...This page intentionally left blank Business Performance Measurement Drawing together contributions from leading thinkers around the world, this book reviews recent developments in the theory and practice of performance measurement and management. Significantly updated and modified from the first edition, the book includes ten new chapters that provide a comprehensive review of performance measurement from the perspectives of accounting, marketing, operations, public services and supply chain management. In addition to these functional analyses the book explores performance measurement frameworks and methodologies, practicalities and challenges, and enduring questions and issues. Edited by one of the world’s leading experts on performance measurement and management, Business Performance Measurement will be of interest to graduate students, managers and researchers who wish to understand more about the latest developments in this rapidly changing field. Andy Neely is Deputy Director of the ESRC/EPSRC AIM Research initiative, Professor of Operations Strategy and Performance at Cranfield School of Management, and Visiting Professor of Operations Management at London Business School. Business Performance Measurement Unifying theories and integrating practice Second edition Edited by Andy Neely CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge...
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...Business performance management is a set of management and analytic processes that enables the management of an organization's performance to achieve one or more pre-selected goals. Synonyms for "business performance management" include "corporate performance management (CPM)"[1] and "enterprise performance management".[2][3] Business performance management is contained within approaches to business process management.[4] Business performance management has three main activities: selection of goals, consolidation of measurement information relevant to an organization’s progress against these goals, and interventions made by managers in light of this information with a view to improving future performance against these goals. Although presented here sequentially, typically all three activities will run concurrently, with interventions by managers affecting the choice of goals, the measurement information monitored, and the activities being undertaken by the organization. Because business performance management activities in large organizations often involve the collation and reporting of large volumes of data, many software vendors, particularly those offering business intelligence tools, market products intended to assist in this process. As a result of this marketing effort, business performance management is often incorrectly understood as an activity that necessarily relies on software systems to work, and many definitions of business performance management explicitly...
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...Harvard Business Review Case study Analysis BY John Raphael Marty Vitality Health A better Corporate Performance Management System to Retain Top Talent Vitality Health Vitality Health Introduction Issues Beth Williams stepped in to fill the shoes of Fred Kikuchi in 2009 as the new CEO. Her primary stated purpose was to “find a better way to identify and reward top performers in order to keep ‘A’ players in their positions and accelerate company growth by attracting new top talent.” To do this, Beth created a new performance management team (PMET) to study the existing rewards & compensation, and uncover changes that needed to be made. With over 50% of the staff in Des Moines consisting of scientists and engineers, and a total R&D budget nearing 30% of total gross revenue in 2009; Vitality’s growth depended heavily on continued human resources for R&D, especially due to Vitality’s focus on emerging markets and the volatility that comes along with such growth. Beth’s prompt delivery of a new performance management system only eight weeks after discovering problems likely delighted Vitality’s board as well as some staff, but her no-nonsense approach must have also been a shock internally as she was “a notable contrast from Kikuchi’s more conciliatory management style.” The email sent to management to simply review the online guidebook of the new performance management system hardly created “buy-in” within the organization, that was...
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...Harvard Business Review Case study Analysis BY John Raphael Marty Vitality Health A better Corporate Performance Management System to Retain Top Talent Vitality Health Vitality Health Introduction Issues Beth Williams stepped in to fill the shoes of Fred Kikuchi in 2009 as the new CEO. Her primary stated purpose was to “find a better way to identify and reward top performers in order to keep ‘A’ players in their positions and accelerate company growth by attracting new top talent.” To do this, Beth created a new performance management team (PMET) to study the existing rewards & compensation, and uncover changes that needed to be made. With over 50% of the staff in Des Moines consisting of scientists and engineers, and a total R&D budget nearing 30% of total gross revenue in 2009; Vitality’s growth depended heavily on continued human resources for R&D, especially due to Vitality’s focus on emerging markets and the volatility that comes along with such growth. Beth’s prompt delivery of a new performance management system only eight weeks after discovering problems likely delighted Vitality’s board as well as some staff, but her no-nonsense approach must have also been a shock internally as she was “a notable contrast from Kikuchi’s more conciliatory management style.” The email sent to management to simply review the online guidebook of the new performance management system hardly created “buy-in” within the organization, that was...
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...CHIEF PERFORMANCE OFFICER MS - - 16 INTRODUCTION POSITION CONTROLS Works together with the Director to capture and leverage business performance data to affect improvements and innovations in business operations. DUTIES AND RESPONSIBILITIES Negotiating and establishing business performance metrics, formulae and thresholds at various levels of the enterprise Assimilating industry benchmarks or other external data against which to gauge business performance Recommending a set of performance-based actions for the COO to implement Prioritizing and budgeting enterprise and line-of-business strategic performance initiatives Reporting strategic performance initiative progress and results (returns) to the executive team Implementing the components needed to collect, assimilate, analyze, and deliver business performance management data." Collector The CPO plays the role of collector. He or she is collecting performance measurements and metrics from all parts of the organization. These measurements may be in automated systems on various technical platforms. The collection process involves significant business expertise to understand what is important to collect, and what can remain within the department. As part of the collection process, certain technologies such as databases and corporate networks need to be understood and leveraged. Ultimately all the performance data will be in one place, and the CPO needs to begin with this end in mind. Consolidator In...
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...Week 5 Tutorial Exercise Business Performance Management Task 1 Answer to Discussion Question: * 1. How does a KPI differ from an operational metric? 2. What are some of the drawbacks of relying solely on financial metrics for measuring performance? 3. How does a BSC align strategies and actions? 4. What does Six Sigma refer to? 5. What are some of the ways that the success of Six Sigma implementations is improved? 6. SAP uses the term strategic enterprise management (SEM), Cognos uses the term corporate performance management (CPM), and Hyperion uses the term business performance management (BPM). Are they referring to the same basic ideas? Provide evidence to support your answer 7. BPM encompasses five basic processes: strategize, plan, monitor, act and adjust. Select one of these processes and discuss the types of software tools and applications that are available to support it. 8. Select a public company of interest. Using the company’s 2008 annual report, create five strategic financial objectives for 2009. For each objective, specify a strategic goal or target. The goals should be consistent with the company’s 2008 financial performance. Task 2 Case Study : Application Case CPR 1. What are the major components of the CPR dashboard? 2. How many agencies were involved in the definition and implementation of the CPR dashboard? 3. What were the major steps used in defining and implementing the CPR? 4. What role did...
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...Week 5 Tutorial Exercise Business Performance Management Task 1 Answer to Discussion Question: * 1. How does a KPI differ from an operational metric? 2. What are some of the drawbacks of relying solely on financial metrics for measuring performance? 3. How does a BSC align strategies and actions? 4. What does Six Sigma refer to? 5. What are some of the ways that the success of Six Sigma implementations is improved? 6. SAP uses the term strategic enterprise management (SEM), Cognos uses the term corporate performance management (CPM), and Hyperion uses the term business performance management (BPM). Are they referring to the same basic ideas? Provide evidence to support your answer 7. BPM encompasses five basic processes: strategize, plan, monitor, act and adjust. Select one of these processes and discuss the types of software tools and applications that are available to support it. 8. Select a public company of interest. Using the company’s 2008 annual report, create five strategic financial objectives for 2009. For each objective, specify a strategic goal or target. The goals should be consistent with the company’s 2008 financial performance. Task 2 Case Study : Application Case CPR 1. What are the major components of the CPR dashboard? 2. How many agencies were involved in the definition and implementation of the CPR dashboard? 3. What were the major steps used in defining and implementing the CPR? 4. What role did...
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...The Future of Corporate Performance Management Abstract Adaptive Planning is a Corporate Performance Management system that has foreseen the future of IT. They have adapted a full service CPM system which can accommodate customers from beginning to end. The “cloud” has become a vital asset to the selling point which will forever change IT as we know it. This new system has allowed companies to “Dramatically reduce budgeting and forecasting cycle times by up to 90%” (Product Overview). “Allowing them to make faster, more informed and better decisions” (Product Overview). This paper will discuss the alternative of cloud computing and many of the other assets to automating the CPM cycle. We will discuss Bridon American Corporation’s (BAC’s) process of forecasting, budgeting and financial reporting prior to implementation and after implementation of Adaptive Planning. Keywords: forecasting, budgeting, financial reporting, cloud computing The Future of Corporate Performance Management “Corporate Performance Management is a cycle that begins with budgeting and continues to comparison of actual performance against the plan” (Product Overview). “Reports and dashboards are used to analyze real-time data, and compare it to what was planned. Based on this analysis, the cycle begins again, with what-if analysis and re-forecasting” (Product Overview). “A truly integrated and automated cycle has tight collaboration among managers throughout the organization, as well as tight integration...
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...Int. J. Business Performance Management, Vol. 5, No. 1, 2003 1 Implementing performance measurement systems: a literature review Mike Bourne* and Andy Neely Centre for Business Performance, School of Management, Cranfield University, Cranfield, MK43 0AL, UK E-mail: m.bourne@cranfield.ac.uk *Corresponding author John Mills and Ken Platts Centre for Strategy and Performance, Institute for Manufacturing, University of Cambridge, Mill Lane, Cambridge, CB2 1RX, UK Abstract: Currently, there is a great interest in performance measurement with many companies attempting to implement the balanced scorecard. However, there is also evidence that many of these implementations are not successful. This paper reviews the different performance measurement system design processes published in the literature and creates a framework for comparing alternative approaches. The paper then proceeds to review the literature on performance measurement system implementations and concludes that the performance measurement literature is at the stage of identifying difficulties and pitfalls to be avoided based on practitioner experience with few published research studies. This paper is the first of two, the second going on to consider performance measurement implementation from the point of view of the change management literature. Keywords: Performance measurement; management process implementation. Reference to this paper should be made as follows: Bourne, M., Neely, A., Mills, J. and Platts...
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...Production Research Vol. 48, No. 17, 1 September 2010, 5137–5155 Supply chain performance measurement: a literature review Goknur Arzu Akyuz* and Turan Erman Erkan Department of Industrial Engineering, Atilim University, Kizilcasar Mahallesi, 06836 Incek Go¨lbasi, Ankara, Turkey (Received 19 February 2009; final version received 2 June 2009) This paper is intended to provide a critical literature review on supply chain performance measurement. The study aims at revealing the basic research methodologies/approaches followed, problem areas and requirements for the performance management of the new supply chain era. The review study covers articles coming from major journals related with the topic, including a taxonomy study and detailed investigation as to the methodologies, approaches and findings of these works. The methodology followed during the conduct of this research includes starting with a broad base of articles lying at the intersection of supply chain, information technology (IT), performance measurement and business process management topics and then screening the list to have a focus on supply chain performance measurement. Findings reveal that performance measurement in the new supply era is still an open area of research. Further need of research is identified regarding framework development, empirical cross-industry research and adoption of performance measurement systems for the requirements of the new era, to include the development of partnership...
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...Introduction The subject of performance measurement is encountering increasing interest in both the academic and managerial worlds. This, for the most part, is due to the broadening spectrum of performances required by the present-day competitive environment and the new production paradigm known as Lean Production or World Class Manufacturing (Hall et al., 1991). In addition there is the need to support and verify the performance improvement programmes such as Just-in-Time, Total Quality Management, Concurrent Engineering, etc. (Ghalayini and Noble, 1996). These programmes are characterised by their ability to pursue several performances at the same time, for example the increase in the product quality together with the lowering of the production costs and the lead times, following the reduction in discards, waste, reworks, and controls. Performance measurement is how organisations, both public and private, measure the quality of their activities and services. An influential 1982 book, "In Search of Excellence," sparked interest in measuring performance. Since then, business, government and other organisations have sought to measure the extent to which they meet organisational goals. Performance measurement may sound simple, but is often a complicated process that requires deep strategic thinking and assessment. Performance measurement systems (PMS), such as Kaplan and Norton’s (1992, 1996a) Balanced Scorecard, focus on organisational performance and, although the impacts...
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...A critical analysis of Balanced Scorecard as a performance measurement tool: an overview of its usage and sustainability A iti al a alysis of Bala ed “ o e a d as a pe fo TABLE OF CONTENTS a e easu e e t tool: a o e ie of its usage a d sustai a ility TOPICS PAGE i ii iii iv-v LETTER OF TRANSMITTAL DECLARATOIN ACKNOWLEDGEMENT ABSTRACT CHAPTER ONE INTRODUCTION 1.1 Background of the study 1.2 Objective of the study 1.3 Scope of the study 1.4 Methodology 1.5 Limitations of the study BALANCED SCORECARD 2.1 Overview of the Balanced Scorecard (BSC) 2.2 Objective 2.3 Design 2.4 Original design method 2.5 Improved design method 2.6 Popularity 2.7 Variants and alternatives CRITICAL ANALYSIS ON THE CONCEPT & USING OF BALANCED SCORECARD WHETHER IT IS THE UNIVERSAL SOLUTION FOR THE BUSINESS MANAGEMENT? 3.1 Crucial investigation of the concept and using of Balanced Scorecard 3.2 A comprehensive new approach for the measurement and management 3.3 Is the Balanced Scorecard a universal key to the business management? 3.4 Balanced Scorecard: a question of conjecture and application CHAPTER FOUR: THE SUSTAINABILITY OF THE BALANCED SCORECARD 4.1 The Balanced Scorecard: an instrument for sustainability management 4.2 Different possible approaches of integrating environmental and social aspects 4.3 The process of formulating a sustainability Balances Scorecard 4-7 5 5 5 6 7 8-15 9-11 12 12-13 13 14 14 14-15 16-25 CHAPTER TWO CHAPTER THREE 17-21 21-22 22-23 23-25...
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...Performance Measurement Robert Campbell MGT/437 March 14, 2011 Sunil Mehta Performance Measurement According to NY Government (n.d.) website, “Strategic, performance measurement-based management systems allow an organization to align its business activities to its strategy, and to monitor performance toward strategic goals over time” (para. 1). Each measurement should be objective, easy to understand, controllable by minimizing outside influences, timely, accurate, cost-effective, useful, motivating, and trackable (NY Government, n.d.). The use of performance measurement is important because the stock market’s volatility has shown that financial measurement is not the only measurement. By using measurement techniques companies can compare themselves to established norms. In this discussion there will be a look at three different types of performance measurement systems, what they do and how they are used. These systems identified are the balanced scorecard, performance dashboards, and the economic value added. The balanced scorecard is a strategic planning and management measurement style widely used throughout the business world to bring its business activities in line with the vision and strategy of the organization (Balanced Scorecard Institute, 1998-2010). According to the Balanced Scorecard Institute (1998-2010) the implementation increases focus on strategy and results, increases organizational performance by measuring what is important, and aligns strategy...
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...SUPPLY MEASUREMENT BUSINESS METRICS Definition - A business metric is any type of measurement used to gauge some quantifiable component of a company's performance, such as return on investment (ROI), employee and customer churn rates, revenues, EBITDA, and so on. It can also be defined generally as a unit or units of measure to gauge a company's performance and provide the company's employees with a standard to improve. The current interest in performance measurements has led to a variety of supporting adages or clichés in the industry, such as: • “Anything measured improves.” • “What you measure is what you get.” • “Anything measured gets done.” • “You can’t manage what you do not measure.” These are not new business ideas, but there are a few new twists. Using measurements to support manufacturing operations has its roots back to the late 19th and early 20th centuries with ideas espoused by Frederick W. Taylor, the father of applying scientific methods to running business. His ideas for time and motion studies of operations were successfully used to scientifically manage production lines and warehouse operations. These ideas, however, led to exaggerated business processes that transitioned into “running a business by the stopwatch” with employers treating human employees as if they were highly reliable, predictable machines to be monitored and controlled. Over time, the workplace’s view of performance measurement became more humane and these exaggerated types...
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...Requiements of business Management Systems: A Delineation of the Comprehensive Set of Criteria Bartłomiej NITA* 1 Introduction There are organizations which have serious problems with transforming their strategies in-to actions and achieving good performance, so the major purpose of modern management accounting is to support the strategy execution. However, for fulfilling this goal it is essential to design and implement effective performance measurement and management system in order to asses, control, and finally improve organizational performance. Unfortunately, still a lot of companies today use financial and accounting-based calculations as the ultimate measures of company performance although exclusively financial approach to performance is not sufficient any longer. The aim of the paper is to figure out the requirements that should be fulfilled by modern performance management systems. Thus, in the first part of the article the short review of contemporary approach to performance management was described, in the following part different opinions and discussions from the relevant academic literature were depicted and finally the comprehensive set of ten requirements was proposed. 2 Contemporary Approach to Performance Management In 1965 R. N. Anthony published his seminal work titled “Planning and Control Systems”, in which he introduced the concept of management control. His classic definition of management control...
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