3 results
Part II - Performance measurement – frameworks and methodologies
-
- By Andy Neely, Professor Operations Strategy and Performance at Cranfield School of Management, UK, Mike Kennerley, Research Fellow Cranfield School of Management, UK., Chris Adams, Visiting Fellows Cranfield School of Management, UK.
- Edited by Andy Neely, Cranfield University, UK
-
- Book:
- Business Performance Measurement
- Published online:
- 22 September 2009
- Print publication:
- 13 December 2007, pp 141-142
-
- Chapter
- Export citation
-
Summary
The second part of the book explores some of the frameworks and methodologies associated with performance measurement. While there is considerable interest in the balanced scorecard, there are, of course, numerous other measurement frameworks and methodologies, each with their own strengths and weaknesses.
The first contribution in this part, from Andy Neely, Mike Kennerley and Chris Adams, reviews some of these other measurement frameworks and then proposes an alternative framework: the performance prism. Neely, Kennerley and Adams argue that the strength of the performance prism lies in the fact that it unifies existing measurement frameworks and builds upon their individual strengths. The balanced scorecard, for example, is strong in that it argues for a balanced set of measures, but weak in that it omits some extremely important stakeholder perspectives – i.e. those of employees and suppliers. Similarly, activity-based costing is strong in that it explicitly recognizes the importance of activities and processes, but weak in that it does not link these processes back to strategies or stakeholders. The performance prism addresses these, and other issues, by providing an integrated framework with which to view organizational performance.
The second contribution explores the concepts of “beyond budgeting” and the adaptive organization. In recent years there has been significant interest in beyond budgeting, a notion promulgated by Jeremy Hope and Robin Fraser.
7 - Performance measurement frameworks: a review
-
- By Andy Neely, Professor Operations Strategy and Performance at Cranfield School of Management, UK, Mike Kennerley, Research Fellow Cranfield School of Management, UK., Chris Adams, Visiting Fellows Cranfield School of Management, UK.
- Edited by Andy Neely, Cranfield University, UK
-
- Book:
- Business Performance Measurement
- Published online:
- 22 September 2009
- Print publication:
- 13 December 2007, pp 143-162
-
- Chapter
- Export citation
-
Summary
Introduction
The shortcomings and dysfunctional consequences of performance measurement systems have been discussed in the academic literature for at least fifty years (Ridgway, 1956), but recently there has been a flurry of activity. Throughout the 1980s vocal and influential authors criticized the measurement systems used by many firms (Johnson and Kaplan, 1987; Hayes and Abernathy, 1980). By the 1990s the noise made by these voices had grown to a crescendo (Eccles, 1991; Neely, Gregory and Platts, 1995), and increasing numbers of firms appeared to be “re-engineering” their measurement systems, with data suggesting that, between 1995 and 2000, 30 to 60 per cent of companies transformed their performance measurement systems (Frigo and Krumwiede, 1999). By 2001 the balanced scorecard had been adopted by 44 per cent of organizations worldwide (57 per cent in the United Kingdom, 46 per cent in the United States and 26 per cent in Germany and Austria). More recent data suggest that 85 per cent of organizations should have had performance measurement system initiatives under way by the end of 2004 (Rigby, 2001; Silk, 1998; Williams, 2001; Speckbacher, Bischof and Pfeiffer, 2003; Marr et al., 2004). However, cautionary evidence was reported by three Austrian academics to the effect that 8 per cent of 174 companies from German-speaking countries decided not to implement a performance measurement system (and a balanced scorecard in particular) because they could see no advantages or “positive impact” for themselves, especially given the implementation effort required (Speckbacher, Bischof and Pfeiffer, 2003).
9 - Performance measurement frameworks: A review
- from Part III - Performance measurement – frameworks and methodologies
- Edited by Andy Neely, Cranfield University, UK
-
- Book:
- Business Performance Measurement
- Published online:
- 06 July 2010
- Print publication:
- 07 March 2002, pp 145-155
-
- Chapter
- Export citation
-
Summary
Introduction
It has been widely reported that there has been a revolution in performance measurement in the last 20 years. The enormous interest in measurement has manifested itself in practitioner conferences and publications as well as in academic research (Neely, 1998).
Research indicates that organizations using balanced performance measurement systems as the basis for management perform better than those that do not (Lingle and Schiemann, 1996). For this benefit to be realized, it is necessary for organizations to implement an effective performance measurement system that “enables informed decisions to be made and actions to be taken because it quantifies the efficiency and effectiveness of past actions through acquisition, collation, sorting, analysis, interpretation, and dissemination of appropriate data” (Neely, 1998, pp. 5–6). This definition is important as it indicates that a performance measurement system has a number of constituent parts:
individual measures that quantify the efficiency and effectiveness of actions;
a set of measures that combine to assess the performance of an organization as a whole;
a supporting infrastructure that enables data to be acquired, collated, sorted, analyzed, interpreted, and disseminated.
For the full benefit of measurement to be exploited it is important for organizations to maximize the appropriateness and effectiveness of measurement activity at each of these levels. This contribution is concerned with the second of these points, that is how an organization identifies a set of measures that reflects the performance it is trying to achieve. Numerous processes have been proposed that organizations should follow in order to design and implement performance measurement systems (Bourne et al., 2000; Neely et al., 1996).