Performance Measurement

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IJOPM 20,7


Designing, implementing and updating performance measurement systems University of Cambridge, Cambridge, UK University of Northumbria, Newcastle, UK University of Cranfield, Cranfield, UK, and University of Cambridge, Cambridge, UK Keywords Performance measurement, Implementation, Alignment, Strategic management Abstract This paper addresses issues met when designing, implementing, using and continuously updating performance measurement systems in manufacturing companies. The paper develops, from theory, a framework for analysing the implementation of a performance measurement system and uses this framework to interpret three longitudinal case studies. The paper concludes that specific processes are required to continuously align the performance measurement system with strategy. When these processes are combined with a well defined model of strategic success, the measurement system can enhance the strategic management process by challenging the assumptions and the strategy itself.

Mike Bourne, John Mills Mark Wilcox Andy Neely Ken Platts

Introduction There is currently considerable interest in performance measurement. Management interest can be gauged from the high levels of attendance at the large number of industrial conferences on the subject. Academic interest is manifest through the considerable number of papers on the topic (Neely, 1999). But this interest is not new. In the late 1970s and 1980s, authors expressed a general dissatisfaction with traditional backward looking accounting based performance measurement systems, identifying their shortcomings and arguing for change. In the late 1980s and early 1990s, this dissatisfaction led to the development of ``balanced'' or ``multi-dimensional'' performance measurement frameworks. These new frameworks placed emphasis on nonfinancial, external and future looking performance measures. They were then quickly followed by the development of management processes specifically This paper was produced during the research project ± Manufacturing Strategy and Performance Measurement ± which was sponsored by the CDP section of EPSRC under grant numbers GR/K53086 and GR/L18655. Acknowledgement must be made to the others who participated in this phase of the testing. These were, from the University of Cambridge, Huw Richards, from Buckingham University, John Bicheno, from University of Luton, David Hamblin, from Thames Valley University, David Barnes, from Middlesex University, Raj Gill and from De Montfort University, Frank Rowbotham.

International Journal of Operations & Production Management, Vol. 20 No. 7, 2000, pp. 754-771. # MCB University Press, 0144-3577

designed to give practising managers the tools to develop or redesign their performance measurement system. The result has been the publication of alternative balanced performance measurement frameworks and suggested management processes for the design of performance measurement systems. As can be seen from the above, most of the more recent academic literature and practitioner activity has focused on the early stages of the development of the performance measurement system, the conceptual frameworks and processes for designing the performance measures. There are few longitudinal studies of the implementation and continuous updating of performance measurement systems, the subject of this paper. The paper begins with a brief review of the academic literature, covering the main criticisms levelled at traditional performance measures, the balanced performance measurement frameworks and published performance measurement design processes. The paper then goes on to develop a theoretical framework which categorises and describes the steps an organisation goes through when using a management process to develop a performance measurement system. This framework extends from the design processes into...
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