A Dynamic Performance Measurement
System for Global Organizations
Ree Paranjape, Dept. of
Engineering, A.N.U.
Scope Definitions
49,800,000 web sites on Google Performance measurement-
search process of quantification of
Inherently interdisciplinary efficiency & effectiveness of
Contributions from academics action.
from Harvard, Cambridge, MIT Performance measure- metric
Sloan used to quantify the efficiency
Still maturing, still evolving and/or effectiveness of action.
Performance measurement
system- a set of metrics used to
quantify both the efficiency and
effectiveness of actions.
- Neely et al. (1995)
Ree Paranjape, Dept. of Engineering, A.N.U.
PMS - A set of metrics used to quantify both the
efficiency and effectiveness of actions (Neely et al., 1995)
Performance measurement framework
PMS
Individual
measures
Individual Individual The environment
measures measures
Individual
measures
Ree Paranjape, Dept. of Engineering,
A.N.U.
Goals
– Development of a comprehensive set of traits/attributes for generic performance measures
– Design of a dynamic (adaptive) Performance Measurement System (DPMS)
Research / Establishing Concepts Research / Empirical Studies
A study of reporting and feedback 1. Global A study of key business processes within
structures as per literature business CANON’s division(s), analysis of current
processes reporting and feedback mechanism within
CANON
Analysis of existing PMS in CANON (global,
A study of existing PMS – BSC, 2. Analysis of national & local???) - results for input to
Performance prism Existing PMS Stage 4
Research on process-based performance Process-based approach for design
measurement of a dynamic PMS?
Key processes, their determinants/ 3. Process Identification Addressing the question of “How to
important dimensions (individual; team; measure?”
Inclusion of PM, review & revisal as organisational) Mapping CANON’s measures
routine business activities against established framework of
4. Establishing Traits for traits – i.e. testing the performance
Designing measures that are dynamic,
Performance Measures of the Canon PMS.
adaptable – avoiding over quantification,
automation, ROI considerations PMS redesign for CANON – a fore-
runner to Phase 5
Design of a dynamic PMS (with
E-teams, v-teams, - measures 5. Design of a dynamic
efficient feedback loops) – How to
that work for individuals AND PMS (for global orgs) implement, How to review & revise
teams PMS
This phase will begin the process of
testing the designed dynamic PMS.
6. Case Study – implementation Given the long time-scales for
Ree Paranjape, Dept. of results from new PMS – outcomes
Engineering, A.N.U. will not be included in this thesis
The Balanced Scorecard (Kaplan &
Norton, 1992)
“David and I are experts
in what to measure – not
in how to measure.”
•Most popular and influential network for the last decade
•High emphasis on strategy
•Operational difficulties
•Negligible successful implementations
•Many criticisms
Ree Paranjape, Dept. of Engineering,
A.N.U.
Ree Paranjape, Dept. of Engineering,
A.N.U.
The Performance Prism (Neely et al.,2002)
•Strategy, in today's dynamic
environments is a response to
stakeholders wants and needs.
•Emphasis on stakeholders
•Introduces checks at all points
•Can handle mergers and Criticisms:
acquisitions
•Too wide a framework
•Very few known implementations
Ree Paranjape, Dept. of
Engineering, A.N.U.
TYPES OF MEASURES/ASPECTS/DIMENSIONS OF PERFORMANCE
FRAME-
FRAME-
Product/Process
WORK related Resource Learning &
Competitor Agility Employee Strategy/
Financial Customer /Infra-
/Infra- growth/
Time Quality aspect /Flexibility /People Vision
structure innovation
1. Keegan et Yes Yes Yes Yes Yes
al, 1989
2. Fitzgerald Yes Yes Yes Yes Yes Yes
et al, 1991
3. Azzone et Yes Yes Yes Yes Yes Yes
al, 1991
4. Lynch & Yes Yes Yes Yes Yes
Cross, 1991
5. Kaplan & Yes Yes Yes Yes Yes Yes Yes Yes
Norton, 1996
6. Brown, Yes Yes Yes Yes Yes
1996
7. Neely et yes Yes Yes Yes Yes Yes Authors Yes Yes Yes
al, 2002 agree
Ree Paranjape, Dept. of Engineering,
A.N.U.
Characteristics of a PMS
Should provide a balanced picture of the business
Should give a concise overview of the organizational
performance
Should be multi-dimensional
Comprehensive
Should provide vertical and horizontal integration
Integration with business processes
Should measure results and their drivers
Should be dynamic
Should enhance learning and growth
Should be consistent with management techniques and
improvement initiatives
Should be cost effective-consideration of over quantification and
automation issues
Should be pro-active
Should be easy to implement
Ree Paranjape, Dept. of Engineering,
A.N.U.
Some interesting observations
Frameworks – a means of categorising measures
None of the existing PMSs satisfy characteristics
outlined
No dynamic PMS
Emphasis on financial measures is still very much in
practice
Designing, implementing and refreshing measures are
still problematic areas
Evolutions in existing PMSs is still going on
BSC still the most popular framework – as per a 2005
review
ROI on PMS – one of the great unanswered questions
in performance measurement
Ree Paranjape, Dept. of Engineering,
A.N.U.
Goals behind proposed
Framework
Strategy or stakeholders? Both.
Simple
Dynamic
Should enable design / selection of
specific and relevant measures
Global organization focus
Ree Paranjape, Dept. of Engineering,
A.N.U.
Dimensions for measuring performance
[Link]
Sub processes
Activities
[Link] [Link] Edge Factor
[Link] functional teams
[Link]-people
[Link] within teams
[Link] & other technologies
[Link] & other
facilities
Ree Paranjape, Dept. of Engineering, A.N.U.
Why these three dimensions?
Efficient business processes+ competent
people +highly sophisticated technologies
/other infrastructure = unique edge over
competitors.
Global organizations - business processes are
executed by cross-functional teams (often
virtual or semi-virtual), by utilizing highly
efficient technologies /infrastructure.
Ree Paranjape, Dept. of Engineering,
A.N.U.
Why start with processes?
•“A business process is the complete and dynamically coordinated set
of collaborative and transactional activities that deliver value to the
customers (Smith & Fingar, 2003;p.47).”
•Processes are characteristically dynamic, responding to customers
demands as well as changing market conditions.
•Strategic goals and stakeholder satisfaction is achieved through
business processes.
•A process has an identified, goal (as per strategy) stakeholders, cross
functional teams and established hierarchy.
•Is already integrated with other business processes.
•In order to provide true dynamism and full integration with other
business systems, PMS should be an integral part of the ERP platform
(Bititci, 2000).
•Process based PMS leads to better integration with ERP platform
(Berretta, 2002).
Ree Paranjape, Dept. of Engineering,
A.N.U.
start
Designing specific and relevant measures
Product
book-
book-ins
Within No Customer agrees
To product
Warranty? to quote? No pile-
pile-up
Yes Yes
Repair
Dispatch
End
Ree Paranjape, Dept. of Engineering,
A.N.U.
Key elements of a PMS
A set of procedures for collecting and processing
data
Timetables and protocols for distributing
information about performance to users within
and outside the organization
An organisational learning mechanism to identify
what actions can be taken further to improve
performance
A review process to update the PMS regularly
Reward system
Ree Paranjape, Dept. of Engineering,
A.N.U.
Insights –
Components/considerations for a dynamic PMS practice
reviews
Process
Schedule/ Mechanism to approach
Collection/ protocols Be dynamic
Analysis of
Learning
data
process
Integration Performance
with business Review
measures process
processes
Vertical and Focus on
Horizontal virtual teams
integration & global org.
Automation
Reward system?
Ree Paranjape, Dept. of
Engineering, A.N.U.
Next Step
Designing the measures at a microcosmic
level within Canon to test the framework in
practice.
Ree Paranjape, Dept. of Engineering,
A.N.U.