A measure of managerial performance based on a two-stage relative efficiency approach

Managerial performance will be influenced by two main factors: the external environment and the organizationpsilas strength. Together these factors make up an organizationpsilas ldquoobjectively basic conditionrdquo. To successfully evaluate managerial performance, influences of the two factors must be eliminated. Existing studies have considered the impact of external environment to some extent, however, overlooked the influence of organizational strength. This paper proposes a dynamic methodology named two-stage relative efficiency approach to provide better measurement on managerial performance. In the first stage the organizational strength will be evaluated with some traditional methods, and in the second stage DEA model will be employed to eliminate those two kinds of influences simultaneously to reflect real managerial performance. The method might prove helpful to safeguard against two errors of penalizing good managers within an unfavorable objectively basic condition, and rewarding poor managers within a favorable objectively basic condition. An important of this method is motivating managers to consider the resources of low performance in subjective perspectives. And finally, the method is illustrated with a sample of edible oil manufacturing companies. The results provide us some interesting and more realistic information.