Performance Measurement

What is Performance Measurement?

 Assessment of progress & results (Cruz et al., 2011;

Payer & Hiebl, 2013)

 Operationalize strategy to get result (Franco et al., 2012;

Hall, 2010)
 PM is a technical process as well as a social process (Bititci et al.,
2012)
 So, PM is…
• Assessment of progress
• Assessment of results
• A tool to quantify efficiency & effectiveness
• Measuring of tasks accomplished against pre-
determined standards
• Keeping track of objectives
• A system which monitors translation of
strategy into action
 Why Measure Performance?
• Know where you are & where you are going
• Motivation
• Learning & Improvement (identify problems &
strengths)
• Accountability (to whom?)
• Legitimacy (reputation building, attracting talent)
• Planning (for what?)
• Isomorphism (Mimic, Coercive, Normative)
• Become SUCCESSFUL & SUSTAINABLE
 History Of PM
• Evolved from simple to complex, static to
dynamic, discrete to continuous
• Double-Entry Book-Keeping System (13th
century)
• Scottish Textile Factory Records (18th century)
• Formal process of measuring, recording,
reporting (20th century)
 Evolution of PM
Dominant Perspectives in PM
Accounting Figures
…………………
…………………………… …………………………..

Financial Ratios
…. …………….
Quality
………
Integrated

1900 1920 1940 1960 1980 2000

20th Century
 Efficiency Era (1900-20)
• Frederick Taylor: Industrial efficiency can be
quantified and hence improved. Time & motion
studies. Observe and document the processes…
time taken, movements etc…(i.e. input
resources) … input leads to output (production)..
So there is a causal relationship which can be
optimized; this is called system analysis
• PM Focus: Increase Productivity, External
factors are taken as a constant (i.e. ignored)
 Result Era (1920-50)
• DuPont: Profit Margin (NI/Sales) * Asset Turnover
(Sales/Assets) * Equity Multiplier (Assets/Equity) = NI/Equity
• Profit Maximization is the ultimate aim
• Profitability, asset use efficiency, financial
leverage
• Target based (production, sale, profit)
• PM Focus: Accounting information & ratio
analysis. External factors impacts PM but are
un-controllable
 Quality Era (1960-90)
• Deming & Ducker: PM is an active process
• Planning is the key
• Quality is an outcome NOT a method
• Motivate & train your employees
Deviations are caused by internal flaws
 Humans (Customers & Employees) are the
key
PM Focus: Variance Analysis, KPI
 Integration Era (1990----)
• Kaplan & Neely: BSC, Prism
BSC: Financial, Customer, Internal process,
Learning

Prism: Other stakeholders

PM focus: Multi-disciplinary
Performance Prism
Qualitative Measurement - Effectiveness

IMPACT
LEVEL
Changes in Society
OUTCOME
LEVEL
Changes in Individual Life

Changes in Behaviour

Changes in Perceptions & Econ Status OUTPUT

LEVEL
Changes in Knowledge & Skills
 PM in the Future
• Predictive
• Inclusive
• Flexible
• Collaborative
• Risk incorporator
• Strategy builder
• Big Data
• ……
 Articles Link
• https://www.researchgate.net/publication/329735963_International_Jour
nal_of_Economics_Commerce_and_Management_PERFORMANCE_MEAS
UREMENT_HOW_FAR_IT_HAS_TRAVELED_AND_WHERE_IS_IT_HEADED

• https://www.researchgate.net/publication/325180038_Performance_mea
surement_The_next_station