Establishment Of The Holographic Performance Evaluation System

A holographic performance evaluation comprises of three basic dimensions: effectiveness dimension, efficiency dimension and synergy dimension. It implies that for every meaningful transaction, an organization or an individual needs to evaluate the three dimensions: (1) its expected or realized economic interests, i.e. effectiveness dimension; (2) its impacts on the allocation and utilization of limited resources, i.e. efficiency dimension; and (3) its likelihood to harm stakeholders' interests and therefore the sustainability of its interests, i.e. synergy dimension. As the economy of a society develops, the holographic performance evaluation evolves. This process is accompanied by the formation of the Performance Evaluation System (PES).Based on the evolvement of its meanings, the practice of performance evaluation experienced four stages: the birth period (represented by the Dupon financial analysis, from 1494 to 1928); the developing period (represented by the Economic Added Value System, from 1929 to 1986);the booming period (represented by Balancescore Card system, from 1987 to 2001); and the perfecting period (represented by Prism system, from 2002 till now). The meanings of the three dimensions have been richened. Now, the effectiveness dimension includes both accounting measures and market measures; the efficiency dimension includes both outcomes and processes; and the synergy dimension consists of the synergy of both short-term and long-term interests of stakeholders.The establishment of the holographic performance evaluation system is built up from four theoretic foundations: Stakeholder-based strategic management theory, agency-based firm value theory, strategy-inducing organization design theory, and contingency theory. In addition, this study indicates that the establishment of the HPES should incorporate the view of holography and strategic focus. Horizontally, a HPES has three dimensions—effectiveness, efficiency and synergy—and six aspects which include accounting-based and market-based measures, outcome and process, and short-term and long-term. Vertically, it has three levels: strategic decision level, strategy execution level, and employee performance level. It integrates firm management, firm performance and core strategic performance, connects management to firm overall performance and strategic activity performance, and links employee performance level to strategic considerations. Furthermore, it shows the real performance of a firm, its strategic achievements and strategic focus along the value chain.