Contemporary performance measurement systems: A review of their consequences and a framework for research

The main purpose of this paper is to develop a conceptual framework for understanding the literature on the consequences of contemporary performance measurement (CPM) systems and the theories that explain these consequences. The framework is based on an in-depth review of 76 empirical studies published in high-quality academic journals in the areas of accounting, operations, and strategy. The framework classifies the consequences of CPM into three categories: people's behaviour, organizational capabilities, and performance consequences. This paper discusses our current knowledge on the impact of CPM, highlighting inconsistencies and gaps as well as providing direction for future research

Reporting Concerns about Earnings Quality: An Examination of Corporate Managers

Using an experiment with corporate financial managers (e.g., CFOs, controllers), we find that when red flags are present in the financial statements under their review, managers identify those red flags and, in turn, have greater concerns over earnings quality. In addition, when pressure to meet a financial target is high, managers are more concerned about earnings quality when red flags are present. We also document that when red flags are present, managers are more likely to report both internally to their CEO and, if their concerns are not resolved internally, externally to their auditor. Pressure to meet a financial target directly influenced the decision to report internally, but not externally. Additional analyses contemplate the countervailing personal costs associated with reporting or not reporting earnings quality concerns. We demonstrate the important role short-term costs play in external reporting decisions. Finally, we provide initial evidence that corporate managers with a longer tenure at their position (public accounting background) are less (more) likely to report externally

Comprehensive performance measurement systems design and organizational effectiveness

Purpose The purpose of this paper is to provide empirical evidence regarding the relationship between the level of comprehensiveness of a performance measurement system (PMS) and its respective organizational effectiveness. The extant literature has highlighted that a PMS may successfully contribute to the implementation of the organizational strategy, with the balanced scorecard (BSC) serving as an exemplar of a strategy performance management tool and playing a primary role to this end. However, the reasons for the overall high rate of failure in the implementation of the BSC remain unexplained and, to date, little empirical research exists regarding the design of PMSs such as the BSC and its constituent elements. Design/methodology/approach Using a survey of 103 Italian managers, the paper advances a model describing a comprehensive BSC design, after identifying the key attributes from the performance management literature. Data were analyzed using cluster analysis and multiple regression analysis. Findings Results suggest that organizations are implementing the BSC following two different approaches, which vary from a less comprehensive to a more comprehensive design. More importantly, the BSC design explains variation across three organizational effectiveness measures: improvements in translating the organizational strategy into operational goals, understanding cause–effect relationships and enhancing internal communication among employees. Originality/value The paper builds on and extends the previous literature on performance management in two ways. First, via a literature review, it introduces a model describing a comprehensive BSC design, which includes 12 attributes. Second, it demonstrates that organizational effectiveness varies positively with the level of comprehensiveness of the BSC design

Exploring Slider vs. Categorical Response Formats in Web-Based Surveys

Web-based surveys have become a common mode of data collection for researchers in many fields, but there are many methodological questions that need to be answered. This article examines one such question—do the use of sliders to express numerical amounts and the use of the more traditional radio-button scales give the same, or different, measurements? First, we review the central debates surrounding the use of slider scales, including advantages and disadvantages. Second, we report findings from a controlled simple randomized design field experiment using a sample of business managers in Italy to compare the two response formats. Measures of topic sensitivity, topic interest, and likelihood of participation were obtained. No statistically significant differences were found between the response formats. The article concludes with suggestions for researchers who wish to use slider scales as a measurement device

The influence of cultural context in managerial decision-making: legitimacy views of Finnish and Italian managers

This study examines the influence of cultural context in managerial decision-making by comparing the legitimacy views of Finnish and Italian business managers. In the business context, managers often make decisions based on economic interests only; but for moral decisions, other means of legitimacy are required. Although both Finland and Italy are members of the European Union (EU), they have significant differences in terms of culture and economy. Finland is a North-European country with Protestant religion and low level of corruption, while Italy is a South-European country with the Catholic religion and high level of corruption. The study contributes to previous research on managerial decision-making by showing, with a qualitative approach, that Finnish managers rely more on property and perception view of legitimacy in their decision-making, whereas Italian managers rely more on a process view of legitimacy in their decision-makin

"How dare you?!": A self-verification perspective on how performance influences the effects of abusive supervision on job embeddedness and subsequent turnover

Higher-performing employees are extremely important to organizations due to their superior contribution to unit performance and vaulted value within their teams. In turn, they espouse higher work-specific self-worth (WSSW) evaluations that influence how they react to abusive supervision. Taking a self-verification perspective, we theoretically explain how performance (through WSSW) augments the aversive nature of abusive supervision, which in turn affects higher-performing employees' job embeddedness and subsequent decisions to quit their jobs. Across three field studies, our model is supported as we find that performance is positively related to WSSW, which magnifies the negative effects of abusive supervision on satisfaction. Consequently, we discover that as job performance (and in turn self worth) increases, abusive supervision indirectly reduces job embeddedness and increases turnover through two forms of satisfaction. We expound upon how these findings contribute to both theory and practice.Peer reviewedBusiness Managemen

The Impact of the Investors in People Standard on People Management Practices and Firm Performance

This document reports on an extensive study into the impact of the Investors in People Standard on business performance. We started by reviewing what is already known about the Standard’s impact on business performance, before building a framework of the expected benefits of IIP from the Strategic Human Resource Management literature. This framework was tested using case studies, a survey and financial analysis to create a body of knowledge that improves our understanding of how the Investors in People Standard improves business performan

Alignment Between Performance Metrics And Business Strategy: Does It Impact Organizational Performance?

This study establishes that a certain type of performance metrics (operational/financial or strategic/relational) is more suitable for pursuing a particular business strategy— prospector/reactor. Using data from 372 organizations, we test hypotheses about the relationships between types of performance metrics emphasized and 1) structural variables, such as organization size and nature of the organization—manufacturing/service and multinational/domestic) and 2) the type of business strategy pursued. We also investigate the overall organizational performance impact of the fit between the types of performance metrics utilized and the business strategy pursued