Performance measurement system design: developing and testing a process‐based approach

TLDR

Frameworks such as the balanced scorecard and performance prism exist, but little attention has been given to how they can be populated or how managers decide which measures to adopt. The study develops and tests a structured methodology for designing performance measurement systems, based on a literature review that identifies desirable characteristics of the design process. The authors created a process‑based approach guided by the framework, refined through three action research projects with major UK automotive and aerospace firms, and then formally documented and tested in six additional industrial applications. The resulting process was compiled into a publicly available workbook.

Abstract

Describes the development and testing of a structured methodology for the design of performance measurement systems. Frameworks, such as the balanced scorecard and the performance prism, have been proposed, but until recently little attention has been devoted to the question of how these frameworks can be populated, i.e. how managers can decide specifically which measures to adopt. Following a wide ranging review of the performance measurement literature, a framework identifying the desirable characteristics of a performance measurement system design process is developed. This framework provided guidelines which were subsequently used to inform the development of a process‐based approach to performance measurement system design. The process was enhanced and refined during application in three action research projects, involving major UK automotive and aerospace companies. The revised process was then formally documented and tested through six further industrial applications. Finally the process was written up in the form of a workbook and made publicly available.