A framework for understanding factors affecting the development and application of a predictive performance measurement system
NURMINEN, MARTTI (2008)
NURMINEN, MARTTI
2008
Yrityksen taloustiede, laskentatoimi - Accounting and Finance
Kauppa- ja hallintotieteiden tiedekunta - Faculty of Economics and Administration
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Hyväksymispäivämäärä
2008-06-18
Julkaisun pysyvä osoite on
https://urn.fi/urn:nbn:fi:uta-1-19072
https://urn.fi/urn:nbn:fi:uta-1-19072
Tiivistelmä
Performance measurement, although an integral part of regular business operations is back on the current agenda as a topic of great interest. Researchers from multiple functional backgrounds and representing several different academic disciplines are actively examining and evaluating current methods of performance measurement. The theory base of the research area is highly heterogenic and the lack of predictive performance measures is highlighted as a key issue. At the same time, economic globalization is driving increased levels of change and uncertainty in ways never seen before. The need for predictive business insight is greater than ever before.
Predictive performance measurement systems require a robust organizational setting which is explicitly tied into the current internal and external realities of the organization. The nature of the organizational contingencies needs to be considered when a predictive performance measurement system is developed and applied. An organization capable of dealing with the current must evolve a capability to actively impact the operational measurement and management systems meaningfully with the changing external and internal realities facing the organization. A reliable and robust forward looking capability is an additional dimension of a quality performance measurement system in an environment, where the primary processes of an organization are already in general control.
An organization must accept the inherent uncertainty of the current marketplace. As a response an organization needs to build a capability to understand the source and nature of the uncertainty which impacts its processes and causes their outcomes to vary. This process variation can be leveraged as a basis to enable predictive business insight. An organization needs to also develop a language which it can apply in its effort to integrate the measurement world and the real world, bringing the financial and non-financial managers closer to each other to enable the delivery of predictive business insight. Recognizing the social nature of predictive performance measurement and the operational transformations of financial targets are suggested as responses to create the joint language.
Keywords: performance measurement, contingency theory, dynamism, uncertainty, prediction
Predictive performance measurement systems require a robust organizational setting which is explicitly tied into the current internal and external realities of the organization. The nature of the organizational contingencies needs to be considered when a predictive performance measurement system is developed and applied. An organization capable of dealing with the current must evolve a capability to actively impact the operational measurement and management systems meaningfully with the changing external and internal realities facing the organization. A reliable and robust forward looking capability is an additional dimension of a quality performance measurement system in an environment, where the primary processes of an organization are already in general control.
An organization must accept the inherent uncertainty of the current marketplace. As a response an organization needs to build a capability to understand the source and nature of the uncertainty which impacts its processes and causes their outcomes to vary. This process variation can be leveraged as a basis to enable predictive business insight. An organization needs to also develop a language which it can apply in its effort to integrate the measurement world and the real world, bringing the financial and non-financial managers closer to each other to enable the delivery of predictive business insight. Recognizing the social nature of predictive performance measurement and the operational transformations of financial targets are suggested as responses to create the joint language.
Keywords: performance measurement, contingency theory, dynamism, uncertainty, prediction