Measuring coherence of performance measurement indicators in complex and changing environments

Abstract

PurposeThis paper discusses and integrates the concept of complexity in the performance measurement and management (PMM) theory by providing a comprehensive framework to design and evaluate the overall coherence alignment of an indicators hierarchy in unstable and changing environment.Design/methodology/approachAn original, comprehensive and dynamic framework has been proposed and then applied on a sample case of a large-scale retail trade (LSRT) company, starting from relevant frameworks and criteria in the scientific literature.FindingsThis research shows that organizational changes may significantly impact the coherence alignment of an organization's indicators hierarchy. In addition, it finds that even though the alignment at the operational level is obtained, its effectiveness should be evaluated in relation to the organization's strategic orientation. Indeed, without assessing the strategic alignment of an indicators system, an aligned hierarchy at the operational level could lead to ineffective results.Research limitations/implicationsThis paper focuses on the topic of measuring the coherence inside an indicators hierarchy, which seems not to be addressed in the literature. Thus, it opens a new research stream, integrating the studies on performance indicators with an essential element that often causes flawed performance measures in organizations.Practical implicationsOrganizations could adopt this framework to design effective PMM systems and maintain them in light of the organizational changes.Originality/valueThis study introduces different metrics to evaluate the coherence and alignment of an indicators system, being one of the few research studies to address this topic in the context of complex and changing environments.