Abstract
The Literature on performance measurement systems is abundant, although scholars have not achieved a consensus on which performance measurement framework better fits the different contexts in which the firms operate. This Chapter first addresses the role of the performance measurement in the performance management system and analyses the characteristics of the performance measurement process in order to highlight the fundamental steps to implement an effective and efficient measurement system. Then, the main performance measurement systems available in literature will be discussed in order to present their strengths as well as their limitations. Finally, the comparative analysis of the performance measurement frameworks will result in the development of some performance measurement archetypes. These archetypes have been purposefully identified in order to put forward some insights in order to support the decision-making process related to the framework choice and foster the effectiveness of the design phase of the performance measurement process.
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- 1.
After having identified the measures, Neely and colleagues claim that the measure should undergo a set of tests, namely (Neely et al. 2002: 39–40):
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The truth test, which is related to the measurement of the intended dimension;
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The focus test, which relates to the measurement of the only dimension(s) which was (were) intended;
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The relevance test, which assures that the measurement system is definitely measuring the right thing;
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The consistency test, which induces insight into the scientific tracking of the measure in a way that is consistent no matter who carries it out;
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The access test, which results in the extent to which the measure is easy to access and to understand;
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The clarity test, which seeks possible ambiguity in interpreting the measure;
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The so-what test, which refers to the effective use of the measurement, once it has been collected;
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The timeliness test, which assesses whether the data can be analysed in order to take suitable actions on time;
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The cost test, which addresses a cost/benefit analysis for tracking a specific dimension of performance;
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The gaming test, which refers to the assessment of whether the measure actually addresses the desired behaviour.
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Customize is at the extreme opposite end of ‘plug-and-play’ performance measurement models, which are implemented by replicating the infrastructure and the metrics developed in the framework proposed by its founder(s).
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Poor understanding of desired results, over-quantification, and gamesmanship are all types of dysfunctional behaviours of control. An incorrect understanding of the most important results for the company can prevent goal achievement. Over-quantification, instead, refers to the practice of concentrating highly on quantifiable areas of control, which can hinder real strategic issues for organizational survival. Gamesmanship occurs when controllees either retain budgetary slacks in order to easily achieve targeted results or manipulate data (falsifying or managing data) in order to meet targets. Operation delays also occur when bureaucratic approval to proceed takes longer than required. Negative attitudes, such as job tension, conflict, frustration, and thus the implementation or the use of a performance management system can cause harmful behaviour, such as gameplaying, absenteeism and turnover (Merchant and Van der Stede 2007).
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Demartini, C. (2014). The Performance Measurement Mechanism. In: Performance Management Systems. Contributions to Management Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-36684-0_9
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