A decomposition and hierarchical approach for business performance measurement and management

Abstract

PurposePerformance measurement and management (PMM) is a key practice to drive modern businesses. The literature available in this field highlights a certain maturity regarding performance measurement systems, while few frameworks have been proposed for PMM, which is today's target. Hence this paper aims to focus on the development of a new framework for providing direction and guidance to an organization in measuring and managing its performance.Design/methodology/approachThe proposed framework is developed based on the strengths of the axiomatic design (AD) and the analytical hierarchy process (AHP) techniques.FindingsThe framework proposed, namely “Business System Design Decomposition” (BSDD), offers a holistic approach to PMM, identifies cause‐effect relationships in business processes, measures performance versus stakeholders, and offers interlinking between performance indicators. The result is a deep understanding of the business environment and a real step forward for PMM.Research limitations/implicationsThe proposed framework for PMM needs to be validated through an empirical approach or by a clinical approach utilizing a case study.Practical implicationsThe paper offers to academics, managers and practitioners a framework to understand, measure and manage business performance. Moreover, the application of the framework represents a learning process for the people involved in the project.Originality/valueLittle research is available regarding holistic performance measurement and management systems and the understanding of quantitative relations between performance indicators. By combining two existing methodologies, the framework proposed adds value to the existing body of knowledge and offers good insights for addressing future research.