Performance measurement systems essay

Management The current issue and full text archive of this journal is available at www.

Performance measurement systems essay

Performance measurement systems essay

How to Write a Summary of an Article? Performance Measurement The current issue and full text archive of this journal is available at http: 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. Management interest can be gauged from the high levels of attendance at the large number of industrial conferences on the subject.

Academic interest is manifest through the considerable number of papers on the topic Neely, But this interest is not new.

Performance Measurement | Essay Example

In the late s and s, authors expressed a general dissatisfaction with traditional backward looking accounting based performance measurement systems, identifying their shortcomings and arguing for change. These new frameworks placed emphasis on nonfinancial, external and future looking performance measures.

Performance measurement systems essay

Acknowledgement must be made to the others who participated in this phase of the testing. MCB University Press, designed to give practising managers the tools to develop or redesign their performance measurement system.

Performance Measurement Essay Sample

The result has been the publication Performance measurement systems essay alternative balanced performance measurement frameworks and suggested management processes for the design of performance measurement systems. As can be seen from the above, most of the more recent academic literature and practitioner activity has focused on the early stages of the development of the performance measurement system, the Performance measurement systems essay frameworks and processes for designing the performance measures.

There are few longitudinal studies of the implementation and continuous updating of performance measurement systems, the subject of this paper. The paper begins with a brief review of the academic literature, covering the main criticisms levelled at traditional performance measures, the balanced performance measurement frameworks and published performance measurement design processes.

The paper then goes on to develop a theoretical framework which categorises and describes the steps an organisation goes through when using a management process to develop a performance measurement system.

This framework extends from the design processes into the implementation, use and updating of performance measures. The paper then uses this framework to chart the design, development and implementation of performance measurement systems in three UK manufacturing companies over a two year period.

It compares their experiences and looks specifically at the difficulties the management teams encountered whilst attempting to implement metrics and measure performance. The issues of continuously updating the performance measures and the measurement systems are then illustrated and the paper concludes by discussing the usefulness of the framework developed and the implications for performance measurement system development.

Background literature Traditional performance measures, developed from costing and accounting systems, have been criticised for encouraging short termism Banks and Wheelwright, ; Hayes and Garvin,lacking strategic focus Skinner,encouraging local optimisation Hall, ; Fry and Coxencouraging minimisation of variance rather than continuous improvement Johnson and Kaplan, ; Lynch and Cross,not being externally focused Kaplan and Norton, and even for destroying the competitiveness of US manufacturing industry Hayes and Abernathy, At the time, many performance measurement systems in the UK and USA were heavily financially biased and it has been argued that systems which were specifically designed for external reporting were being inappropriately used to manage business enterprises Hayes and Abernathy, In an attempt to overcome these criticisms, performance measurement frameworks have been developed to encourage a more balanced view.

For example, Keegan et al. These frameworks are therefore multi-dimensional, focusing more on non-financial information in an attempt to redress the balance. They are designed to provide a balance by including measures of external success as well as internal performance, and measures which are designed to give an early indication of future business performance as well as a record of what has been achieved in the past.

To do this a management process was needed and there are a number of different approaches in the literature. Bitton proposes an approach based on the GRAI methodology for enterprise modelling, breaking down the planning and control of manufacturing into discrete decision making units and then attaching appropriate performance measures to each decision; Dixon et al.

A similar approach is now adopted for the development of the balanced scorecard Kaplan and Norton, This is described more fully later in this paper.

However, at the end of each of these management processes, participating managers have reached the stage of deciding what to measure but nothing has been implemented.

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The next section therefore develops a framework to assist with the understanding of the stages of implementation and embedding. Phases in performance measurement system implementation It is proposed here that the development of performance measurement systems can be divided into three main phases see Figure 1.

These are now described in turn. From the literature, the design phase can be subdivided again into identifying the key objectives to be measured and designing the measures themselves.

There is now a strong consensus amongst authors that measures should be derived from strategy e. Mintzberg, ; Globerson, ; Sink, ; Fortuin, ; Keegan et al.

Performance measurement systems Figure 1. Phases in developing a performance measurement system IJOPM 20,7 Therefore, the two requirements of the design phase are identifying the key bjectives to be measured and designing the measures.Design/methodology/approach – An evaluation of the key issues surrounding performance measurement and the effective application of benchmarking systems are examined, exploring the possibility of applying a benchmarking technique to measure facilities performance.

Phases in performance measurement system implementation It is proposed here that the development of performance measurement systems can be divided into three main phases (see Figure 1). These are: (1) the design of the performance measures; (2) the implementation of the performance measures; (3) the use of the performance .

The two performance measurement systems are purportedly unique and yet both tend to have a comprehensive view on what constitutes good performance. Perhaps, a look at each of the performance measurement will help in filling in the question of the similarities and differences of between the two.

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Essay on Performance Measurement Systems - Performance measurement systems (PMS) have been around for some time and even though it is typically used by businesses, measuring performance is something people do on a regular basis.

Measuring performance involves setting goals and developing a plan to achieve the . Performance Measurement Systems Performance measurement systems are an integral part of the management control systems.

Management control is a process through which management ensures that resources are obtained and used effectively and efficiently in accomplishing the organization's goals.

Performance Measurement Systems in Business Essay - Business firms may seem to be similar, relying on guide of organizational models.

However, in practice, all business is unique, functioning as a distinct arrangement of organizational models, designs and practices.

Performance Measurement Systems - Sample Essays