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Article
Publication date: 9 January 2009

Ali Uyar

The purpose of this paper is to present the results of a survey study on quality performance measurement practices in the Turkish top 500 manufacturing companies. The study…

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Abstract

Purpose

The purpose of this paper is to present the results of a survey study on quality performance measurement practices in the Turkish top 500 manufacturing companies. The study evaluates both financial and non‐financial aspects of quality performance measures in Turkish manufacturing companies.

Design/methodology/approach

The methodology of the study was a postal questionnaire survey. The survey was conducted with the top 500 industrial enterprises in Turkey specified by the Istanbul Chamber of Industry (ICI) for the year 2005. These firms are selected and ranked by ICI according to production‐based sales.

Findings

Two major findings of the study are: Turkish manufacturing companies utilize non‐financial measures more frequently than financial measures; and Turkish managers perceive non‐financial measures to be more effective than financial measures.

Research limitations/implications

The sample is restricted to the top 500 industrial enterprises in Turkey. As the data in this study were collected from the manufacturing companies, the findings should not be generalized to other sectors.

Originality/value

The study is unique in reflecting the general practices and perceptions of manufacturing companies on quality performance measures across Turkey.

Details

The TQM Journal, vol. 21 no. 1
Type: Research Article
ISSN: 1754-2731

Keywords

Article
Publication date: 1 July 2005

Maurice Gosselin

The recent performance measurement literature suggests that organizations should put more emphasis on non‐financial measures in their performance measurement systems, that…

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Abstract

Purpose

The recent performance measurement literature suggests that organizations should put more emphasis on non‐financial measures in their performance measurement systems, that organizations must use new performance measurement approaches such as the balanced scorecard and that measures should be aligned with contextual factors such as strategy and organizational structure. The purpose of this paper is to assess the extent to which organizations are following these prescriptions.

Design/methodology/approach

A survey of a sample of Canadian manufacturing firms was conducted. In the questionnaire, organizations had to indicate the extent to which they use 73 performance measures. They also had to respond to questions about determinants such as strategy, organizational structure and environmental uncertainty. More than 100 organizations responded to the survey. The response rate was 50.5 percent.

Findings

The results show that manufacturing firms continue to use financial performance measures. Despite the recommendations from experts and academics, the proportion of firms that implement a balanced scorecard or integrated performance measurement systems is low. Furthermore, organizations that use these approaches are not employing more extensively non‐financial measures than those which are applying traditional performance measurement approaches. This research project also shows that there are some significant relationships between the types of measures and contextual factors like strategy, decentralization and environmental uncertainty. This research finally demonstrates clearly that there is a need to develop a theory that explains how firms can use their performance measurement system to enhance their performance.

Originality/value

This paper provides information on performance measures used by organizations and their association with organizational determinants.

Details

International Journal of Productivity and Performance Management, vol. 54 no. 5/6
Type: Research Article
ISSN: 1741-0401

Keywords

Book part
Publication date: 4 August 2008

Belverd E. Needles, Marian Powers and Mark L. Frigo

This study examines the links between financial performance and executive compensation for high-performance companies (HPC). HPC display sustained and superior cash flow returns…

Abstract

This study examines the links between financial performance and executive compensation for high-performance companies (HPC). HPC display sustained and superior cash flow returns, asset growth, and total shareholder returns. In previous empirical analysis, HPC companies displayed specific identifiable financial performance drivers and measures when compared to companies in the S&P 500 (Needles et al., 2004). Most recently, HPC sustained their high performance when compared to the S&P 500 over varied economic periods. Further, the research identified operating asset management characteristics of these companies, especially as they relate to the cash cycle (Needles et al., 2004). Continuing this stream of research, this study first identifies the financial and non-financial performance measures related to compensation of top management of HPC as reported in the companies’ public disclosures. Then, these findings for HPC are matched to a set of comparable non-HPC. Finally, we evaluate the stated performance measures for executive compensation in light of the performance drivers and measures identified by previous research to be distinguishing characteristics of HPC. We hypothesize that HPC will more closely align stated performance measures for executive compensation with performance characteristics that have been shown to be characteristics of HPC. We find that HPC are more focused and unambiguous in their use of both financial and non-financial performance measures in executive compensation.

Details

Performance Measurement and Management Control: Measuring and Rewarding Performance
Type: Book
ISBN: 978-1-84950-571-0

Book part
Publication date: 13 March 2023

Vincent K. Chong, Gary S. Monroe, Isabel Z. Wang and Feida (Frank) Zhang

This study examines the effect of employees' perceptions of political connections on performance measurement systems (PMS) design choice and firm performance. In addition, this…

Abstract

This study examines the effect of employees' perceptions of political connections on performance measurement systems (PMS) design choice and firm performance. In addition, this study explores the moderating effect of social networking, a very common and widely used factor by domestic and foreign multinational firms operating in China, and its joint effect with political connections or PMS design choice on firm performance. We collected survey responses from a sample of 110 managers from manufacturing firms in China. Our results reveal that highly politically connected managers use nonfinancial measures, leading to improved firm performance. Our results suggest that social networking interacts significantly with political connections, and nonfinancial and financial measures on firm performance. The theoretical and practical implications of our findings are discussed.

Book part
Publication date: 29 March 2016

Lasse Mertins and Lourdes Ferreira White

This study examines the impact of different Balanced Scorecard (BSC) formats (table, graph without summary measure, graph with a summary measure) on various decision outcomes…

Abstract

Purpose

This study examines the impact of different Balanced Scorecard (BSC) formats (table, graph without summary measure, graph with a summary measure) on various decision outcomes: performance ratings, perceived informativeness, and decision efficiency.

Methodology/approach

Using an original case developed by the researchers, a total of 135 individuals participated in the experiment and rated the performance of carwash managers in two different scenarios: one manager excelled financially but failed to meet targets for all other three BSC perspectives and the other manager had the opposite results.

Findings

The evaluators rated managerial performance significantly lower in the graph format compared to a table presentation of the BSC. Performance ratings were significantly higher for the scenario where the manager failed to meet only financial perspective targets but exceeded targets for all other nonfinancial BSC perspectives, contrary to the usual predictions based on the financial measure bias. The evaluators reported that informativeness of the BSC was highest in the table or graph without summary measure formats, and, surprisingly, adding a summary measure to the graph format significantly reduced perceived informativeness compared to the table format. Decision efficiency was better for the graph formats (with or without summary measure) than for the table format.

Originality/value

Ours is the first study to compare tables, graphs with and without a summary measure in the context of managerial performance evaluations and to examine their impact on ratings, informativeness, and efficiency. We developed an original case to test the boundaries of the financial measure bias.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78441-652-2

Keywords

Book part
Publication date: 3 July 2017

Michael L. Roberts, Bruce R. Neumann and Eric Cauvin

Prior research identified conflicts in implementing performance measurement systems that include both financial and non-financial measures. Attempts to incorporate non-financial

Abstract

Purpose

Prior research identified conflicts in implementing performance measurement systems that include both financial and non-financial measures. Attempts to incorporate non-financial measures, for example, balanced scorecards (BSCs), have shown short-term success, only to be replaced with systems that rely on financial measures. We develop a theoretical model to explore evaluators’ choice and use of the most important performance measurement criterion among financial and non-financial measures.

Methodology/approach

Our model links participants’ prior evaluation experiences with their attitudes about relative accounting qualities and with their choice of the most important performance measure. This choice subsequently affects their evaluation judgments of managers who perform differentially on financial versus non-financial measures.

Findings

Experimental testing of our structural equation model indicates that it meets the accepted goodness of fit criteria. We conclude that experience has an influence on choice of performance measures and on decision heuristics in making such evaluations. We suggest that an “experience gap” must be considered when deciding which performance metrics to emphasize in scorecards or similar performance reports. We analyzed four accounting qualities, importance, relevance, reliability, and comparability and found that importance, relevance, and reliability have strong effects on how managers prioritize and use accounting measures.

Originality/value

We conducted our study in a controlled, experimental setting, including participants with diverse experiences. We provide direct evidence of participants’ experience and attitudes about the relative accounting qualities of financial and non-financial measures which we link to their choice of the most important performance measure. We link this choice to their performance evaluations.

Book part
Publication date: 10 December 2005

Gerald K. DeBusk, Larry N. Killough and Robert M. Brown

This paper examines potential cognitive difficulties inherent in the use of performance measurement systems. We examine the potential for emphasizing financial measures as…

Abstract

This paper examines potential cognitive difficulties inherent in the use of performance measurement systems. We examine the potential for emphasizing financial measures as compared to nonfinancial measures in the evaluation of an organization's overall performance. The results suggest that users of performance measurement data will emphasize historical financial measures. Two separate experiments provide additional evidence that users of performance measurement data suffer a halo bias, in that an organization's performance on financial measures appears to influence their perception of the organization's performance on nonfinancial measures.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-0-76231-243-6

Book part
Publication date: 9 May 2014

Debbie P. S. Chia, Chong M. Lau and Sharon L. C. Tan

The widespread adoption of the Balanced Scorecard has led to a need to understand how performance measures affect employees’ attitudes and behaviors. Despite the growing trend in…

Abstract

Purpose

The widespread adoption of the Balanced Scorecard has led to a need to understand how performance measures affect employees’ attitudes and behaviors. Despite the growing trend in the implementation of the Balanced Scorecard, there is little research evidence available on the behavioral outcomes resulting from the use of nonfinancial performance measures. This study seeks to address this gap by examining several behavioral outcomes, including job satisfaction, organizational commitment and managerial performance, resulting from the use of financial and nonfinancial performance measures.

Methodology

Data were collected using a mailed questionnaire survey to manufacturing organizations in Singapore. Path analysis technique was employed in this study to investigate the relationships.

Findings

The results of the study show that behavioral outcomes are indifferent regardless of the nature and type of performance measures used. However, the relationships between performance measures and behavioral outcomes are indirect through procedural fairness and trust in supervisor.

Research limitations

Survey questionnaire method was used in this study and there are limitations associated with survey questionnaire method. As our sample was selected from large organizations, it is unclear if our results are generalizable to small organizations. Also, as our sample was selected from the manufacturing sector, generalizing our results to the nonmanufacturing sectors should be made with caution.

Practical implications

This study highlights the need for organizations to pay attention to issues pertaining to procedural fairness and interpersonal trust in the design and implementation of performance measurement systems.

Details

Performance Measurement and Management Control: Behavioral Implications and Human Actions
Type: Book
ISBN: 978-1-78350-378-0

Keywords

Book part
Publication date: 8 April 2005

Petri Suomala

The essential investments in new product development (NPD) made by industrial companies entail effective management of NPD activities. In this context, performance measurement is…

Abstract

The essential investments in new product development (NPD) made by industrial companies entail effective management of NPD activities. In this context, performance measurement is one of the means that can be employed in the pursuit of effectiveness.

Details

Managing Product Innovation
Type: Book
ISBN: 978-1-84950-311-2

Book part
Publication date: 3 May 2012

Bruce R. Neumann, Eric Cauvin and Michael L. Roberts

In the growing debate about designing new management control systems (MCS) to include stakeholder values, there has been little discussion about information overload. Stakeholder…

Abstract

In the growing debate about designing new management control systems (MCS) to include stakeholder values, there has been little discussion about information overload. Stakeholder advocates call for including more environmental and related social disclosures but do not consider how information overload might impair the use and interpretation of corporate performance measures. As we know, shareholders and boards of directors are most concerned with market data such as earnings per share, dividend rates, and market value growth. In this chapter, we assert that management control system designers must consider information overload before expanding the MCS to include social and nonfinancial disclosures.

The paradox in expanding MCS is that demand for sustainability performance measures will likely result in overload for both information preparers and information users. Corporate Social Responsibility (CSR) and similar sustainability disclosures are likely to overload MCS and overwhelm the readers and users by performance reports that include multiple dimensions.

CSR affects the design of companies' annual reports because stakeholders are increasingly concerned with how organizations address their social responsibilities and how they disclose their societal responses. Management accountants are accustomed to providing performance measures within an organization and MCS usually have an internal focus. CFOs are often not accustomed to balancing the needs of stakeholders with those of managers and owners. We suggest that companies and CFOs will face an information overload dilemma in making these determinations, and that users will be overloaded in sifting through the multiple dimensions of information that are increasingly being provided. We suggest that the bias toward financial performance measures will distort both the provision of relevant information and the use of sustainability performance measures. We modified the Epstein and Roy sustainability model (2001) to illustrate some of these potential impacts.

We note that the balanced scorecard (BSC) was developed as one such tool to reflect and communicate multiple measures. We summarize a previous study showing how managers ignored multiple performance measures in a performance scorecard study. We then relate our results to some of the information overload literature to support our suggestion that stakeholders will face many of the same information overload issues and constraints when using and processing social disclosures.

Our summary of the information overload literature results in a call for more interdisciplinary information overload research involving real-world contexts and tasks. We note that most of the extant information overload literature is restricted to discipline-based silo-oriented studies and to simplistic evaluations, brand identification, or forecasting tasks. Our study went into some depth to describe the business, its strategies and objectives, and a comparison of actual results to specific goals. As management control systems evolve or are designed to report sustainability data, the issues surrounding increasing complexity and information overload will become exponentially problematic. We suggest that future research also include consideration of information overload conditions facing preparers and disclosers of sustainability measures.

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