Implementation Of Performance Measurement System Research Articles

Performance measurement systems in the Finnish public sector

PurposeThis paper aims to identify the specific problems faced by the Finnish public sector organizations in designing and implementing performance measurement systems (PMS).Design/methodology/approachAn understanding of the problems is obtained by examining three case organizations in practice. In order to support the analysis of the empirical findings, a review of prior literature on the private and public sector PMSs is carried out.FindingsThe design and implementation processes in the Finnish public sector organizations differ significantly from the way they are realized in industrial private sector companies. The four underlying reasons for problems in public sector organizations are the following: there are many stakeholders with conflicting needs; the end products and goals are undefined; there is a lack of property ownership and lacking management skills.Practical implicationsBy utilizing the results of the study, PMS design and implementation in the public sector can be carried out by taking into account and avoiding the evident pitfalls introduced in the study.Originality/valueA large portion of the prior research on public sector PMSs consists of surveys and conceptual studies. This paper describes three case studies and reveals new insights into the specific challenges faced by public sector organizations, especially in designing and implementing PMSs.

Understanding the relationship between PMS and MIS in SMEs: An organizational life cycle perspective

This research aims to investigate the relationship between performance measurement system (PMS) and management information system (MIS) adopting a company life-cycle approach. The scope is to show if and how MIS influences PMS and vice versa. The investigation is carried out using the case study methodology in Italian and Scottish small and medium enterprises (SMEs). The empirical results are synthesized in two theoretical propositions. The first proposition underlines the presence of two circular relationships between PMS, MIS and organizational capability. The first relationship is that; PMS implementation and use promote development in organizational capability, and that improvements in organizational capability supports PMS implementation and use. The second relationship is that; advanced MIS create a favourable context for PMS implementation and use, and that PMS implementation and use encourages investments in MIS. The second proposition emphasizes that company maturity has a relevant impact on MIS and PMS development where mature organizations are able to recognize their needs and are able to design effective MIS responding to PMS requirements. On the other hand, in less mature organizations an external stimulus is essential for supporting MIS investment and PMS implementation and use.

The Impact of Performance Measurement on Financial Forecasting in Italian Municipalities

Since the mid-1990s, under the wave of New Public Management reforms around the globe, Italian local governments (LGs) have received growing pressure from the legislature to implement performance measurement systems. With reference to municipalities, data show that there has been a growing diffusion of management control systems (MCSs) and therefore some sort of performance measurement. In 1998, less than one-tenth of about 8,100 Italian municipalities indicated that they had a MCS in place. This number increased during the following four years to about 36% for municipalities with a population less than 60,000 inhabitants, and 77% for larger municipalities (source: Italian Court of Audit, 2003). Other evidence depicts similar trends: an increase in benchmarking projects during the latter half of the 1990s and 2001 (Lucianelli and Tanese, 2002), and a growing attention on cost accounting which led to half of Italian municipalities with some sort of measurement of costs in 2003 (Orelli and Visani, 2004). The general framework of the Italian Local Governments Accounting Standards (Commission for Local Governments' Finance and Accounting - Ministry of the Interior, 2004) emphasize that the annual budget approved by each municipality's council should present the true and fair view of the next year. In other words, municipalities should plan the year after attempting to determine the best feasible picture of it in terms - above all - of revenues and expenses. Toward this end the legislature (Decree no. 267/00, articles no. 162, 196, and 197) suggests the use of performance measures, especially those connected to a MCS. Therefore an important question is whether the growth of performance measurement had a positive impact on Italian municipalities' ability to estimate revenues and expenditures more accurately in their annual budgets. To answer this question we use a quantitative approach based on an analysis of annual budgets and annual reports of Italian municipalities covering financial years 1999-2002.

Will Evaluation Prosper in the Future?

Abstract: The main thesis of this article is that program evaluation and program evaluators have largely missed out on the movement, now into its second decade, to make performance measurement the centrepiece of public sector management and accountability. If these developments are not strategically faced by evaluators, program evaluation runs the risk of becoming less and less relevant to public sector and nonprofit organizations. Evaluators, divided by epistemological and methodological differences, have collectively not been willing to embrace professionalization as a way to reclaim territory lost to the audit and management consulting professions. It is essential that evaluators develop and implement strategies that are intended to create a professional practice space that includes designing and implementing performance measurement systems. Evaluators are well-positioned to do so, if they act collectively.

Dynamics of performance measurement and organisational culture

PurposeThis research paper aims to model the dynamic relationship between performance measurement, management styles and organisational culture, in order to develop a better understanding of the causal linkages between these three areas.Design/methodology/approachThe related literature on performance measurement, management control systems and management information systems, in the context of organisational culture, is examined and a framework for mapping the interplay of the three areas is developed. The research is based around five case studies where performance measurement systems were implemented in action research programmes, using identical implementation methods, by the same research team. The use of the performance measurement systems was then observed over a period of time in relation to the implementation lifecycle, changes to management style and organisational structure over time. The dynamic relationships were then mapped using the framework developed. Patterns were observed, which led to new insights.FindingsOrganisational culture and management style seem to be interdependent throughout the lifecycle of the performance measurement system. That is, management styles need to evolve as the maturity of the performance measurement system and the organisational culture evolve. A successfully implemented and used performance measurement system, through cultural change, leads to a more participative and consultative management style. Similarly, the correct use of performance measurement systems can encourage an achievement culture to emerge. All five cases suggested that an authoritative management style was essential at the start but this would change with the emerging culture.Research limitations/implicationsThe research results are limited to five socially constructed case studies. Whilst these findings remain valid, they cannot be used for universal generalisations. In terms of modelling the organisational culture, the research focuses on the organisation as a whole and does not take into account the possible existence of sub‐cultures within the organisation.Practical implicationsA better understanding of management styles and organisational culture will allow practitioners to better assess the organisations' readiness to implement performance measurement systems. Similarly, the results provide guidance towards the management styles that would be appropriate when implementing performance measurement systems in different cultural settings.Originality/valueThe framework for modelling the dynamic relationship between performance measurement, management style and organisational culture, together with the findings, should provide useful insights and methods for future researchers in this area.

The role of existing measures in developing and implementing performance measurement systems

PurposeThe purpose of this study is to investigate the role of existing, local performance measures in the process of developing and implementing an integrated performance measurement system. Performance measurement has received much attention since the 1980s, based on the notion that performance measurement systems should be adapted to modern manufacturing systems. However, relatively few empirical studies have investigated implementation processes of such systems.Design/methodology/approachThe paper describes a case study of the development of a performance measurement system in a medium‐sized company.FindingsIt was found that the process was strongly guided by the need to identify existing reports and metrics at different levels within the organization, which informed the development and implementation of the new performance measurement system. This is a more significant role than has usually been proposed in the literature – one side of the gap between existing measures and an ideal system that has first been developed following a kind of “greenfield” approach.Research limitations/implicationsFuture research could use other longitudinal case studies to obtain more insights into development and implementation processes, and also focus on information systems in these processes.Originality/valueThe value of this paper lies in highlighting the interplay between organizational experiences that are embedded in informal, local performance reports and new performance measurement initiatives that are initiated from a higher management‐level.

Measuring Success: Factors Impacting on the Implementation and Use of Performance Measurement within Victoria's Human Services Agencies

Evaluation of performance is now an accepted human resource management practice in many organisations. The research reported in this paper identifies factors impacting on the implementation and use of performance measurement systems in Victoria's human services agencies. It applied a conceptual framework to evaluate the influence of rational/scientific and political/cultural factors on their implementation. The results indicate that both political/cultural and rational/scientific influences are present when human services organisations in Victoria implement and use performance measurement systems. While the results do not contain an exhaustive list of influences that may impact on an organisation's performance measurement efforts, they do provide confirmation of the existence of these two distinct categories of influences, and are useful in understanding how such factors may affect the operation of performance measures. This paper advances our knowledge of how to develop new approaches that more effectively manage the implementation and utilisation of performance measures. The results will be of interest to human service organisations, government departments that fund these agencies and to those with an interest in the accountability of publicly funded bodies.

Researching performance measurement system implementation: the dynamics of success and failure

There is a growing literature concerned with the design and implementation of performance measurement systems but few studies of success and failure. This paper describes three phases of research into design and implementation of performance measurement systems involving 16 different businesses. The conclusion from the research is that senior management commitment is a key driver of success, but the paper will also describe the main factors which influence and change this commitment over the life of a performance measurement implementation project.

Implementation and impact of performance measures in two SMEs in Central Scotland

This paper describes how performance measures were selected and then implemented in two small to medium size enterprises (SMEs) in Central Scotland. It then goes on to consider the impact of these measures on the performance of those businesses using data generated from an action research approach. A review of academic literature on the barriers to implementation of performance measurement systems in general, and those specifically relating to SMEs, suggested that considerable difficulties can be found in implementing performance measures. These perceived difficulties are considered and discussed in relation to the SMEs in question and the approaches used to minimize and overcome them are described. A systematic approach that is well resourced and focused on measuring variation in performance of entire ‘operate’ processes during execution is found to enable business improvement activity. The impact of using this approach on operations management strategy in each SME is reported. The research suggests that implementation of performance measures in an SME will have considerable impact on business performance if the process for implementation is well structured, resourced and focused on improving the capability of ‘operate’ processes.

Performance measurement systems in SMEs: A review for a research agenda

In recent years, literature has identified the increasing complexity of small and medium‐sized enterprises (SMEs) and highlighted their sensitivity to differences in managerial culture and management systems. Research has shown that performance measurement systems (PMSs) could play an important role in supporting managerial development in these companies. In this paper, the literature on performance measurement in manufacturing SMEs is reviewed and the diffusion, characteristics and determinants of performance measurement in SMEs are analysed. Shortcomings in the performance measurement systems are highlighted and the many factors that seem to constrain PMSs in manufacturing SMEs are defined, e.g. lack of financial and human resources, wrong perception of the benefits of PMS implementation, short‐term strategic planning. Moreover, using dimensions defined according to the information found in the literature, two PMS models specifically developed for SMEs are compared with generic PMS models. The comparison points out an evolution in PMS models over time; in particular, the models developed in the last 20 years are more horizontal, process‐oriented and focus on stakeholder needs. However, it is not clear whether these changes are due to the evolution of the generic models or an attempt to introduce models suited to the needs of SMEs. To clarify this matter and better to understand PMSs in SMEs, further theoretical and empirical studies are necessary. The main issues still requiring investigation are listed in a research agenda at the end of the paper.

Falling from a Great Height: Principles of Good Practice in Performance Measurement and the Perils of Top Down Determination of Performance Indicators

The author uses an evaluator's perspective and practical experience of implementing performance measurement systems in the public, private and voluntary sectors to devise ten principles of good practice in performance measurement: conceptualisation, stakeholder approach, clarity, balance, ownership, usefulness, accuracy, contextualisation, dynamism and value for money. These principles are not easily achieved and require adjustments that are difficult to implement in top down performance measurement systems. Locally determined performance measurement systems have a higher chance of meeting learning-based and practical purposes of performance measurement as opposed to political and symbolic purposes. Incorporating an evaluation element can moderate some of the potential weaknesses of a top down approach and take advantage of the scale of a national system to provide a powerful contextualised learning repository.

Less is more: Virginia's Performance Outcomes Measurement System.

Public mental health authorities are faced with the responsibility of containing costs, improving quality, and providing greater accountability. In response, a number of states began developing mechanisms to assess consumer outcomes and provider performance. In the late 1990s Virginia took a proactive stance by pilot testing the Performance and Outcome Measurement System (POMS), which was based on the ConsumerOriented Report Card of the Mental Health Statistics Improvement Program (MHSIP). The Virginia Department of Mental Health, Mental Retardation, and Substance Abuse Services implemented the pilot project at eight sites. Implementing POMS statewide was intended to serve two major purposes: it would continuously improve the quality of services, and it would increase accountability for taxpayer dollars. POMS was designed by a committee that included major stakeholder groups: consumers, family members, and providers. This committee also oversaw the implementation of the pilot project and obtained input from a wider array of stakeholders throughout the implementation process. In early 1997 six community mental health centers and two state hospitals were selected to participate in the pilot project. Two sites each were selected to represent adult mental health, child and adolescent mental health, adult substance abuse, and inpatient services. A total of 46 different indicators were tested across the four populations. The goals of the pilot project were to determine which of these indicators provided the most useful information at the lowest cost and to develop recommendations for improving POMS and for implementing the program statewide. The pilot project took place from 1997 to 1999.

How virtuality affects knowledge work: points on performance and knowledge management

The idea of organising tasks virtually arises from a lack of resources, such as time, money and competent people. As its name suggests, the virtual organisation is more dependent on the people working in it than the physical location or structure of an organisation. The concept of virtuality is approached from the organisational and professional viewpoint and the problems of working virtually are discussed in general. Thus, the results are applicable in avoiding the problems discovered. The concepts analysed are mostly from a managerial viewpoint, the theoretical framework emphasises the transformation of the economic landscape and working environment. The case exploration consists of results from a performance measurement system implementation process and participant observation and theme interviews, which aim to enlighten us as to the nature of knowledge work and performance in a virtual organisation.

Implementing performance measurement systems: a literature review

Currently, there is a great interest in performance measurement with many companies attempting to implement the balanced scorecard. However, there is also evidence that many of these implementations are not successful. This paper reviews the different performance measurement system design processes published in the literature and creates a framework for comparing alternative approaches. The paper then proceeds to review the literature on performance measurement system implementations and concludes that the performance measurement literature is at the stage of identifying difficulties and pitfalls to be avoided based on practitioner experience with few published research studies. This paper is the first of two, the second going on to consider performance measurement implementation from the point of view of the change management literature.

An Empirical Investigation of the Performance Consequences of Nonfinancial Measures

Firms are increasingly implementing new performance measurement systems to track nonfinancial metrics such as customer and employee satisfaction, quality, market share, productivity, and innovation. This study examines the implications of nonfinancial performance measures included in compensation contracts on current and future performance. Contextual factors, environmental factors, and strategic plans vary across firms and, in turn, adopting appropriate nonfinancial measures determines the performance consequences of such measures. Our findings support the contention that firms that employ a combination of financial and nonfinancial performance measures have significantly higher mean levels of returns on assets and higher levels of market returns. Although we find evidence that the adoption of nonfinancial measures improves firms' current and future stock market performance, we find only partial support for accounting performance improvements. Overall, the results indicate that the association between the use of nonfinancial measures and firm performance is contingent on the firm's operational and competitive characteristics.

The success and failure of performance measurement initiatives

This paper investigates the success and failure of performance measurement system design interventions in ten companies. In each case, the senior management team was facilitated through a management process to redesign their performance measurement systems. Analysis of the initial pilot case studies suggested three important differences between companies that proceeded to implement the measures agreed during the process and those that did not. Post intervention semi‐structured interviews with the directors and managers directly involved revealed two main perceived drivers of implementation and four perceived factors that block implementation. The results are of specific interest for performance measurement system implementation but have wider implications for our view of management commitment in change management.

Measuring up: do you have a scorecard?

Performance measurement can be an effective tool in driving organization improvement to enable your utility to become more competitive, or improve customer satisfaction. WERF Project #99-WWF-7, Developing and Implementing a Performance Measurement System, is developing performance measurement systems by investigating a number of “best practices” in other industries and implementing selected practices at various water/wastewater utilities nationwide to determine how these practices can be adapted and applied. This joint WERF/AWWARF research project has been underway since mid-1999 to provide methods and tools that enable the utility to develop and implement a performance measurement system based on a demonstrated, proven approach. The Volume I Report summarizes the secondary research and project approach. Well designed, properly implemented performance measurement systems can enable utilities to achieve new levels of performance in terms of efficiency, quality, and effectiveness. Interest in performance measurement is increasing in all competitive businesses and industries today, and has been advanced through concepts such as the Balanced Scorecard. Utilities can employ these same concepts and learn “best practices” from other industries' experiences. While a performance measurement system alone does not improve performance or make a utility competitive, when combined with an appropriate business strategy and performance improvement initiatives, it can drive a cycle of change. A successful performance measurement system combines a holistic approach around improved business practices and effective human/organizational strategies in addition to actual performance information for operational decision-making.

Auditing Performance Data in Local Government

Performance measurement for local government represents the implementation of performance measurement systems, the collection of performance data, and the calculation of performance measures for operational accountability. There is another dimension of performance measurement that has gone unnoticed in public administration literature, auditing the accuracy of performance data used to create performance statistics. This article describes why performance data must be audited and presents an approach to auditing the accuracy of them. It concludes that additional research is needed on auditing performance data and that the auditing process sets the stage for improving the efficiency and effectiveness of service delivery.

What Does Globalization Mean for Educational Change? A Comparative Approach

What Does Globalization Mean for Educational Change? A Comparative Approach

Performance measurement: a critical analysis of the literature with respect to total quality management

This paper represents a comprehensive review of the literature on performance measurement. The roadmap used for this analysis is from the evolution of performance measurement, to the way it is currently defined and how it is applied from a corporate‐wide perspective. One useful contribution of this review is a special focus on performance measurement in a non‐financial, non‐traditional sense. This discussion was further amplified by referring to newly developed tools and techniques and by highlighting critical factors of success in the application of performance measurement.The key factors from this literature review reveal that, although interest in the area of measurement is growing significantly, this is not reflected by the tangible and credible experiences in the organizations concerned. There is a concurrent view amongst various writers that there are both hard and soft issues reflecting, for instance, the lack of strategic thinking and goal clarity, putting measurement systems in the driving seat and therefore trusting unreliable designs and not focusing on the true ethos of modern measurement towards continuous improvement and thereby not engaging employees and neglecting the culture change aspects.The paper concludes by highlighting the dearth in research in the important field of performance measurement and, in particular, the design and implementation of performance measurement systems that cover all the essential aspects through an integrated perspective.