Cranfield School of Management

Managing and Measuring for Value

From a practitioner perspective, this is where measures have an impact on the performance of the organisation. Conferences, books and articles have for many years focused on performance measurement frameworks and how to design and implement a balanced performance measurement system. However, unless the frameworks are operationalised and measurement leads to action, there is no organisational benefit of performance measurement.

In the academic literature this has recently started to become an important topic. Until recently, researchers were focusing primarily on how to design and implement a performance measurement system (Franco & Bourne, 2003), but the emphasis has now moved to understanding how people manage through measures. Currently a number of aspects of research are being investigated. For example: -

What are the contextual characteristics that facilitate the use of measures?

In this regard, environment, industry and market, culture and politics, technology, resources, organisational structure, organisational size, organisational maturity, HR practices, task and function characteristics have been identified (Coates et al, 1992; Mooraj et al, 1999; Waggoner et al, 1999; Hoque & James, 2000; Speckbacher et al, 2003).

How are performance measures used in practice?

Besides Simons (1991, 1995), little work has been done until recently in this area. Lately researchers have started to investigate the use of performance measures (e.g. Martins & Salermo, 1999), how managers perceive the balanced scorecard (Malina & Selto, 2002), how the structure of the measurement system impacts on judgement (Lipe et al, 2002; Banker et al 2004) and the impact of feedback for evaluating management decisions (Forza et al, 2000).

What is the impact the use of performance measures has on performance?

Most studies related with this issue analyse the effect that the use of non-financial measures have on the organisational performance. So far this area of research seems to be contradictory since some studies have found that actually the use of non-financial measures increases overall organisational performance (Ittner & Larcker, 1998; Banker et al., 2000; Said et al, 2003) whereas other studies have found no relation between both variables (Perera et al., 1997). Our own review and reflections on this subject suggest that there are a number of interrelated aspects to get right if performance measurement is going to positively impact on performance. If any one element is missing, then the benefit will not occur (Bourne et al, 2003).

We have used the Performance Planning Value Chain in practice and to inform our research design by looking at the elements that distinguish between average and high performing organisations (Bourne et al, 2005)

Research agenda

• Understanding the performance measurement and management practices that differentiate between high and low performing business units
• Establishing examples of best practice in the area of performance measurement and management
• Developing processes and frameworks to assist in the review of performance measures
• Developing insights into the theory behind the performance review process
• Collaborators for projects in any of these areas are encouraged and welcome.

Research projects

Best practice performance measurement, an ongoing research project sponsored by the Best Practice Performance Measurement Round Table.

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