Reference no: EM131801238

The success and failure of performance measurement initiatives perceptions of participating managers

We are going to review research by Bourne, Neely, Platts and Mills on performance measurement in system design interventions within supply chains.

Many leading researchers and publications recognise the widely used ‘balanced score card’ approach to measuring performance, but not the implementation process. Much of the literature focuses on change management and general guidelines about how change should be implemented. Yet, there is very little research into performance measurement system implementation. The authors of this article chose to look at medium-sized companies in manufacturing that were either privately owned or subsidiaries of a larger group.

Prior to intervention, most companies used financial performance figures. However, after applying a scorecard process, eight out of the ten companies populated the scorecards four perspectives. One area that was overlooked was innovation and learning processes within the organisations. Three factors emerged where data differentiated the companies that were successful from those that were not. These three factors were: purpose, structure, and culture. The differences between success and failure in these categories were quite revealing. With regard to purpose, the senior management of failing companies understood the project in terms of company performance measurement. On the other hand, successful companies undertook the project in terms of managing the business better. All of the successful companies were privately owned and had a paternal leadership style, something which ‘flies in the face’ of current leadership theory and practice.

Additional interviews took place with managers and directors. Those that were successful listed the benefits of performance measurement as top followed by senior management support; continuation of the process; time; the role of a facilitator, and the juxtaposition of the performance measurement intervention with other projects. Clearly the systematic use of performance measurement enabled companies to measure quality and delivery times and gave them issues to focus on and improve as a ‘good’ thing. Once some of the difficulties like data access, developing appropriate units for measurement, and culture were dealt with, the benefits were clear. Overcoming internal inertia between individuals or units was identified as a minor, but significant, factor in some of the companies.

The unsuccessful companies all failed to implement performance measurement. The prime barriers to implementation were based on time and effort. In addition, personal factors; the perceived lack of benefits of the process; difficulty with data access; top management commitment; parent company relationship issues and just simply applying the process were cited. Implementation was hindered by a lack of strategy, poor vision, or not actionable where measures were poorly defined.

1. What factors distinguished the successful companies from those that were not?

2. List the findings and then compare to the known factors that promote efficiency in supply chains.