The impact of performance measurement on performance

Citation

Bourne, M., Melnyk, S. and Faull, N. (2007), "The impact of performance measurement on performance", International Journal of Operations & Production Management, Vol. 27 No. 8. https://doi.org/10.1108/ijopm.2007.02427haa.001

The impact of performance measurement on performance

About the Guest EditorsMike Bourne is a Professor of Business Performance at the Centre for Business Performance at Cranfield School of Management, Cranfield University in the UK.

Steven Melnyk is a Professor of Operations Management at the Department of Marketing and Supply Chain Management, Eli Broad Graduate School of Management, Michigan State University in the USA.

Norman Faull is a Professor of Business Administration at the Graduate School of Business, University of Cape Town, South Africa.

The impact of performance measurement on performance

Over the last 20 years, there has been a revolution in performance measurement. Traditional accounting based measures have been replaced by key performance indicators (KPIs). A multitude of frameworks have been proposed and developed including the balanced scorecard, the results determinants matrix and the performance prism. Despite this frenzy of activity, there have been fewer studies on the impact of performance measurement on performance itself, which led to us creating the call for this special issue.

Why is this? Possibly it reflects the maturity of the current research in the subject. The initial dissatisfaction and criticism of solely using financial performance measures that was so prevalent in the 1980s was overcome by the multi-dimensional performance measurement systems developed and proposed in the late 1980s and early 1990s. Much of this work was devoted to developing new concepts and demonstrating how they could be used in practice. As a result, until recently there has been much less focus on the impact these new approaches were having on business performance.

The subject is now maturing and when the field was surveyed recently, 99 papers were identified that investigated in some way the impact of performance measurement on performance (Franco and Bourne, 2004). However, this work appeared to replicate the two key findings of Kondrasuk's (1981) study of management by objectives (MBO). Firstly, as with MBO, the studies of the impact of performance measurement on performance do not clearly define the approaches they are studying. Secondly, if one considers that the research method become more rigorous as one moves from field research, through survey research, combined methods (field and survey), archival, quasi-experiment to controlled experiment, then both papers found that the more rigorous the method, the less effective the system being studied. These results give cause for concern especially if our operational definition of performance measurement is not clear, as we cannot easily compare the results of different research studies.

No single study will show the positive or negative impact of performance measurement on performance. Our understanding will only develop over a number of studies that investigate the same issue using different techniques, in different contexts and using different approaches to performance measurement. So, this special issue contributes to this debate with a set of studies investigating the impact of performance measurement in contexts as diverse as small and medium sized enterprises (SMEs), supply chains and the voluntary sector. However, we start with a paper that focuses specifically on our definition of performance measurement.

Therefore, the first paper by Monica Franco-Santos, Mike Kennerley, Micheli Pietro, Verónica Martinez, Steve Mason, Bernard Marr, Dina Gray and Andy Neely looks at the key characteristics of a business performance measurement (BPM) system. Through a literature review, the paper proposes a set of conditions of a BPM system from which researchers can choose those which are necessary and sufficient conditions for their studies. The paper clarifies definitions in this field giving a basis on which future researchers can ground their investigations.

The second paper by Patrizia Garengo and Umit Bititci looks at the contextual factors that have an impact on the implementation and use of performance measurement in SMEs. The paper reports the relative lack of use of performance measurement in SMEs. It identifies and emphasises the importance of a change in the business model, the support of sophisticated information systems and the need for an authoritative management style for the successful adoption of formal performance measurement systems in this setting.

The third paper by Claire Moxham and Ruth Boaden looks at the use of performance measurement in the voluntary sector where it is still in its infancy. From the four organisations investigated, the study found that the imposition of external measures was causing deterioration in service delivery, and confusion and frustration amongst staff. This results from a mismatch between the requirements of those giving the funding and the reporting mechanisms being used in the voluntary organisations.

In contrast, the paper by Richard Greatbanks and David Tapp looks at the impact of the balanced scorecard in a public sector environment. This longitudinal case study shows how producing a clear and individually tailored set of key performance measures provides the motivation to deliver the targeted level of performance. When this approach is combined with regular reporting and the backing of a supportive incentive system, the study found staff support for the approach and evidence of improved performance.

The fifth paper by Chris Morgan and Adam Dewhurst looks at performance measurement in the context of food retail supply chains. The findings from this study suggest that a better solution to improving performance would be to adopt a composite approach. This involves firstly the use of statistical techniques to establish and monitor standards and, secondly, control charts for monitoring actual performance and as the basis for joint buyer/supplier problem solving.

The final paper by Helena Forslund looks at the impact of performance management on customers' expected logistics performance. The approach taken was to conduct two surveys applied to 136 dyads of Swedish manufacturing companies. The paper concludes with a conceptual model that links target setting and measurement with collaborative discussion of the issues, practices and customer expectations.

We would like to thank the following for their help in compiling this special issue – David Barnes, Clive Emmanuel, Ingo Forstenlechner, Monica Franco, Gerry Frizelle, Jacky Holloway, Melanie Hudson Smith, Yasar Jarrar, Hale Kaynak, Mike Kennerley, Archie Lokamy III, Jill MacBryde, Veronica Martinez, Steve Mason, Pietro Micheli, John Mills, Chris Morgan, Andy Neely, Ann Tzu-Ju Peng, Ken Platts, Gianni Schiuma, Esam Shehab, Robert Spekman and James Storbeck.

Mike Bourne, Steven Melnyk and Norman FaullGuest Editors

ReferencesFranco, M. and Bourne, M.C.S. (2004), “Are strategic performance measurement systems really effective?”, Proceedings of the 11th EurOMA annual conference, Fontainebleau, 27-29 June 2004.Kondrasuk, J.N. (1981), “Studies in MBO effectiveness”, Academy of Management Review, Vol. 6 No. 3, pp. 419-30.

Note from the IJOPM regular editors

In honouring the approval given by the previous IJOPM editors at UMIST, this special issue is published now – some 3 years after the handover of editorial responsibility to us at Bradford. The considerable time lag between approval and eventual publication is evidence of the extent of the effort required in bringing an issue to publication. This applies particularly to special issues where the process begins with the development and approval of a call for papers and continues through the submission and review cycle until a set of papers meets the criteria agreed at the approval stage.

As we have said before, the task of editing a special issue is not one to be taken lightly. Serious consideration needs to be given to the management of all aspects of this at the outset, including – most especially – the need to establish administrative and review procedures that will ensure that the quality of the journal is not compromised by the inclusion of papers of a lower standard than is required for regular issues.

We continue to welcome proposals for special issues, but advise that the current IJOPM standards of rigour in writing and reviewing, must be upheld. In this way, we will all benefit – authors, reviewers, guest and regular editors will be responsible for, and associated with, a high-quality issue of a high-quality journal.