The impact of multi-criteria performance measurement on business performance improvement

Abstract

<p><strong>Purpose: </strong>The purpose of this paper is to investigate the relationship between multi-criteria performance measurement (MCPM) practice and business performance improvement using the raw data collected from 33 selected manufacturing companies. In addition, it proposes modified MCPM model as an effective approach to improve business performance of manufacturing companies.</p> <p><strong>Design/methodology/approach:</strong>Research paper. Primary and secondary data were collected using questionnaire survey, interview and observation of records. The methodology is to evaluate business performances of sampled manufacturing companies and the extent of utilization of crucial non-financial (lagging) and non-financial (leading) performance measures. The positive correlation between financial business performance and practice of MCPM is clearly shown using Pearson’s correlation coefficient analysis.</p> <p><strong>Findings –</strong>This research paper indicates that companies which measure their performance using important financial and non-financial measures achieve better business performance. Even though certain companies are currently using non-financial measures, the researchers have learned that these financial measures were not integrated with each other, financial measures and strategic objectives.</p> <p><strong>Research limitations/implications: </strong>The limitation of this paper is that the number of surveyed companies is small to make generalization and they are found in a single country. Further researches which incorporate a large number of companies from various developing nations are suggested to minimize the limitation of this research.</p><p><strong>Practical Implication: </strong>The paper shows that multi-dimensional performance measures with the inclusion of key leading indicator are essential to predict the future environment. But cost-accounting based financial measures are inadequate to do so. These are shown practically using Pearson’s correlation coefficient analysis.</p> <p><strong>Originality/value: </strong>The significance of multi-dimensional performance measures for business improvement in developing countries has been an issue among researchers. The originality of the paper is evident in the proposal of MCPM model, considering the problems being faced by some manufacturing firms leading to low performance.</p><span class="GingerNoCheckEnd"> </span

Sustainability and Continuous Improvement of Organization: Review of Process-Oriented Performance Indicators

“…Studies mention at least five different elements that help to describe and analyse the organization's performance. They are: objectives [23,[46][47][48][49][50][51], metrics [23,47,48,52,53], data measures [23][24][25][26][46][47][48][49], indicators [23,[46][47][48]54,55] and key performance indicators (KPI) [23,39,[45][46][47]49,52,[55][56][57][58][59]. Each of these elements is important to monitor the organization's activities.…”

“…This indicates real time measures as an important factor. [48] Good performance measures are quantitative, objective and not subjective. They are simple, understandable, practical, and consistent with appropriate scales and clear, timely objectives.…”

“…In the literature, some studies mention two main types of indicators-lagging (outcome) and leading indicators [49,60]. At the same time, organizations can divide indicators into financial and non-financial [48]. However, the organization should understand the main difference between indicators and KPIs.…”

Logistics outsourcing and performance of manufacturing small and medium-sized enterprises in Nairobi

“…Financial measures such as return on assets (ROA) and profitability are objective as they make use of actual figures, whereas the non-financial measures, such as customer satisfaction, use perception and are generally subjective (Tseng & Liao 2015;Yang, Marlow & Lu 2009). Measuring firm performance is not an easy task as one should select the most appropriate measures for the industry, period (long-term and short-term) and firm size to achieve the desired results (Kasie & Belay 2013;Quang et al 2016). As such, because SMEs lack clear management structures, the specific performance metrics selected, should be growth based and should focus on financial liquidity and customer satisfaction (Marchand & Raymond 2008;Raymond et al 2013).…”

“…Firm performance refers to how well a firm achieves its overall goals, both financial and non-financial (Kasie & Belay 2013;Quang et al 2016). Financial measures such as return on assets (ROA) and profitability are objective as they make use of actual figures, whereas the non-financial measures, such as customer satisfaction, use perception and are generally subjective (Tseng & Liao 2015;Yang, Marlow & Lu 2009).…”