A Dynamic Performance Measurement

System for Global Organizations

Ree Paranjape, Dept. of

Engineering, A.N.U.
 Scope
„ 49,800,000 web sites on Google
search
„ Inherently interdisciplinary
„ Contributions from academics
from Harvard, Cambridge, MIT
Sloan
„ Still maturing, still evolving
Ree Paranjape, Dept. of Engineering, A.N.U.
Definitions
„ Performance measurement-
process of quantification of
efficiency & effectiveness of
action.
„ Performance measure- metric
used to quantify the efficiency
and/or effectiveness of action.
„ Performance measurement
system- a set of metrics used to
quantify both the efficiency and
effectiveness of actions.
- Neely et al. (1995)
PMS - A set of metrics used to quantify both the
efficiency and effectiveness of actions (Neely et al., 1995)

Performance measurement framework

PMS

Individual
measures
Individual Individual The environment
measures measures
Individual
measures

Ree Paranjape, Dept. of Engineering,

A.N.U.
 Goals
– Development of a comprehensive set of traits/attributes for generic performance measures
– Design of a dynamic (adaptive) Performance Measurement System (DPMS)
Research / Establishing Concepts
A study of reporting and feedback
structures as per literature
A study of existing PMS – BSC,
Performance prism
Research on process-based performance
measurement
Key processes, their determinants/
important dimensions
Inclusion of PM, review & revisal as
routine business activities
Designing measures that are dynamic,
adaptable – avoiding over quantification,
automation, ROI considerations
E-teams, v-teams, - measures
that work for individuals AND
teams
6. Case Study – implementation
Research / Empirical Studies
1. Global A study of key business processes within
business CANON’s division(s), analysis of current
processes reporting and feedback mechanism within
CANON
Analysis of existing PMS in CANON (global,
2. Analysis of national & local???) - results for input to
Existing PMS Stage 4
Process-based approach for design
of a dynamic PMS?
3. Process Identification Addressing the question of “How to
(individual; team; measure?”
organisational) Mapping CANON’s measures
against established framework of
4. Establishing Traits for traits – i.e. testing the performance
Performance Measures of the Canon PMS.
PMS redesign for CANON – a fore-
runner to Phase 5
Design of a dynamic PMS (with
5. Design of a dynamic
efficient feedback loops) – How to
PMS (for global orgs) implement, How to review & revise
PMS
This phase will begin the process of
testing the designed dynamic PMS.
Given the long time-scales for
Ree Paranjape, Dept. of results from new PMS – outcomes
Engineering, A.N.U. will not be included in this thesis
 The Balanced Scorecard (Kaplan &
Norton, 1992)

“David and I are experts

in what to measure – not
in how to measure.”

•Most popular and influential network for the last decade

•High emphasis on strategy
•Operational difficulties
•Negligible successful implementations
•Many criticisms
Ree Paranjape, Dept. of Engineering,
A.N.U.
Ree Paranjape, Dept. of Engineering,
A.N.U.
 The Performance Prism (Neely et al.,2002)

•Strategy, in today's dynamic

environments is a response to
stakeholders wants and needs.
•Emphasis on stakeholders
•Introduces checks at all points
•Can handle mergers and Criticisms:
acquisitions
•Too wide a framework
•Very few known implementations

Ree Paranjape, Dept. of

Engineering, A.N.U.
 TYPES OF MEASURES/ASPECTS/DIMENSIONS OF PERFORMANCE

FRAME-
FRAME-
Product/Process
WORK related Resource Learning &
Competitor Agility Employee Strategy/
Financial Customer /Infra-
/Infra- growth/
Time Quality aspect /Flexibility /People Vision
structure innovation

1. Keegan et Yes Yes Yes Yes Yes

al, 1989

2. Fitzgerald Yes Yes Yes Yes Yes Yes

et al, 1991

3. Azzone et Yes Yes Yes Yes Yes Yes

al, 1991

4. Lynch & Yes Yes Yes Yes Yes

Cross, 1991

5. Kaplan & Yes Yes Yes Yes Yes Yes Yes Yes
Norton, 1996

6. Brown, Yes Yes Yes Yes Yes

1996

7. Neely et yes Yes Yes Yes Yes Yes Authors Yes Yes Yes
al, 2002 agree

Ree Paranjape, Dept. of Engineering,

A.N.U.
Characteristics of a PMS
† Should provide a balanced picture of the business
† Should give a concise overview of the organizational
performance
† Should be multi-dimensional
† Comprehensive
† Should provide vertical and horizontal integration
† Integration with business processes
† Should measure results and their drivers
† Should be dynamic
† Should enhance learning and growth
† Should be consistent with management techniques and
improvement initiatives
† Should be cost effective-consideration of over quantification and
automation issues
† Should be pro-active
† Should be easy to implement

Ree Paranjape, Dept. of Engineering,

A.N.U.
 Some interesting observations
Frameworks – a means of categorising measures
None of the existing PMSs satisfy characteristics
outlined
No dynamic PMS
Emphasis on financial measures is still very much in
practice
Designing, implementing and refreshing measures are
still problematic areas
Evolutions in existing PMSs is still going on
BSC still the most popular framework – as per a 2005
review
ROI on PMS – one of the great unanswered questions
in performance measurement

Ree Paranjape, Dept. of Engineering,

A.N.U.
Goals behind proposed
Framework
† Strategy or stakeholders? Both.
† Simple
† Dynamic
† Should enable design / selection of
specific and relevant measures
† Global organization focus

Ree Paranjape, Dept. of Engineering,

A.N.U.
Dimensions for measuring performance
1.Processes
Sub processes
Activities

2.People 3.The Edge Factor

1.Cross functional teams
1.Competencies-people
2.Individuals within teams
2.ICT & other technologies
3.Infrastructure & other
facilities

Ree Paranjape, Dept. of Engineering, A.N.U.

 Why these three dimensions?
Efficient business processes+ competent
people +highly sophisticated technologies
/other infrastructure = unique edge over
competitors.
Global organizations - business processes are
executed by cross-functional teams (often
virtual or semi-virtual), by utilizing highly
efficient technologies /infrastructure.

Ree Paranjape, Dept. of Engineering,

A.N.U.
 Why start with processes?
•“A business process is the complete and dynamically coordinated set
of collaborative and transactional activities that deliver value to the
customers (Smith & Fingar, 2003;p.47).”
•Processes are characteristically dynamic, responding to customers
demands as well as changing market conditions.
•Strategic goals and stakeholder satisfaction is achieved through
business processes.
•A process has an identified, goal (as per strategy) stakeholders, cross
functional teams and established hierarchy.
•Is already integrated with other business processes.
•In order to provide true dynamism and full integration with other
business systems, PMS should be an integral part of the ERP platform
(Bititci, 2000).
•Process based PMS leads to better integration with ERP platform
(Berretta, 2002).

Ree Paranjape, Dept. of Engineering,

A.N.U.
 start
Designing specific and relevant measures

Product
book-
book-ins

Within No Customer agrees

To product
Warranty? to quote? No pile-
pile-up

Yes Yes

Repair

Dispatch

End

Ree Paranjape, Dept. of Engineering,

A.N.U.
 Key elements of a PMS
A set of procedures for collecting and processing
data
Timetables and protocols for distributing
information about performance to users within
and outside the organization
An organisational learning mechanism to identify
what actions can be taken further to improve
performance
A review process to update the PMS regularly

Reward system
Ree Paranjape, Dept. of Engineering,
A.N.U.
 Insights –
Components/considerations for a dynamic PMS practice
reviews
Process
Schedule/ Mechanism to approach
Collection/ protocols Be dynamic
Analysis of
Learning
data
process
Integration Performance
with business Review
measures process
processes

Vertical and Focus on

Horizontal virtual teams
integration & global org.
Automation
Reward system?

Ree Paranjape, Dept. of

Engineering, A.N.U.
 Next Step

Designing the measures at a microcosmic

level within Canon to test the framework in
practice.

Ree Paranjape, Dept. of Engineering,

A.N.U.