Design Of Performance Measurement Systems Research Articles

Performance Measurement System Design for Integrated Thinking: Evidence from Japanese Electric Utility Providers

Asian companies are increasingly practicing integrated reporting to create long-term economic, environmental, and social value for investors and other stakeholders. To accomplish such value creation, far-reaching changes in strategies, management control systems, and governance are required, which is achieved through a management approach called integrated thinking. However, findings from previous studies indicate barriers in designing performance measurement systems, leading to misalignment between strategies and managers' decision-making. Therefore, this research study aims to expand existing knowledge on integrated reporting by (1) developing a conceptual framework for the characteristics of performance measurement systems to support integrated thinking and (2) analyzing the current status of performance measurement systems used by Japanese electric utility providers. To support integrated thinking, performance measurement systems should contain multidimensional and connected key performance indicators with quantitative target values and action plans that are integrated into the management reward system. By utilizing primary data, the most recent integrated reports of all 11 Japanese electric utility providers were analyzed trough a manual content analysis and percentage analysis. On average, the requirements of performance measurement system design are fulfilled to a degree of 56 %, while the lowest degree being 39 % and the highest degree being 75 %. In most cases, companies use multidimensional key performance indicators with incomplete target values and vaguely defined action plans. Key performance indicators are insufficiently connected and integrated with rewards systems, indicating the outside-in approach of integrated reporting. Larger companies that explicitly refer to the <IR> Framework tend to use more sophisticated performance measurement systems. The findings suggest several areas for improvement, such as connectivity between KPIs as well as further integrating non-financial KPIs with the rewards system.

Performance Measurement System Design as Link Between Strategy Formulation and Performance Information Use in Public Sector Organizations

There has long been calls for improving the link between strategic planning and performance management. Despite such calls, there are few empirical studies of how performance management system design is related to performance information use in public sector organizations, which can be important for implementing and evaluating strategies to improve public sectors organizations’ performance. Utilizing data from 135 public sector organizations consisting of municipalities, counties, central government owned higher education institutions, and agencies in Norway, this paper analyzes how strategy formulation and performance measurement system design relate to purposeful performance information use. Multivariate analysis with partial least squares path modeling (PLS-PM) found a positive relationship between formal strategic planning and logical incrementalism with performance measurement system design as well as a positive relationship between performance measurement system design and performance information use. There were no significant direct relationships between formal strategic planning or logical incrementalism and performance information use, or between organizational size or government sector and performance information use. Therefore, performance measurement system design seems to be an important link between strategy formulation and performance information use.

Implementing organizational performance measurement systems: measures and success strategies

PurposeThis study assesses performance measurement (PM) system implementation efforts across various organizational contexts and investigates which factors are critical to achieving implementation success (IS).Design/methodology/approachAn empirical field study was conducted to refine a framework of PM system IS that consists of 5 dimensions of success and 29 factors. A survey questionnaire was used to investigate actual organizational practice and exploratory factor analysis was conducted to refine constructs corresponding to potential factors and dimensions of IS. The resulting variables were then investigated using multiple regression analysis to identify critical success factors for implementing PM systems.FindingsThe survey was completed by representatives from 124 organizations and the exploratory factor analysis results indicated that there are three underlying dimensions of IS (i.e. Use of the System, PM System Performance, and Improved Results and Processes) and 12 factors. Of the factors, nine can be considered critical success factors having a significant relationship with at least one dimension of IS: Leader Support, Design and Implementation Approach, Reward System Alignment, Organizational Acceptance, Organizational Culture and Climate, Easy to Define Environment, IT Infrastructure Capabilities, PM System Design Quality, and PM Participation and Training.Originality/valueThe results show that there are distinct dimensions of IS and, although some factors are associated with all dimensions, most are more closely related to only one dimension. This suggests that different strategies should be utilized based on the types of challenges experienced during implementation.

Technological mediation, mediating morality and moral imaginaries of design: Performance measurement systems in the pharmaceutical industry

In this paper, we seek to understand the ethics of accounting technology design. We commence by working with the concept of technological mediation, which is theorizing how technologies steer actions by evoking given behaviours and by contributing to perceptions and interpretations of reality that form the basis for choices and decisions to act. As such, this relation between people and technologies has important ethical consequences since it implies that technologies contribute actively to how humans do ethics. In this paper, we draw upon a postphenomenological approach (Ihde; Verbeek) to study and to theorise the moral mediations brought about by accounting technology, by examining how, in its design, technology can actively mediate the moral choices and guide the moral actions human beings make. Our central research question is ‘how is morality mediated in the design of accounting technologies?‘. This question is explored through an ethnographic study of the design of a new Performance Measurement and Compensation System in the Italian division of a multi-national pharmaceutical company. We offer two main contributions towards answering this question. First, by working within the theory of technological mediation, we develop the concept of a ‘moral imaginary’ as an approach to understanding designing the morality of things. Second, we elaborate a process model to theorise how moral mediations unfold in the design of accounting technology. From our conceptual motivation and the theoretical elaboration it inspired, we illuminate how the design of accounting technologies, in this case a PMS system, is a form of ‘engineering ethics’ through techno-moral mediation.

Top Management Characteristics, Performance Measurement Systems Design and Strategic Change of Reformed Public Hospitals in Indonesia

This study examined the impact of top management characteristics on strategic change in public hospitals in Indonesia, focusing on the mediating role of performance measurement system (PMS) design. Questionnaires were distributed to 157 top managers from Indonesian regional public hospitals undergoing reform. The findings indicate that younger, short-tenured top managers with business administration backgrounds are likelier to lead the strategic change, specifically the shift from a defender to a prospector strategy. Additionally, PMS design partially mediates the relationship between top managers' age, educational background, and strategic change. However, no significant mediation effect of PMS design was observed in the relationship between top managers' tenure and strategic change. These results suggest that healthcare organizations should consider their top managers' characteristics when planning and implementing strategic change. The role of PMS design in facilitating strategic change should also be carefully evaluated, especially when considering younger and less-tenured top managers as change leaders.

Experience on centralizing the Asset Management and Maintenance Engineering function in an Italian multi-utility company

The paper explores the centralization process of the Asset Management and Maintenance Engineering functions drawing from a project experience carried out in an Italian multi-utility company. The path towards centralization of the management of assets emerges as a strategic response to enhance operational synergies, improve resource allocation, and capitalize on economies of scale. The project is described in this paper, providing insights proposing a comprehensive, standardized approach for utility Asset Management, considering diverse utility services (water, gas, electricity and heating) and asset types to be managed. The centralization effort follows a three-step process: maturity assessment, common performance measurement system design, and sharing practices company-wide. This strategic response to evolving business demands offers a valuable framework for utility asset management in diverse industries and may be of help to companies following the same evolution path. Existing areas of research to be further explored are also emerging and discussed.

The performance function in local government: Does location impact performance data use?

AbstractResearch has demonstrated that certain drivers increase the probability of performance data use in local government. One performance driver that has received minimal attention is where the performance function is organizationally located, even though prior research has shown that the organizational placement of the performance function can potentially influence the design and use of performance measurement systems. Our study explores how the organizational placement of the performance function in local government influences key drivers of performance data use. We find evidence that performance functions located outside the budget office are more likely to promote the drivers of measurement system maturity, other management processes, and devolved decision‐making, which in turn increases the probability that local officials engage in performance data use. We also identify several research implications to advance the study and practice of performance management in local government and conclude with research limitations and suggestions for future research opportunities.

Logics in situations of lower or higher “perceived control exposure”: the case of researchers

PurposeThis paper examines the qualities of situations wherein hybrid professionals in knowledge-intensive public organizations (KIPOs) vary in their displays of conflicting institutional logics. Specifically, it examines the situations when individual researchers vary in their displays of a traditionalist academic- and an academic performer logic.Design/methodology/approachAnalysis is grounded in an institutional logics perspective and founded on qualitative interviews with university researchers recurrently exposed to performance measurement and management.FindingsThe findings show that individual researchers display a traditionalist academic- and an academic performer logic in situations of lower or higher “perceived control exposure” (i.e. perceptions of (not) being exposed to “what the performance measurement system wants to/can ‘see’”). In more detail, that a traditionalist academic logic is displayed more in situations of lower “perceived control exposure” whereas an academic performer logic is displayed comparatively more in situations of higher “perceived control exposure”.Originality/valueThese findings add insight into when there is room for resistance to pressures to perform in accordance with increasing performance measurement and when researchers more so tend to conform. While previous research has mostly studied such matters by emphasizing variation between researchers, this study points out the importance of situations of lower or higher “perceived control exposure”. Such insight is arguably also more broadly valuable since it adds to our understanding about hybridity of professionals in KIPOs and how to design and use performance measurement systems in relation to them.

REVIEW OF PERFORMANCE MEASUREMENT ON SUPPLY CHAIN MANAGEMENT

The purpose of this paper is to find out the extraordinary features of the public sector in developing nations and the impact of reforms in this sector. Describes the improvement and testing of a structured methodology for the design of performance measurement systems. It became clear that a good deal of the writing about performance measurement so far has been very superficial, neglecting the complexity involved in the actual design of measurement systems. Performance measurement is in the stage of identifying difficulties and pitfalls based totally on practitioner experience with some published research studies. This paper is aimed at small and medium businesses and large corporations and proposes a research agenda for the future. The results of the literature review expose a certain maturity of the literature pertaining to large companies and a significant lack of PMS for SMEs. It additionally discusses PMS in the context of an emerging enterprise environment such as globalization, servicing, and networking in the context of a multicultural environment. The place of PMS has been heavily researched and but some of the basic standards of PMS, especially the particular meaning and software of PMS characteristics, data, measurement residences including measurements, metrics and indicators, and size methods continue to be unclear.

Examining the impact of top-management teams on performance measurement system design: a social network perspective

Examining the impact of top-management teams on performance measurement system design: a social network perspective

Examining the impact of top-management teams on performance measurement system design: a social network perspective

Examining the impact of top-management teams on performance measurement system design: a social network perspective

Performance measurement system in local governments: A critical analysis and advancements

The literature highlights the need to develop and utilise a balanced, dynamic, and multi-perspective performance measurement system (PMS) for managing organisations. The system should report the key performance indicators (KPIs) to support decision-making processes. Although the useful approaches for the development of this system are described in the literature, they are not sufficiently applied to public organisations. Hence, this paper aims to identify and apply a useful approach for PMS design in a local government according to national legislation. A qualitative case study method is adopted in this research. It is recognised as the most effective method for obtaining an in-depth understanding of complex environments. To define the steps for developing a PMS, the context and regulation of an Italian municipality are investigated in this research. The result highlights the steps of PMS development suggested by national legislation. It illustrates a local government context, highlighting the considerable complexity of the organisational perspective and numerous controls to carry out to be compliant with the legislation background. The contribution of this study is twofold. First, the study contributes to the performance measurement literature through the approach definition of PMS development in local governments. Second, it contributes to practice by providing a useful case study of PMS development of local governments according to a national legislation background. The research describes a useful approach for designing a PMS in a complex and bureaucratic environment. Moreover, it highlights the main steps to develop a performance measurement system in a local government.

Industrial Performance Measurement Systems Coherence: A Comparative Analysis of Current Methodologies, Validation and Introduction to Key Activity Indicators

This paper discusses and integrates the concept of complexity in the industrial performance measurement and management systems (PMM) theory, providing a comprehensive overview of the different methodologies used within the decision systems research area. It also discusses the importance of introducing Key Activity Indicators (KAI) within PMM, specifically related to the Operations and Supply Chain management research and industrial areas. Moreover, it provides validation of the methodology through a case study concerning the production environment of a multinational pharmaceutical company. The main research objective is to design appropriate industrial PMM systems with the aim of increasing the industrial efficiency and effectiveness of manufacturing and service organizations. An analysis of the central industrial performance measurement systems design methods is conducted, classifying them into macro-categories and conducting a comparative study. Based on the analysis of the different proposed methods, organisations will be able to choose the best one based on their needs to design effective decision systems. The research work allows organisations to evaluate, assess, and design effective industrial performance measurement systems. Moreover, the proposed methodology can be easily integrated within an Industry 4.0 context, and benefit from the digitalization environment to obtain continuous feedback on the effectiveness of the industrial PMM.

Measuring project team performance: A review and conceptualization

Performance measurement has been a central topic of study in project management research for many years. However, the literature on project team performance measurement is fragmented and underdeveloped. To address these limitations, we conducted a systematic literature review aimed at organizing the state-of-the art, providing a better conceptualization of project team performance measurement, and strengthening theory in the field. We used an inductive approach to synthesize the literature and, building upon the performance measurement design literature and the Input-Mediator-Outcome (IMO) model of team effectiveness, we propose a theoretical framework that organizes project team performance measures around two axes: the nature of performance (i.e., efficiency or effectiveness), and the nature of the measure (i.e., tangible or intangible). By combining these two axes, we propose a 2 × 2 performance measurement structure composed of four dimensions: (1) project team processes, (2) project team emergent states, (3) project team tangible outcomes, and (4) project team perceptual benefits. Our study advances theory by offering a comprehensive and integral understanding of project team performance measurement and providing an evidence-based framework that could help practitioners improve the design of performance measurement systems for project teams.

Enhancing external knowledge search: The influence of performance measurement system design on the absorptive capacity of top management teams

External knowledge search is critical for innovation performance and centers on a firm's absorptive capacity. This study investigates whether and how two dimensions of absorptive capacity at the top management team (TMT) level, potential absorptive capacity and realized absorptive capacity, are influenced by two design choices of the performance measurement system (PMS), broad scope PMS and PMS integration, under different conditions of environmental dynamism. Based on cross-sectional survey data from firms in innovative industries, the results of our empirical study indicate that in more dynamic environments, a broader scope PMS is associated with higher potential absorptive capacity whereas higher PMS integration is associated with lower potential absorptive capacity. These associations are not observable in more stable environments. Moreover, broad scope PMS and PMS integration are both positively associated with realized absorptive capacity, independently of environmental dynamism. These findings highlight the relevance of PMS design choices for absorptive capacity, showing on the one hand the differences between the implications of broad scope PMS and those of PMS integration and, on the other hand, that the implications of PMS design choices for potential absorptive capacity (i.e. acquisition and assimilation of external knowledge) follow different patterns than the implications for realized absorptive capacity (i.e. the transformation and exploitation of such knowledge).

The joint effects of performance measurement system design and TMT cognitive conflict on innovation ambidexterity

Prior research examining the consequences of specific performance measurement system (PMS) design attributes is largely focused on processes and decisions at an individual level. We extend this research by examining how PMS design attributes interact with group socio-cognitive processes to influence firm level outcomes. Specifically, we examine how the interaction between two PMS design attributes related to comprehensiveness – scope and integration – and top management team (TMT) cognitive conflict affect the achievement of innovation ambidexterity. Based on cross-sectional data collected from a survey of TMT members of 90 firms operating in innovative industries, we find that PMSs with broad scope positively interact with cognitive conflict, leading to higher innovation ambidexterity, while highly integrated PMSs negatively interact with cognitive conflict, leading to lower innovation ambidexterity. Overall, our study demonstrates the importance of disentangling the interplay of different PMS design attributes with group socio-cognitive processes for understanding how firms achieve innovation ambidexterity.

Revenue growth in not‐for‐profit organisations: The effects of interactive and diagnostic controls and organisational culture

AbstractUsing survey and archival data for 180 not‐for‐profit aged care organisations, we find that interactive use of performance measurement systems positively affects the organisations’ revenue growth, while the diagnostic use negatively affects revenue growth. We also find that organisational culture, specifically attention to detail, innovation and respect for people, moderates these effects. Our findings have implications for the literature in terms of understanding the combinatorial effects of formal management control and culture on organisational performance. The findings also have practical implications for designing performance measurement systems and developing organisational cultures, to create an internal environment effective in enabling revenue growth.

Preparation o f Balanced Scorecard a s Performance Measurement Instrument In P P . Kecap Maja Menjangan

This study aims to (1) formulate and describe the BSC strategy map under the company’s vision, mission, and strategy, (2) formulate the design of performance measurement system based on the BSC concept (3) measure the performance that has been achieved with BSC approach and analyze the results. The lag of indicators used by PP. Kecap Maja Menjangan is a net profit/loss margin and sales growth rate and a level of customer satisfaction index regarding the quality, price, and reputation of the product from the customer perspective. The internal business process is measured through revenue per cost (R/C) growth and the proportion of new product revenue to TR, while the level of employee satisfaction is measured through initiatives, risk tolerance, direction, integration, supervision, identity and motivation, and reward system as the lag indicator for learning and growth. The final score of 72,91 percent indicates the good overall performance of the company (although not optimal). The company performed well on all three non-financial perspectives marked by achievements above 75 percent. While the achievement of a financial perspective that showed below average results in this research period indicates the influence of external factors outside the analysis (such as the increase in the price of raw materials and fuel) that indirectly affect financial performance. Implementation of BSC plan on PP. Kecap Maja Menjangan could be done with the following stages: (1) Review of BSC design, (2) communicate the design and setting individual objectives, (3) strengthen the annual plan and budget, and (4) conduct monthly evaluations. The failure and success of BSC implementation should be viewed positively

Design of Performance Measurement System in Feed Company PT XYZ With Balance Scorecard Approach

The management of PT XYZ realizes that the company needs another method that is able to comprehensively provide views with various approaches to corporate strategy formulation. Management is very aware that even though the company has been established for more than 30 years, there are several conditions that need to be improved including 1) Data that is still not integrated, where data from each department is still collecting, managing and utilizing data related to departments and not free to obtain data support from the department easily. 2) The company does not yet have appropriate indicators to develop and manage a sustainable business. and 3) The company does not yet have an integrated approach in viewing all important aspects of the business. This study aims to obtain comprehensive measurements and analyze benchmarks with a balanced scorecard. The data used were primary through interviews and secondary data with literature studies. The methods used were descriptive, paired comparison and BSC analysis. The results show that using the BSC is able to provide a comprehensive and appropriate picture of 4 perspectives

Impact of national culture on performance measurement systems in manufacturing firms

With globalisation, the use of performance measurement systems (PMS) for managing international operations is increasing. The purpose of this research is to explore how differences in national culture impact on the design and use of PMS. Despite considerable literature investigating the impact of national culture on management practices in general, studies focussing on understanding the impact of national culture on PMS are scarce. This study adopts an analytical framework based on social and technical controls, PMS lifecycle and Hofstede’s six dimensions of national culture to explore the complex impact of national culture on PMS using 10 case studies from five culturally diverse regions. Findings clarify previously inconclusive research results by explaining how various dimensions of national culture influence the technical and social dimensions of PMS. They also highlight, for the first time, the significance of the masculinity dimension of national culture. The paper concludes with recommendations for future research.