Performance Management Systems

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Management Accounting Research 20 (2009) 283–295

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Management Accounting Research
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Performance management systems: A conceptual model
Jane Broadbent a,∗ , Richard Laughlin b
a b

Vice Chancellor’s Office, Roehampton University, Roehampton Lane, London SW15 5PH, United Kingdom Department of Management, King’s College London, University of London, Franklin-Wilkins Building, 150 Stamford Street, London SE1 9NH, United Kingdom

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This paper builds on the view that too much attention in the management, management control and management accounting literatures has been given to ex post performance measurement as distinct from ex ante performance management. The paper develops a conceptual model of Performance Management Systems (PMS) building on the work and insights of primarily Otley (1999) and Ferreira and Otley (2005, 2009) who share similar concerns. Particular attention is given to analysing the underlying factors that influence the nature of any PMS, which Ferreira and Otley (2005, 2009) address only to a limited extent in their model. This analysis into these factors leads to the development of Ferreira and Otley’s conceptualisation into a ‘middle range’ (Laughlin, 1995, 2004; Broadbent and Laughlin, 1997) model of the alternative nature of PMS lying on a continuum from ‘transactional’ at one end to ‘relational’ at the other built on respectively underlying instrumental and communicative rationalities and guided by a range of contextual factors. © 2009 Elsevier Ltd. All rights reserved.

Keywords: Performance management systems (PMS) Communicative rationality Instrumental rationality Transactional PMS Relational PMS

1. Introduction The analysis of performance measurement systems is considerably more extensive than the analysis of performance management systems (PMS) (cf. Fitzgerald et al., 1991; Otley, 1999; Brignall and Modell, 2000; Kloot and Martin, 2000). In fact, as Kloot and Martin (2000: 233) highlight, PMS ‘. . .often. . . refer to individual performance management or appraisal schemes’. Despite the work of these authors to open up this understanding of PMS the wider conceptual debate has, in some cases, been closed down again by a concentration on how to measure this wider emphasis—for instance through the ‘balanced scorecard’ (cf. Kaplan and Norton, 1992, 1996). This paper distances itself from such a narrowing of understanding of what constitutes PMS and builds on the work of Fitzgerald

∗ Corresponding author. E-mail addresses: (J. Broadbent), (R. Laughlin). 1044-5005/$ – see front matter © 2009 Elsevier Ltd. All rights reserved. doi:10.1016/j.mar.2009.07.004

et al. (1991), Fitzgerald and Moon (1996), Otley (1999) and Ferreira and Otley (2005, 2009) that PMS are concerned with defining, controlling and managing both the achievement of outcomes or ends as well as the means used to achieve these results at a societal and organisational, rather than individual, level. The aim of this paper is to build on but also develop this ‘results and determinants framework’ (cf. Fitzgerald et al., 1991). Otley (1987, 1999) and Ferreira and Otley (2005, 2009) have made considerable progress on the conceptual understanding of PMS and it is their model which forms the starting point for the conceptualisation in this paper. Otley (1999) and Ferreira and Otley (2005, 2009) build their conceptual model of PMS empirically by drawing from an analysis of management control systems in a range of organisations. Otley (1999) poses his conclusions from this analysis in terms of five ‘issues’ or ‘questions’ that need to be answered by any organisation in relation to the design and nature of its PMS. This is extended in Ferreira and Otley (2005, 2009) to twelve questions—eight of which relate to PMS design and the other four to issues...
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