The practice of strategic performance measurement systems

Abstract

Purpose – For over 20 years, management control literature has indicated the importance of supporting the strategy development and implementation process with strategic performance measurement systems (SPMS) and integrating traditional financial indicators with a set of multidimensional forward-looking measures focusing on the long term and linked to cause-effect relationships. Nevertheless, knowledge on the specific SPMS models used in practice and their effectiveness in supporting the managerial decision-making process is still fragmented and ambiguous. The purpose of this paper is to first analyse the SPMS models used in practice, also considering the role of strategy and firm size as drivers of adoption, thereafter analysing the capability of SPMS models to provide managers with measures that are consistent with their strategic information needs. Design/methodology/approach – The research is based on a survey involving 88 Italian medium-large sized firms (or subsidiaries of multinational firms) operating on a global level. Findings – The cluster analysis identifies two very different SPMS models used in practice. The first is the Short-term Financial Model, and as its name indicates, is based on short-term, internally focused and unconnected financial indicators. The second is the Multidimensional Additive Model, which integrates financial and non-financial measures but without a fully developed fit with the strategy. The research primarily indicates unsatisfied information needs in both clusters, presenting a significant challenge to the further development of existing SPMS models and in defining new theoretical SPMS frameworks. Practical implications – The adoption of an incremental approach to SPMS, simply adding new operational and strategic non-financial measures without a real fit with the strategy does not increase the information effectiveness of the system. Originality/value – The paper analyses the characteristics and use of SPMS models in practice from an exploratory perspective, defining and applying a model to evaluate the information effectiveness of SPMS.

Business Performance Analytics: exploring the potential for Performance Management Systems

“…A number of studies investigate its potential in revealing and quantifying the relationships between value drivers and firm performance through the connection between ICT and PMS (Nudurupati and Bititci 2005;Nudurupati et al 2011). However, the diffusion of data-based PMS remains limited, with a low number of applications and low relevance within PMS (Bititci et al 2012;Ittner, Larcker, and Meyer 2003;Ittner and Larcker 2005;Silvi et al 2015). The growing importance of Big Data and BA has generated a renewed interest in this research area and several contributions claim their potential role for performance management purposes (CIMA 2014; Economist Intelligent Unit 2013;…”

Design and Implementation Factors for Performance Measurement in Non-profit Organizations: A Literature Review

“…Pinheiro de Lima et al (2008) and Waal (2007) describe a PMS as a set of processes that transforms mission, strategy, and organizational goals into key measurable performance indicators that govern organizational actions. Silvi et al (2015) suggest PMS is considered strategic when it embeds characteristics for long and short term planning, financial and non-financial indicators, future perspectives, internal and external viewpoints, and includes causes and effects of relations between measures and system aspects. Ospina et al (2002) recognize that most of the tools and models for performance management have been developed considering for-profit companies.…”

Applicability of Performance Prism in SMEs: a multiple case study

“…Taylor & Taylor (2014) evaluated the influence of the size of 349 English companies on the effectiveness of the PMS implementation, concluding that the practices that allow the execution of PMS in large companies are not necessarily the same in SMEs and vice versa. Conversely, Silvi et al (2015) tested 88 firms in Italy if size influenced the implementation and choice of the PMS model and the result rejected the hypothesis. Therefore, the research gap that demonstrates the influence of the size of companies in relation to the choice, implementation, use and revision of the PMS needs further investigation.…”

“…Few studies have been concerned in analyzing how the implementation of PMS occurs in SMEs (Taylor & Taylor, 2014;Silvi et al, 2015). Still, in the surveys, there are indications of ambiguity in the results that compare the effectiveness of PMS in small and large companies.…”