S&C Total costs per customer S&C Number of new services/products launched

Standard Mean SD weightings 4.369 0.833 10

Ranking 297

4.235 0.908 4.174 1.086 4.158 0.876

9 8 8

167 309 99

4.105 4.055 4.002 3.992 3.966 3.958

0.923 0.884 0.891 0.929 0.866 1.004

7 7 6 6 6 6

81 126 78 167 145 177

3.954 0.895

6

48

3.941 0.892 3.868 0.959

6 5

105 209

3.803 1.033 3.778 1.086

4 4

153 46

3.765 0.934

4

61

3.730 0.984 3.721 0.997 3.683 1.053

3 3 3

51 181 212

3.518 3.514 3.472 3.415

1 1 1 0

82 16 30 22

1.077 1.004 1.039 0.986

Table 5. Indicators validation for performance measurement system

30


Construct S&C L&I S&C S&C L&I S&C L&I S&C S&C S&C L&I L&I

Performance Indicators - Validation (scale 1-5) Customer satisfaction with range of products and services Increased learning and training Increased Return On Investment Annual percentage of sports specific objectives achievement Employee satisfaction ratings Annual percentage of managerial specific objectives achievement Increased innovation Increase rate of customer products/ services quality’s satisfaction Increased customer retention Increased global customer satisfaction Improved teamwork Improved employee skills Mean Standard Deviation

Performance information

Development

Measurement requirements

4.203 4.030 4.098

4.053 4.015 4.030

4.008 4.120 4.015

4.045 3.947

4.030 4.030

4.068 4.060

4.045 3.992

4.068 3.970

3.940 4.023

3.962 4.060

3.992 3.992

4.068 4.023

3.977 4.030 3.827 4.018 0.091

3.887 3.880 3.820 3.981 0.078

4.000 3.910 3.827 4.005 0.080

Table 6. Average allocated by the new participants to previously excluded indicators but considered fundamental Construct Performance Indicators 2ª choice (scale 1-4) S&C Increased growth revenues S&C Number of customer complaints S&C Cost reduction - quality product improvement Percentage of increase in investment in sports S&C development programs S&C Total costs per customer Percentage of increase in investment in HR development L&I programs S&C Percentage of sponsorship revenue compared to total S&C Increased profit S&C Number of new services/products launched S&C Improved innovation cycle times S&C Increased cash flow Mean

Mean 3.128 3.030 3.023

SD 0.701 0.768 0.802

3.012 3.009

0.723 0.758

3.002 2.857 2.850 2.835 2.639 2.511 2.900

0.759 0.809 0.744 0.751 0.732 0.775 0.756

Table 7. Components Matrix after Varimax Rotation Construct

Performance Indicators

Component 31


S&C S&C S&C S&C

1 0.761 0.687 0.681 0.678 0.661

2

3

S&C S&C S&C

Cost reduction - quality product improvement Total costs per customer Increased Return On Investment Increased growth revenues Customer satisfaction with range of products and services Increased customer retention Increased global customer satisfaction

S&C L&I

Increase rate of customer products/ services quality’s satisfaction Increased innovation

L&I L&I L&I L&I L&I

Percentage of increase in investment in HR development programs Increased learning and training Improved employee skills Improved teamwork Employee satisfaction ratings

0.728

S&C

Percentage of increase in investment in sports development programs

0.783

S&C

Annual percentage of sports specific objectives achievement

Annual percentage of managerial specific objectives S&C achievement S&C Number of customer complaints Variance explained Total variance explained Internal consistency (α cronbach) Total internal consistency (α cronbach)

0.616 0.592 0.586 0.766 0.776 0.733 0.654 0.613 0.580

0.632 0.551 43.96% 9.91% 6.42% 60.39% 0.873 0.872 0.815 0.964

Appendix A (𝑀𝑖−𝑀𝑎)

Lin et al. (2011) formula, Wi = (𝑀𝑏−𝑀𝑎) 𝑋 10 Wi = Calculated weightings of the indicators Mi = Original means of the weightings according to the questionnaire Ma = Average indicator with lower value Mb = Average indicator with higher value

Simon (2010) formula, Weighted Score (WS) = ∑ (3 × 𝑛𝑅𝑎𝑛𝑘𝑖𝑛𝑔𝐼𝑡𝑒𝑚𝑁º1 + 2 × 𝑛𝑅𝑎𝑛𝑘𝑖𝑛𝑔𝐼𝑡𝑒𝑚𝑁º2 + 1 × 𝑛𝑅𝑎𝑛𝑘𝑖𝑛𝑔𝐼𝑡𝑒𝑚𝑁º3) 32


For example, the highest scored resource was “Increased global customer satisfaction”. The weighted score was calculated using the above formula. Therefore WS = 3x53 (53 participants ranked Increased global customer satisfaction most important) + 2x61 (61 participants ranked it second most important) + 1x28 (28 participants ranked it third most important) = 159+122+28=309 and this produces a clear ranking.

33

Design and construct a performance measurement ...

Design and construct a performance measurement ...

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