Performance management in an international setting

Abstract

This study was designed to develop a landscape of existing performance management practices. Using a three phase field research methodology, the performance measurement systems used by top performing organizations in the U.S. and Europe were explored to determine to what extent the customer perspective and the tenets of the continuous improvement philosophy were present. The findings supported the partial diffusion of customer-based measures, such as quality and responsiveness, as well as the separation of the operational and financial control systems in the sites studied. Specifically, it appears that the site managers operate as a 'hinge' within the existing performance measurement system, buffering the operational core of the organization from the financial goals established at the corporate level. Related findings suggested that, while in global the entire organization might be pursuing objectives such as 'improved quality', at the individual level these concepts were uniquely defined. Individuals appeared to be given the latitude to determine how best to measure and pursue these goals. This result was consistent with the 'aristocratic-professional' control archetype developed by D'Iribarne (1989). Finally, the use of, or reliance upon, formal measurement systems appeared to vary depending on the type of environmental conditions faced by the organization. When faced with a crisis, organizations abandoned both their formal and informal control mechanisms to exert specific, high intensity forms of control over the 'errant' individual or group. The combined results suggest that performance measurement systems do reflect the strategic objectives of a firm under stable operating conditions. These results were consistent across U.S. and European sites.