From Financial Measures to Strategic Performance Measurement System and Corporate Sustainability: Empirical Evidence from Slovakia

Purpose : Strategic performance measurement and management (SPMM) as a subject has come over increased research radar over the last four or so decades. The so-called “performance measurement revolution” of the 1980s to 1990s concentrated on the private sector. “Business managerialism” and “accountingisation” kicked-in into the public sector with transplanting of hitherto private sector management techniques under New Public Management (NPM) and other administrative reform programmes by various governments internationally. Specifically, the 1990s saw the implementation of modern multi-dimensional SPMM systems originally in the private sector. Considering the nuanced nature of the public sector, the transfer of SPMM systems from the private to the public sector has not been straightforward due to technical, conceptual and behavioral factors. This paper contrasts the features of the private and public sectors and investigates the implication of the distinctive nature of the public sector on the application of SPMM in the public sector. This will augment our perceptions and comprehension of existing public sector SPMM theory and practice. Design/Methodology/Approach: The study adopted a systematic literature review (SLR), a mode of research which has been widely adopted and strongly justified for adoption in business and management research since the turn of the 21st century. The study conducted a content and thematic analysis on the commonalities and differences between private and public sectors and implication of the differences on public sector strategic performance measurement and management. The study itself covered 233 published and unpublished documents covering the seven decades to 2023 which to our knowledge constitutes the most comprehensive update on the public-private debate trends to date. Findings: The study thoroughly interrogated the literature perspectives or models on the commonalities and differences between the public and private sectors. The study then deep-dived into the underlying characteristics which differentiate the public and private sectors producing one of the most detailed side-by-side analyses of public-private differentiation based on organisational characteristics, dimension, or concept of all time. The systematic review further identified and derived several thematic areas related to public-private differences and went on to establish the implications of the public-private divergences from an SPMM perspective especially as it relates to the derivation and application of public sector performance measures. These findings are critical for both practitioners and academics as they explore the subject of transplanting private sector SPMM practices into the public sector which is another overripe area for research. The findings provide public managers with a comprehensive and critical cog in their management toolbox as they navigate the practical realities and difficulties of implementing SPMM in the public sector’s unique and complex environment. Research Limitations: The main challenge with conducting a comprehensive research of this magnitude relates mainly to the broad range of literature covered, the unwieldy and onerous analysis and lots of judgement calls which could impact bias and replicability. Practical Implications - This paper conducts a comparative analysis of the key features of the private and public sectors found in the literature and evaluates how they drive attendant management practices in the two sectors and specifically how the public sector’s distinctive nature impacts on the measures of performance. Originality/value - Studying the differences and how they impact the choice of public sector KPIs is crucial in attempting to address the myriad of challenges and potential hindrances to future institutionalisation of SPMM in contemporary PSOs. Exploring and understanding the differences and similarities between public and private sectors is a beneficial springboard to cultivate erudition, cross-pollination and facilitation of knowledge transfer between the two sectors of the contemporary global political economy. Keywords: Strategic, performance management, performance measurement, performance measures, key performance indicators, public-private differences DOI: 10.7176/PPAR/13-2-03 Publication date: March 31 st 2023

A large and growing number of companies worldwide are adopting strategic performance measurement (SPM) systems to help them execute their business strategies. SPM systems use some combination of financial, strategic, and operating measures to evaluate management's success in improving operating efficiency and adding value for shareholders. In many cases, the SPMs also provide the primary basis for rewarding top management, divisional operating managers, and, increasingly, rank‐and‐file employees. Some SPM systems are based entirely on a financial measure like economic value added (or EVA), which encourages managers to consider the opportunity cost of investor capital in making all operating and investment decisions. Other systems are based heavily on nonfinancial considerations, such as the balanced scorecard's emphasis on customer and employee satisfaction, operational excellence, and new product introduction.In this article, the author uses the findings of his recent survey of 113 North American and European companies to shed light on a number of questions: What are the most popular measures in such systems—are they primarily financial, nonfinancial, or amix of the two? To what extent is incentive compensation tied to such measures—and how far down in the organization are such measures (and incentives) extended? What are the most formidable challenges to implementing SPM systems in large corporations, with often diverse collections of businesses and tens if not hundreds of thousands of employees?Among the article's most notable conclusions, a majority of companies expect in the next three years to publish SPM targets and results in their annual reports. The most commonly cited financial SPMs will be cash flow, return on capital employed, and other variations of EVA. The most frequently cited nonfinancial SPMs are customer satisfaction, market share, and new product development. The greatest challenge in implementing SPMs is translating the vision and strategic objectives at the corporate level into performance measures that are relevant to activities at the business unit level, and securing buy‐in from business unit managers and employees.

Strategic Performance Measurement: Benefits, Limitations and Paradoxes

Nowadays the dissatisfaction with only fi nancial indicators has led to a focus on non-traditional areas of performance measurement as Balanced Scorecard, environment indicators and others. Moreover many recent studies has focused on the corporate sustainability concept and performance measurement interconnection. The aim of this paper is to identify the relationship between selected management tools and concepts of various development phases of strategic performance measurement systems to overall business performance measured by indicator ROE. Similarly the aim is to identify the relationship between the sustainability index and indicator ROE as a key aspect in terms of the current climate crisis. Our most important fi ndings bring new information and knowledge for the strategic transformation from traditional business performance measurement system to strategic and sustainable performance measurement system. Specifi cally we found out that the BSC methodology has a demonstrable impact on the business performance. Also KPI system and orientation on the environment affect the performance of enterprises. In the case that companies do not have the knowledge information system as a complex system and do not take into account its implementation they tended to have a lower level of performance. This means that the BI knowledge information system has a major impact on business performance. Regarding to the corporate sustainability concept we can confi rm that the direct moderate correlation is apparent between economic sub-index and also composite index of sustainable development and indicator of ROE. The connection of environmental and social sub-index separately to ROE had not been shown suffi ciently. Based on results we can conclude that the index of sustainable development is a challenge for enterprises refl ecting a growing need for change purely short-term oriented, consumerist patterns of production and consumption.

Purpose – This study investigates the interplay between strategic performance measurement and management accounting to gain a deeper understanding of how strategic measures of performance evolve with the managerial accounting practices. Design/Methodology/Approach – The study explored the performance measures used at a bank focused on the development and sustainability initiatives in Africa. Thirty-two semistructured interviews were conducted with directors, managers, and analysts from nine different categories of job families. Findings – Analysis shows that managers assimilate a comprehensive, multifaceted measurement system to understand the creation and delivery of sustainable value. The results show that the managerial accounting practices adapt to incorporate an integrated set of performance measures that afford sustainable value to the stakeholders. The findings provide rich insights into how the managers adapt their information assimilation practices to the changing demands of the different stakeholders and adopt practices which innovate measures of performance that are aligned to the strategic goals. Finally, the findings illustrate that the interplay between strategic performance and managerial accounting practices has the potential to improve or inhibit sustainable development. Originality/Value – Little is known about how performance measures evolve, and how they interplay with the managerial accounting practices within organizations. This study reveals that the interplay of strategic performance measurement and managerial accounting can only be understood in the confluence of organizational change and sustainability. While acknowledging the need to embrace change and sustainability simultaneously, the study offers insights into the dynamics of change – the duality of emergent managerial accounting practices and the evolution of strategic performance measurement systems.

Synthesizing enterprise data to strategically align performance: The intentionality of strategy surrogation

This chapter discusses the problems of over-reliance on financial oriented performance measures and deals with the role of strategic performance measurement within organisations. It describes the various approaches and types of performance measurement systems and explores the influence of the marketing dashboard and its influence on strategy. The chapter also describes the difference between private and public sector oriented performance measurement. It provides an overview of the salient performance measurement literature and insight to allow the reader to think critically about the design and implementation of strategic performance measurement systems (SPMS). SPMS can aid strategy implementation and the strategy (re)formulation process. Nevertheless, despite the growing number of publications on organisations' PMS, consensus on implementation remains elusive. Effective performance measurement requires management to arrange work and establish decision-making processes together with the communication of renewal strategies. SPMS operationalise firm strategy with a set of performance measures, which in economic and competitive environment necessitates explicit links between strategy and performance measures.

Performance ImprovementVolume 45, Issue 5 p. 5-6 Commentary Public sector strategic planning: An emergent approach Thomas Plant MBA, MPA, Thomas Plant MBA, MPA thomas.plant@vaughan.ca Thomas Plant, MBA, MPA, is the Senior Manager of Strategic Planning with the City of Vaughan in Ontario, Canada. He has a graduate degree in both public and business administration, and his work in the municipal sector includes expertise in strategic planning, performance measurement, and change management. Through his implementation experience he has developed greater insight into the need for a close integration between people and business processes and the establishment of mechanisms that ensure organizational accountability. Recently, Thomas led a group of industry and academic experts investigating best practices in performance measurement/management in North American municipal governments; his research was published by the Institute of Public Administration of Canada (IPAC).Further, his work has been profiled in publications such as Performance Improvement, Municipal World, Municipal Monitor magazine, and IPAC's Public Sector Management magazine. Further, his strategic performance measurement system, implemented in the City of Mississauga, was awarded the City of Mississauga's Continuous Improvement Award for Excellence, a corporate award given by the Mayor and City Manager for excellence in public administration.Search for more papers by this author Thomas Plant MBA, MPA, Thomas Plant MBA, MPA thomas.plant@vaughan.ca Thomas Plant, MBA, MPA, is the Senior Manager of Strategic Planning with the City of Vaughan in Ontario, Canada. He has a graduate degree in both public and business administration, and his work in the municipal sector includes expertise in strategic planning, performance measurement, and change management. Through his implementation experience he has developed greater insight into the need for a close integration between people and business processes and the establishment of mechanisms that ensure organizational accountability. Recently, Thomas led a group of industry and academic experts investigating best practices in performance measurement/management in North American municipal governments; his research was published by the Institute of Public Administration of Canada (IPAC).Further, his work has been profiled in publications such as Performance Improvement, Municipal World, Municipal Monitor magazine, and IPAC's Public Sector Management magazine. Further, his strategic performance measurement system, implemented in the City of Mississauga, was awarded the City of Mississauga's Continuous Improvement Award for Excellence, a corporate award given by the Mayor and City Manager for excellence in public administration.Search for more papers by this author First published: 17 August 2006 https://doi.org/10.1002/pfi.2006.4930450503Citations: 2 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article.Citing Literature Volume45, Issue5May/June 2006Pages 5-6 RelatedInformation

Purpose Strategic uncertainty from emerging threats and opportunities in the business environment can significantly impact managers’ abilities to successfully implement their business strategy. A key strategic control and governance mechanism designed to enable managers to respond to strategic uncertainty is a strategic performance measurement system, such as the balanced scorecard (BSC). This study aims to investigate whether strategic uncertainty is associated with the diversity and types of performance measures in a BSC, which are used by managers for various strategic control and governance purposes. Design/methodology/approach A survey of senior-level managers within strategic business units of Australian Stock Exchange listed organizations was conducted. Findings This study finds that the extent to which managers face strategic uncertainty is positively associated with performance measurement diversity. Further, managers faced with greater strategic uncertainty use performance measures relatively more to evaluate subordinates’ performance, communicate business strategy, track performance against targets, identify problem areas and guide future directions. Outcome measures are used to a greater extent for all five purposes, whereas leading measures are used more only for future-oriented purposes. Practical implications Strategic performance measurement systems, such as the BSC, can and are being used to provide managers with the information and control mechanisms necessary to meet the challenges associated with strategic uncertainty. Originality/value This study provides the first evidence on the relations between strategic uncertainty, performance measurement diversity and managers’ use of performance measures for five key purposes. Understanding these relations is important, as managers need to formulate appropriate responses to strategic uncertainty, to protect and create value by exploiting emerging opportunities and managing associated threats.

PurposeThe purpose of this paper is to examine how the characteristics of strategic performance measurement systems (SPMSs) influence the effectiveness of such systems. Specifically, the study examines the association between the following three strategic performance measurement approaches with the effectiveness of SPMSs: the use of multidimensional performance measures, the use of performance measures that are linked to value drivers, and the use of performance measures that are linked to strategy.Design/methodology/approachData were collected using a mail questionnaire distributed to a random sample of 800 Australian manufacturing and service business units.FindingsThe use of multidimensional performance measures is found to positively influence the effectiveness of SPMSs.Practical implicationsOrganisations need to strive to design their SPMSs in a manner which considers the achievement of both performance- and staff-related goals, with the findings suggesting that managers need to focus on a broad set of performance measures relating to the four dimensions of the BSC (financial, internal, customer, and learning and growth measures).Originality/valueThis study contributes to the literature by examining the important role that SPMSs play in the achievement of organisational process outcomes. The incorporation of a measure of organisational process effectiveness, and the subsequent identification of the performance-related outcome and staff-related outcome dimensions, provides future researchers with an alternative approach to analyse SPMS effectiveness and provides managers with an insight into how to adjust their SPMS to improve their organisational processes.

This paper explores the concept of strategic performance measurement in SMEs. To provide some depth and breadth for the investigation the research was structured into two phases. The first phase of the research focused on identifying whether SMEs develop and use strategic performance measures. A survey of eight SMEs, in the south west of England, was undertaken using semi-structured interviews. The second phase involved a more in-depth study and was based on observing the introduction of a strategic performance measurement system in a small company. The results gained to date indicate that SMEs have a good understanding of financial measurement, and are moving towards customer focused measures. However, these measures typically lack strategic alignment and many may be questioned in regard of their value for business improvement. The observations made during phase two of the research, the development of a new strategic performance measurement system in an SME, indicated the potential planning and control benefits from the design process that was utilised. However, particular difficulties were evident in the development and implementation of the performance measurement system. Further research (phase three) is now being undertaken to analyse these difficulties. This paper describes the first two phases of the work. An introduction is provided which establishes both the relationship of this work to existing literature and the context for the study. The key fmdings from the work are shown following a description of the research methodology that was employed. The paper concludes by summarising the key findings and by presenting a set of propositions that will be used to extend the research into phase three.

Strategic performance management (SPM) has become an important vehicle for business management in today’s turbulent business environment. SPM has in recent years attracted much research interest from the side of both scientists and policy-makers. This interest is warranted because of the fundamental transformations (e.g. increased competition, changes in the regulatory environment, the impact of technology, growing globalization, shifts in customer behaviour and expectations) in industrial systems created a challenging business environment, which prompted firms to call for insight into their business activities and operational performance at all times. The growing importance of these changes has further intensified the need for alternative strategic control and performance measures to allow businesses to stay competitive and profitable. The performance measures should provide a complete picture of a firm’s progress towards the achievement of its mission and goals. The study addresses the need for an efficient SPM and operational Performance Measurement System (PMS) for assessing business performance to cope with continous changing business circumstances, to develop systematic strategic tools/approaches that shape and measure a firm’s capability for continuous competitiveness, to innovate and renew themselves business-oriented climate, which potentially determine the success of the firms. Both the popular and scientific literature indicate that there is evidence that SPM is now implemented (in use) in approximately 70% of medium-to-large firms in the US and Europe, as well as in many governmental departments. There is however, much unjustified belief in the assumed potential offered by the implementation of SPM in Dutch firms. Most studies are anecdotal, case studies, speculative and less based upon empirical facts or solid business management theory. Much work has been carried out on the design and deployment of SPM, but relatively little attention has been paid on the impact of SPM on firms’ results. The paper aims to investigate on an empirical basis whether SPM yield the benefits and/or disbenefits, as predicted by the literature, for Dutch firms. And to provide an insight into the reasons behind the implementation of SPM, as predicted by the literature, because each of the reasons for implementing SPM should yield particular benefits or disbenefits. The overarching analysis framework of this paper is based on SPM, because particular attention is paid to the lessons from the strategic performance management literature for measuring the successes (and failures) of Dutch firms. Much empirical studies provide mixed evidence on the strategic benefits from the implementation of SPM. Various literature sources, case studies and practical experience show that firms that have implemented SPM obtain better financial and non-financial results, and improve more their overall quality than competitors or comparable firms that are less SPM-driven over a longer period of time. But, other literature sources reported that SPM has failed through incorrect identification of non-financial indicators, poorly defines metrics to address the requirements of all the stakeholders, wrong and too little or much measurements, use the metrics ineffectively, no clear existence of the link between nonfinancial and the expected financial results and no clear interactions (correlation(s)) among the benefits, disbenefits and reasons behind the implementation of SPM. The research will deploy sophisticated statistical tools (exploratory factor analysis and multiple regression analysis) to assess systematically the business activities success and (and failures) after implementing SPM in practice.

A strategic performance measurement system (SPMS) is a set of causally linked nonfinancial and financial objectives, performance measures, and goals designed to align managers' actions with an organization's strategy. This study identifies and tests features unique to the cause‐effect structure of an SPMS likely to affect an important antecedent to managerial performance: goal commitment. Companies often set difficult goals for the multiple performance measures contained in an SPMS, but research shows difficult goals are significantly more likely to lead to performance gains if individuals are committed to achieving them. Two features central to the SPMS approach are predicted to affect goal commitment: (1) the strength of the cause‐effect links among the nonfinancial and financial performance measures contained in an SPMS and (2) managers' beliefs in their ability to achieve the SPMS nonfinancial goals. Results from an experiment conducted with experienced managers show both SPMS features have a positive effect on goal commitment.

The interplay of different levers of control: A case study of introducing a new performance measurement system

Employment Relations TodayVolume 24, Issue 2 p. 1-10 New Idea Managing psychological contracts Donna Blancero, Donna Blancero Donna Blancero, Ph.D., is an assistant professor of management at Arizona State University. She has worked as a researcher at the Center for Advanced Human Resource Studies at Cornell University and was also a senior sales marketing analyst. Her areas of expertise include psychological contracts, fairness, and alternative dispute-resolution systems.Search for more papers by this authorGeorge Marron, George Marron George Marron, Ph.D., works in human resource management for Federal Communications Group in Tempe, Arizona. He has 16 years of management experience as a multiunit supervisor for CVS Pharmacy. His research areas include core and contingent workers and work and family issues.Search for more papers by this authorTom Keller, Tom Keller Tom Keller, Ed.D., is an associate professor of management at Arizona State University. His teaching, research, and private-sector consulting interests include strategic management, performance measurement, compensation and employee incentive systems, information technology management, ergonomic facilities design, and electronically mediated communication systems. He has coauthored two books and published numerous articles in professional business journals.Search for more papers by this author Donna Blancero, Donna Blancero Donna Blancero, Ph.D., is an assistant professor of management at Arizona State University. She has worked as a researcher at the Center for Advanced Human Resource Studies at Cornell University and was also a senior sales marketing analyst. Her areas of expertise include psychological contracts, fairness, and alternative dispute-resolution systems.Search for more papers by this authorGeorge Marron, George Marron George Marron, Ph.D., works in human resource management for Federal Communications Group in Tempe, Arizona. He has 16 years of management experience as a multiunit supervisor for CVS Pharmacy. His research areas include core and contingent workers and work and family issues.Search for more papers by this authorTom Keller, Tom Keller Tom Keller, Ed.D., is an associate professor of management at Arizona State University. His teaching, research, and private-sector consulting interests include strategic management, performance measurement, compensation and employee incentive systems, information technology management, ergonomic facilities design, and electronically mediated communication systems. He has coauthored two books and published numerous articles in professional business journals.Search for more papers by this author First published: 31 January 2011 https://doi.org/10.1002/ert.3910240202Citations: 1 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume24, Issue2Summer 1997Pages 1-10 RelatedInformation