2 RESEARCH DESIGN
2.1 Objective, scope and structure of the study
Many organisations utilise performance measurement as a management tool at strategic, tactical and operational levels of management. Performance measurement has been introduced more and more at the operative levels, that is team and individual levels, of organisations. There are measures for operational actions, as well as appraisals of individual and team performance. Employees utilise performance measurement in many ways in their own work (e.g. Lönnqvist, 2002). However, there is a lack of empirical evidence on what impacts performance measurement has on the way that organisations are managed and how organisations can achieve positive impacts of performance measurement (e.g. Kennerley and Bourne, 2003). There is also a lack of empirical evidence concerning the identification of actual factors that facilitate the process of managing through measures (e.g. Franco and Bourne, 2003). As many organisations have adopted performance measurement at the team and individual levels, and the organisations put a lot of effort and resources to the development of performance measurement, it is relevant to focus on the impacts of performance measurement and on the factors that facilitate and improve the performance of the operations and the employees, and the use of performance measurement at the operative level of the organisation. In the following sections, these factors are also called factors behind successful operative level performance measurement.
Based on the research gap above, the primary objective of the study is to construct a framework for successful operative level performance measurement. The purpose of the framework is to help managers to focus on the factors that are important for a higher performance of the operations and employees, and for successful use of performance measurement. By utilising the framework, managers will be able to carry out development actions that will facilitate and improve performance measurement at the operative level of the organisation. The first phase of the study focuses on the impacts of performance measurement on different aspects of management, leadership, and the quality of working
life. In the second phase of the study, the underlying factors behind the positive impacts of performance measurement and the factors that facilitate and improve the performance of the operations and employees, as well as the use of performance measurement are examined. In the third phase, the study is continued by focusing on the question of how the underlying factors behind successful operative level performance measurement operate in practice. The construction of the framework is based on matching the findings of the three phases and performance measurement theory. The research questions are:
1. What kinds of impacts does performance measurement have and what are the underlying factors behind successful operative level performance measurement?
2. How do the underlying factors operate in practice?
3. How to manage performance by utilising the underlying factors behind successful operative level performance measurement?
As a whole, the study focuses on operative level performance measurement. An alternative possibility could have been for example strategic level performance measurement.
However, strategic level performance measurement has received more comprehensive attention in earlier studies. The present study does not focus on any specific model of performance measurement, such as the Balanced Scorecard or Performance Prism. The use of a specific model can not be seen as an important issue when the focus of the study is at the operative level of an organisation. At the operative level, the teams and individuals have usually few measures and it is thus more important to examine what makes them work than to what framework they are based on. In strategic level performance measurement studies it is more important to know, if the starting point of the performance measurement was for example the satisfaction of the stakeholders, as the Performance Prism proposes. Regarding the current research, one of the main criteria in the selection of the organisations was that the organisation must measure performance with some formal or informal performance measurement system. A more specific criterion was that the organisations must measure performance at team or individual levels. Although the study is to some extent related to the use of performance measurement, it does not particularly focus on some specific phase like design, implementation, use or maintenance of the performance measurement system (e.g.
Neely et al., 2000). Instead, the study examines the impacts of performance measurement
on different aspects of management, leadership and quality of working life, as well as the underlying factors that provide a solid base for operative level performance measurement.
The study focuses mainly on the positive impacts of performance measurement, as well as factors that facilitate and improve operative level performance measurement. The study could have also been focused on the negative impacts of performance measurement and the factors that hinder operative level performance measurement. However, the researchers in the area of performance measurement emphasise the research gap related to the factors that facilitate and improve performance measurement, which justifies the scope of the current study (e.g. Bourne et al., 2003a; Franco and Bourne, 2003; Franco-Santos and Bourne, 2005). The study thus seeks a holistic view for successful operative performance measurement. In this study, successful operative level performance measurement is mainly related to factors that facilitate and improve the performance of the operations and employees, and the use of performance measurement at the operative level of an organisation.
The study consists of two sections: an introductory section and a section containing six scientific publications. In the introductory section, an overview of the study is presented.
First, the motivation, relevant literature and earlier studies in regard to the current research are discussed. Next, the research objectives and the structure of the study are presented. At the end of the introductory section, the findings and conclusions from the publications are summarised.
The study consists of six research papers including empirical data from three separate studies. The three sub-studies (A, B, C) are presented in a chronological order and they can be seen as a further study to each other. The first and third sub-studies utilise interview data, whereas the second sub-study utilises quantitative data collected by a structured survey. The research papers form an entity that enables the author to answer the three research questions of the thesis. The primary relationships between the research questions and research papers are presented in figure 1.
Figure 1. Relationships between the research questions and the publications
The findings and conclusions of this thesis are based on the findings of the six research papers at the end of the thesis. Summaries of the publications are presented below:
1. What kinds of impacts does performance measurement have and what are the underlying factors behind successful operative level performance measurement?
2. How do the underlying factors operate in practice?
3. How to manage performance by utilising the underlying factors behind successful operative level performance measurement?
Research Questions Publications
Paper I
Performance measurement impacts on management and leadership:
perspectives of management and employees (sub-study A)
Paper II
The impacts of performance measurement on the quality of working life (sub-study A)
Paper III
Performance measurement and employees: knowledge, understanding and opportunities to participate in decision-making (sub-study B)
Paper IV
How to communicate measurement information successfully in small and medium-sized enterprises: a regression model (sub-study B)
Paper V
Employees satisfied with performance measurement and rewards: Is it even possible? (sub-study B)
Paper VI
A framework to support performance measurement at the operative level of an organisation (sub-study C)
I Performance measurement impacts on management and leadership: perspectives of management and employees
Ukko, J., Tenhunen, J. and Rantanen, H.
International Journal of Production Economics, 2007, Vol. 110, Issues 1-2, pp. 39–51
The aim of the study was to examine what impacts performance measurement has on management and leadership. The empirical part of the study is based on 24 interviews in eight case organisations that have applied a performance measurement system.
Representatives of both management and employees were interviewed in each case organisation. The impacts on management were examined through eight dimensions of management, and the impacts on leadership through four dimensions of leadership. The study concludes that performance measurement can only support, not replace managers in leading people. The study also suggests that performance measurement has positive impacts on different areas of management under suitable circumstances. For example interactive communication between the management and the employees and a linkage between performance measurement and reward system are seen as facilitators for higher performance. The study also presents how the perceptions of management and employees differ from each other.
II The impacts of performance measurement on the quality of working life Ukko, J., Tenhunen, J. and Rantanen, H.
International Journal of Business Performance Management, 2008, Vol. 10, No. 1, pp. 86–98
This paper focuses on the impacts that performance measurement has had on the quality of the working life of employees. The quality of working life is examined through work motivation, learning opportunities, job satisfaction, work atmosphere, health and safety, participation in decision-making, realisation of targets, and the reward system. The empirical data is based on the same interviews as in publication I. The findings suggest that performance measurement has had a positive impact on employees’ motivation, learning opportunities, participation in decision-making, and achievement of goals. The paper
concludes with the underlying factors behind the positive impacts of performance measurement on the quality of working life. Furthermore, the paper presents how the perceptions of management and employees differ from each other. For example the employees felt more than the management that their possibilities to participate in decision-making were on a higher level after launching the performance measurement system.
III Performance measurement and employees: knowledge, understanding and opportunities to participate in decision-making
Karhu, J., Ukko, J. and Rantanen, H.
Performance Measurement and Management: Public and Private, 2006, In: Neely, A., Kennerley, M. and Walters, A. (eds.), Centre for Business Performance, Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire, pp. 377–384
The aim of the study was to find out how the employees at different organisational levels understand their targets, what is their level of knowledge concerning performance measurement, and how they perceive their possibilities to participate in decision-making.
The empirical data was gathered from eight manufacturing companies with the help of a structured survey. To achieve an overall view of the participating companies, all employees were asked to fill in the questionnaire. The total number of valid responses was 210, and the response rate was 69 percent. The study revealed significant differences between the different groups of employees. For example, the blue-collar workers had poor possibilities to participate in decision-making in comparison to the white-collar workers and managers.
This may decrease the work motivation and commitment in the long run.
IV How to communicate measurement information successfully in small and medium-sized enterprises: a regression model
Ukko, J., Karhu, J. and Rantanen, H.
International Journal of Information Quality, 2007, Vol. 1, No. 1, pp. 41–59
The paper focuses on the predictors that explain the success of internal communication of measurement information. The empirical data was gathered with the same structured survey as in publications III and V. The results showed that the information of targets and target realisation was communicated through face-to-face communication by a foreman, or in team and company meetings. These channels were also perceived as the most desirable way of communication in the future. As a result of regression analysis, it can be stated that the quality of information and face-to-face communication are the main predictors of the success of measurement information communication. In the future, the companies should invest in the quality aspects of measurement information, in its exactness, reliability, intelligibility and usefulness.
V Employees satisfied with performance measurement and rewards: is it even possible?
Ukko, J., Karhu, J. and Pekkola, S.
International Journal of Business Excellence, 2009, Vol. 2, No. 1, pp. 1–15
The motivational influence of performance-related rewards has been highlighted in the earlier literature on performance measurement. The paper focuses on the linkage between participation in decision-making and success of rewarding. The quantitative data is based on the same structured survey as in publications III and IV. The findings suggest that the more autonomy in work people have, the more successful they perceive the motivational influence of rewarding. One remarkable result is that the blue-collar workers had really low level of satisfaction in regard to the different success factors of rewarding. The differences between the blue-collar workers and managers were significant in all questions of success
factors of rewarding, except the question “the reward policy of our company is motivating and incentive”.
VI A framework to support performance measurement at the operative level of an organisation
Ukko, J., Pekkola, S., and Rantanen, H.
International Journal of Business Performance Management (accepted for publication)
In this paper the underlying factors behind successful operative level performance measurement were examined. One objective of the study was to strengthen and review the findings presented in papers I and II. The empirical evidence of the study is based on interviews in eight organisations. The findings indicate that there are six factors that have a direct and positive influence on the performance of operations, the actions of the employees, and the use of performance measurement at the operative level of the organisation. The three most important factors are the linkage of performance measurement and rewards, interactive communication, and understanding the linkage between an individual’s and the organisation’s targets. The study concludes by presenting a framework that the managers can utilise in developing operative level performance measurement. The basic idea of the framework is to evaluate and analyse the factors behind successful operative level performance measurement, after which the organisation should choose the most important factors for further development. The study also provides examples of the important issues that should be taken care of when developing the selected factors, and performance measurement in general.
All the six papers have been written in cooperation with other researchers. The role of the present author in the co-authored papers is illustrated in table 3.
Table 3. Role of the author in the co-authored papers
• Analysed the data with the first co-author
• Coordinated the writing of the paper
• Main author of the paper with the assistance of the co-authors
• Reviewed the paper
• Analysed the data with the first co-author
• Coordinated the writing of the paper
• Main author of the paper with the assistance of the co-authors
• Reviewed the paper III Performance measurement and
employees: knowledge, understanding and opportunities to participate in decision-making
• Designed the study with the first co-author
• Gathered the survey data with the first co-author
• Analysed the data with the first co-author
• Wrote the paper with the co-authors IV How to communicate
• Gathered the survey data with the first co-author
• Analysed the data with the first co-author
• Coordinated the writing of the paper
• Main author of the paper with the assistance of the co-authors
• Reviewed the paper with the first co-author V Employees satisfied with
performance measurement and rewards: Is it even possible?
• Designed the study
• Gathered the survey data with the first co-author
• Analysed the data
• Coordinated the writing of the paper
• Main author of the paper with the assistance of the co-authors
• Reviewed the paper with the second co-author VI A framework to support
performance measurement at the operative level of an organisation
• Designed the study
• Analysed the data with the first co-author
• Coordinated the writing of the paper
• Main author of the paper with the assistance of the co-authors
• Reviewed the paper