Mike Bourne

Designing, implementing and updating performance measurement systems

This paper addresses issues met when designing, implementing, using and continuously updating performance measurement systems in manufacturing companies. The paper develops, from theory, a framework for analysing the implementation of a performance measurement system and uses this framework to interpret three longitudinal case studies. The paper concludes that specific processes are required to continuously align the performance measurement system with strategy. When these processes are combined with a well defined model of strategic success, the measurement system can enhance the strategic management process by challenging the assumptions and the strategy itself.

Performance measurement system design: developing and testing a process based approach

Describes the development and testing of a structured methodology for the design of performance measurement systems. Frameworks, such as the balanced scorecard and the performance prism, have been proposed, but until recently little attention has been devoted to the question of how these frameworks can be populated, i.e. how managers can decide specifically which measures to adopt. Following a wide ranging review of the performance measurement literature, a framework identifying the desirable characteristics of a performance measurement system design process is developed. This framework provided guidelines which were subsequently used to inform the development of a process‐based approach to performance measurement system design. The process was enhanced and refined during application in three action research projects, involving major UK automotive and aerospace companies. The revised process was then formally documented and tested through six further industrial applications. Finally the process was written up in the form of a workbook and made publicly available.

Theory and practice in SME performance measurement systems

Describes research undertaken to evaluate the appropriateness of strategic performance measurement (PM) system development processes for small‐ and medium‐sized enterprises (SMEs). An evaluation is undertaken of ten PM approaches found in the literature. To facilitate this evaluation a typology is presented which synthesises current theory. This evaluation resulted in the identification of a process, based on its congruency to the theoretical model, which is used for an empirical investigation. Empirical data from SMEs is collected and analysed using the typology. This indicates a discontinuity between current theory and the requirements of practitioners in small companies. The paper concludes with a number of recommendations to facilitate the development of appropriate PM processes for SMEs.

Designing performance measures: a structured approach

Describes the development and testing of a framework which can assist in the process of designing performance measures. Grounds the framework in the relevant literature and explains how it was developed and tested through a series of action research projects involving collaborators primarily from the aerospace and automotive industries. Notes that inadequately designed performance measures can result in dysfunctional behaviour often due to the method of calculation encouraging individuals to pursue inappropriate courses of action. The performance measure record sheet presented provides a structure which considers factors such as the purpose of the measure and the source of data. Notes the advantages of the record sheet, such as its use to audit existing measures of performance and to facilitate the process of designing new ones.

The success and failure of performance measurement initiatives: Perceptions of participating managers

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.

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.

WHY MEASUREMENT INITIATIVES FAIL

Noting the claim that 70 per cent of balanced scorecard implementations fail, sets out to explore the two main reasons for the failure of measurement systems – namely poor design and difficulty of implementation. Considers the measurement revolution over the past 20 years noting developments such as the early budgetary control measures in DuPont and General Motors during the early 1990s. Looks at the appropriate design of measurement systems and suggests that companies should start with a “success map” – a cause and affect diagram which shows how the company operates. Points to three causes of implementation failure – political, infrastructural and focus and details of each of these. Suggests that the challenge for the twenty‐first century is how to extract maximum value from our performance measurement data.

Managing through measures: a study of impact on performance

Purpose – This study investigates the use of performance measures and how performance measurement impacts performance.Design/methodology/approach – This study was conducted through multiple case studies in a single organisation. Comparisons are made between performance measurement practices in comparable high and average‐performing business units.Findings – The findings suggest that current research into the impact of performance measurement on performance may be too simplistic in its approach as much of the research relies on studying the physical and formal systems used, ignoring the types of factors found to be important in this study.Research limitations/implications – Being based on a single organisation, the wider applicability of the specific findings from this study should be questioned. However, if, as we suggest, the interactive nature of the use of the measurement system is important, future research will need to find ways of observing, measuring and quantifying this interactivity to allow a ri...

Factors that play a role in “managing through measures”

Organisations devote time and effort to the development of strategic performance measurement (SPM) systems. Many articles have been written on how to design and implement this type of system. However, few studies have addressed the issue of why some organisations are better able to “manage through measures” than others. Why do some organisations struggle to ensure that action follows measurement, whilst others systematically use their metrics to inform their decision‐making processes, and their subsequently actions? Specifically, it is unclear what critical factors play a role in enabling organisations to effectively use their SPM system. To gain an understanding of these factors, 24 practitioners were interviewed. This paper presents the analysed evidence from those interviews and its implications for practice.

Corporate performance management

Focuses on the changes in performance measurement, following research conducted with executives in a number of leading European companies. Found that there is a growing trend towards managing performance improvement through focusing on the underlying drivers of performance, whether improvements in the processes or the underlying resources that give these processes capability. The past obsession with pure financial performance is decreasing and there may be a recognition that there is a trade off between hitting today’s financial results and sustaining the capabilities and competences that allow companies to compete effectively in the future.