Performance Measurement in Successful Companies: Three Case Studies

Performance measurement systems play an important role in organisations, providing information on the achievement or otherwise of an organisation’s competitive strategy, and linking that strategy to operations. This paper explores the characteristics of the performance measurement systems in three successful UK service organisations, a food retailer, a motor vehicle distribution network and a firm of accountants. The focus is on strategic business units within each organisation whose performance is regularly reported to and analysed by central headquarters. The case studies involved semi-structured interviews with a range of personnel both at corporate and business unit level combined with examination of internal documents and non-participatory observation of company practices. The performance measurement systems are compared and contrasted using dimensions, standards and rewards framework which poses three central questions for performance measurement systems: What dimensions of performance to measure, how to set standards for those measures and what rewards are to be associated with the achievement of those standards. All three companies measure across a range of dimensions which are consistent with their corporate strategy, have the same approaches to standard setting and reward performance achievement. The framework was useful in highlighting the different measurement mechanisms used in the three organisations, distinguishing between standard setting for profit and quality measures and identifying the importance of non-financial rewards in motivation. Acknowledgement We are grateful to CIMA for funding this research (“Performance measurement in service industries: making it work”), and to the many employees at the case organisations for their time and consideration in providing us with information concerning their organisation’s performance measurement systems.