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.     

The impact of organisational alignment on the effectiveness of firms’ sustainability strategic performance measurement systems: an empirical analysis

Sustainability is becoming a mainstream issue for many organisations. A limited number of studies exist, however, on integrating sustainability into daily practices. Indeed, most of the research to date addresses only the definition and motivation for companies’ interest in environmental and social concerns. This paper contributes to the research on integrating sustainability into companies’ daily activities both directly and indirectly. It analyses the extent to which top management’s commitment to sustainability directly affects structural and social alignment and the effectiveness of measurement systems that monitor sustainability strategic performance and indirectly impacts firms’ social and environmental performance. Based on a quantitative analysis of survey responses from 405 large European companies, this paper documents the limited impact of social alignment to firms’ social and environmental performance. More specifically, the results challenge the diffuse belief that the alignment and commitment of middle managers to sustainability strategies as defined by the upper echelons have a relevant impact on the company’s social and environmental performance.     

Management Control Systems: One View of Components and Their Interdependence1

Professor Robert Anthony's statement that ‘control is the process of assuring that the organization does what management wants done’ implies that systems for management control must be broadly conceived. This paper takes the view that a comprehensive view of control systems should include at least five components: performance measurement, strategy, organization structure, direction and motivation. Each of these components reflects management choices, but those choices have implications for the other components. A strategy of dynamic new product development for example, requires a flexible structure, and should have performance measures that relate to the structure and the desired achievements for that strategy. As what is measured signals what is important, the measures provide direction and the basis for incentives and rewards. The interdependence of the components is seen as a key factor in control system design. When the components support each other, the interdependence is a source of strength; conflict or even absence of support among the components can be a source of weakness. This paper describes the components and illustrates ways in which the design of control systems needs to recognize their interdependence. The process of system implementation is also reviewed, as process choices can be independent of design choices. The framework is related to prior research and writing, showing that the components are themselves complex and have been the focus of extensive study. Finally, several teaching cases are decribed in order to show how the design issues may appear in practice and how the framework can be used to help teach management control systems.     

Information architecture for effective Workload Control: an insight from a successful implementation

The implementation of Workload Control (WLC), a Production Planning and Control concept uniquely designed for Make-To-Order companies, has been a constant challenge. Scholars argued that WLC is largely developed through simulations of well-defined environments while much more complex circumstances (e.g. information availability) have emerged in field research. A recent trend of WLC research is to improve the practical applicability of the concept, where empirical evidence is essential. However, success in WLC implementation remains impeded. The availability of data has been a significant area that frustrates the implementation process. While there is a tendency to simplify data requirements in recent WLC theory development, it is important to understand and maintain the information that is essential for the concept to be effective. For the first time in the field, this paper details the information architecture for WLC. Key informational entities of relevance to the input/output control functions in WLC as well as performance measurement are discussed based on evidence from a successful implementation. The paper not only sheds light for practitioners on how to construct an information system that facilitates successful WLC implementation but also has implications for future development of WLC mechanisms coping with information uncertainties in practice.     

HR systems and leadership attachment affecting idea generation and implementation: An experiment and two-source multi-level study

This paper focuses on the direct and interactive influence of leadership attachment styles (secure, anxious, and avoidant) and commitment HR system on two distinct stages of the individual innovation process—idea generation and implementation. We test our hypotheses in two studies. An experimental study of undergraduate students establishes a positive effect of secure attachment on idea implementation. The interplay between commitment HR system and avoidant attachment marginally predict idea generation; commitment HR system and neither secure nor anxious attachment predict implementation. A multisource multi-level field study in three EU-based private firms replicates the direct role of commitment HR system in stimulating idea implementation (but not generation) and suggests that secure attachment fosters both generation and implementation, whereas anxious attachment hinders both. Moderation analyses support only a marginal interaction between commitment HR system and secure attachment in fostering idea generation. We discuss theoretical, practical, and future research implications.     

Implementation of just-in-time in a small company: A case study

This paper deals with the implementation of JIT in a small company in Taiwan that produces different kinds of automobile lamps such as rear combination lamps and front turn signal lamps. JIT systems have tremendous effects on all operations of a firm, including design, accounting, finance, marketing, distribution, etc., and thus are of interest to all levels of a firm's management. Realizing the success of JIT, large-scale manufacturing companies all over the world have implemented JIT in their production systems with the objective of improving their competitiveness. Nevertheless, small and medium enterprises SMEs play a major role in the national economy. However, JIT has not received serious attention from SMEs. Realising the importance of improving the performance of SMEs, a case study is presented to motivate practitioners to implement JIT in their SMEs. In addition, future research directions in the areas of implementing JIT in SMEs are presented.     

Critical success factors of web-based supply-chain management systems: an exploratory study

This paper reports the results of a survey on the critical success factors (CSFs) of web-based supply-chain management systems (WSCMS). An empirical study was conducted and an exploratory factor analysis of the survey data revealed five major dimensions of the CSFs for WSCMS implementation, namely (1) communication, (2) top management commitment, (3) data security, (4) training and education, and (5) hardware and software reliability. The findings of the results provide insights for companies using or planning to use WSCMS.     

Organizational modifications to support JIT implementation in manufacturing and service operations

This study investigates JIT implementation practices and performance in manufacturing and service organizations in the US. Literature related to JIT usage and performance in both sectors is reviewed. A field study is then conducted to investigate the actual implementation experiences of a selected group of service and manufacturing users of JIT. Our findings from the literature and the field study are used to develop four research hypotheses that are tested using survey data from 130 manufacturing and 61 service firms. Manufacturing and service firms that had engaged in modifications such as operator and management training and improving linkages with suppliers prior to implementing their JIT systems experienced less implementation problems and achieved higher levels of success than firms that placed less emphasis on these modifications. This paper details and discusses these and other results from our study. In addition, managerial implications of our findings are presented.     

Designing effective team-based performance measurement systems: an integrated approach

Measuring the performance of teams and, in particular, designing effective team-based performance measurement systems (TPMS) can be a difficult task. The purpose of this paper is to take the reader through the development and testing of a construct that provides an integrated approach to facilitate the design of TPMS. This construct was developed and tested based on a rigorous set of criteria adopted from constructive research theory as well as from existing performance measurement literature. The construct was tested in a series of workshops described in this paper. The data gathered during these workshops demonstrates the novelty and validity of the construct. The paper should be of interest to managers, team leaders and indeed anyone who is interested in monitoring and managing team performance. The paper will also be of interest to academics working in the fields of performance measurement and team management.     

Assessing the effectiveness of a performance evaluation system in the public health care sector: some novel evidence from the Tuscany region experience

Since 80’s the introduction of New Public Management principles has promoted the use of performance measurement to drive a more efficient, effective and accountable public sector. The adoption of a sophisticated and comprehensive multidimensional performance measurement system, which looks beyond traditional financial measures, based on organization strategies, such as the balanced scorecard, has thus been suggested. This revolution in the public management came together with the devolution processes that involved most European public health systems. Set within this context, in the last decade, each of the twenty Italian regions developed its own management tools. Among others, the Tuscan performance evaluation system (PES) has been valued as a particularly innovative and comprehensive system. This paper reports the novel experience of the Tuscan PES; in particular, it measures PES effectiveness and discusses the critical factors that could have led to the PES success. Five are the critical success factors identified by researchers: the visual reporting system, the linkage between PES and CEO’s reward system, the public disclosure of data, the high level of employees and managers involvement into the entire process and the strong political commitment. All those factors run together to achieve better results; however, the process of development of the system plays a pivotal role. Scholars suggest the use of a constructive approach in order to gain effective changes in human organization. According to this stream of literature, this paper contributes by the novel experience of the Tuscan PES in addressing as a further fruitful application of the constructivist approach in healthcare.     

内外控人格特质的研究及其在管理中的应用

内外控人格特质是个体对其行为及行为所产生的后果强化后的信念。内外控人格特质的不同不但影响个体对工作的态度,还影响着个体对组织的承诺感及满意度,从而影响到员工工作绩效和离职意图。通过对影响内外控人格特质的因素进行归纳,对目前常用的测量内外控人格特质的量表进行分类,并对内外控人格特质在管理中的应用进行分析的基础上,对国内外内外控人格特质的研究现状进行了较全面的概述,并在此基础上提出了5个方面的研究方向。     

Performance management of suppliers in outsourcing project: case analysis from the financial services industry

This study investigates the characteristics of an effective performance management framework for outsourcing projects in a UK-based financial services organisation and how this may contribute to the success of the outsourcing arrangement. The analysis draws on outsourcing and performance management theory, and uses both primary and secondary data. Valuable information was found on objective setting, performance measurement and performance improvement in the outsourcing project. An adapted version of the Balanced Scorecard, termed a Logic Scorecard, is suggested as a measurement tool; a service credit system and a continuous improvement schedule used to enhance supplier performance. The performance management framework, which is one of the pillars of the supply chain operations reference (SCOR) model, was developed, and provides practitioners with step-by-step guidance for the implementation of performance management in outsourcing projects. This combines both suggestions for performance management before and after the outsourcing decision, thus considering the entire outsourcing lifecycle. The proposed 10-step framework for outsourcing not only incorporates strategic propositions but also shows its implementation at an operational level.     

The importance of employee participation in determining pay system effectiveness

Managing pay systems is one of the most controversial and hotly debated areas of human resource management in which contingency theory approaches have dominated over the past few decades. The paper exposes the inadequacies of contingency approaches to pay system design and implementation and assesses the implications of more recent 'best practice' approaches, debating the role of pay within the HR bundle. It then reviews research evidence on the objectives and outcomes of different forms of variable pay, with close attention devoted to the role of employee participation in achieving pay system effectiveness. The significance of employee perceptions of distributive, procedural and interactional justice is explored as a means of explaining why employee participation in pay system management appears to be such a critical success factor. The paper concludes by arguing that we need to move away from a fixation with 'best practice' to a focus on 'best process' as a lens through which to investigate the design, implementation and management of pay systems.     

Success and Failure of MRP II Implementation

This paper assesses the reasons for the success or failure of manufacturing resource planning (MRPII) implementation projects. It begins by discussing the literature and research on success and failure of these systems and presents evidence from cases prepared by the authors. The paper is not concerned to prescribe ‘best practice’ for MRP implementation. The first section reviews the relevant literature and concludes that there is a divergence of opinion as to what constitutes success, raising questions on the usefulness of current methods of establishing whether implementation is successful. The latter section of the paper uses results from longitudinal (process) research carried out by the authors. This starts with a discussion of what counts for success. The discussion highlights the importance of understanding the full potential of MRPII in effecting change of organizational structures, cultures and practice. Several factors that contribute towards MRPII failure are next considered. Finally,‘big bang’style implementations, such as those recommended by the Ollie Wight organization, are most likely to be successful if the organization follows a strategic approach to planning. There also needs to be a high degree of fit between organizational structure, culture and the demands of the MRPII system.     

A performance measurement paradigm for integrating strategy formulation: A review of systems and frameworks

Measuring organizational performance plays a very important part in translating corporate strategy into results. Various emerging (non-traditional) performance systems have recently been devised to aid firms in selecting and implementing measures. This paper discusses the strategy/measurement initiatives and compares ten emerging performance measurement systems with respect to a list of performance dimensions, the characteristics of performance measures, and the requirements of development process. Although these systems have constraints borne with their own application domains, they stand by themselves empirically and/or theoretically, and provide guidance about what to measure and how to design performance measures that could be linked to the corporate strategy and objectives of an organization. This paper concludes that there is a need to develop a paradigm for integrating strategy formulation and performance measurement in organizations.     

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.     

Implementation of S-DBR in four manufacturing SMEs: a research case study

Production planning and control systems (PPCs) are tools that have a major effect on the performance of manufacturing companies. An inappropriate determination of the applicability of PPCs could seriously jeopardise the ability to achieve competitive priorities. This mistake can be expensive for any company, but proper implementation is particularly critical for small and medium enterprises (SMEs), which are characterised by limited access to financial resources. Simplified Drum–Buffer–Rope (S-DBR) is a PPC control approach that is characterised by minimum detail in the planning stage and a primary emphasis on the control of execution. Therefore, this approach is a suitable choice for the highly variable context of SMEs. This study aims to explore the practical issues related to S-DBR implementation in four Ecuadorian SMEs through case study research. The case analysis within this study first identifies the choices made in the implementation process design within the four companies according to process and product characteristics. We then conduct a cross-case analysis to explore the effects of the S-DBR implementation process designs on a group of performance measures. Our research findings provide new insights into the S-DBR implementation process in the context of SMEs, and the effects of this approach on performance measures.     

The Interplay Between Employee and Firm Customer Orientation: Substitution Effect and the Contingency Role of Performance‐Related Rewards

This paper identifies and explains a potential tension between a firm's emphasis on customer orientation (CO) and the extent to which employees value CO as a success factor for individual performance. Based on self‐determination theory and CO implementation research, the authors propose that firm CO may represent both autonomous and controlled motivations for CO, but that employees’ CO is more strongly linked to individual performance when employees experience solely autonomous motivation. Hence, the authors expect a substitution effect whereby the link between employees’ CO and their performance is weaker when firm CO is high. Furthermore, the authors examine a boundary condition for the previous hypothesis and propose that performance‐contingent rewards have a positive effect on the internalization of the extrinsic motivation stemming from firm CO. Two multilevel studies with 979 employees and 201 top management team members from 132 firms support these hypotheses. Against previous research, these findings offer a new perspective on the effectiveness of CO initiatives, propose employees’ motivational states as the theoretical explanation for the heterogeneity in the link between employee CO and performance, and reappraise the role of performance‐contingent rewards in CO research. Managerial implications for the effective implementation of customer‐oriented initiatives within firms are provided.     

A multiple goal methodology for evaluating management information systems

The behavior and performance of an organization are intimately tied to the mode and effectiveness of its information processing function. While there is a rapidly expanding level of research concerned with the design, development, and implementation of management information systems (MIS), relatively few approaches to the evaluation and improvement of these systems have been suggested. The current paper develops a multiple goal methodology aimed at filling this gap by evaluating and, if necessary, subsequently modifying any given set of MIS design variables considered capable of enhancing a series of operational and, perhaps, conflicting goals. The methodology is based on a series of significant findings from the MIS design literature. In particular, the procedure incorporates the tripartite of decision type/decision-maker/MIS design into the evaluation process. The methodology is user-based, being flexible with respect to the definition of performance objectives, evaluation measures, design variables, and correction strategies. A brief example applies the methodology to the evaluation of an MIS within a health services organization.