The dynamic nature of performance management is a significant issue for organisations. A review of the empirical performance management literature highlights that little research has examined an organisation�s holistic performance management framework. Most prior studies have been partial (i.e., examine various performance management elements), and there is a lack of depth in analysis (because of the short-term nature of many studies). In addition to the few studies that have examined the interconnections between the performance management elements, there has also been a lack of research examining incentive systems (especially at lower levels), target-setting, and performance evaluation. The literature review in this thesis also highlights the diversity in the performance management elements studied, the lack of theoretical development, diversity in who is interviewed and research sites, etc. This diversity in field study research provides a difficult base on which to build a cumulative body of literature (as most studies examine a different research question in a different context).
This PhD research examines the overall performance management framework in a large and complex Australasian organisation, Sensol, over a 14 year period. The research is inductive, empirical and interpretative so as to gain a deeper understanding of Sensol�s performance management framework. The narrative highlights the multiple voices that exist in Sensol to illustrate the complexity of performance management at various levels. Otley�s (1999) performance management framework is a useful research tool (e.g., initial data analysis, structuring device).
The documentary evidence traces the history and development of Sensol�s performance management framework. The designers� story tells about the sophisticated nature of Sensol�s approach to performance management. In contrast, the business unit managers describe the complexities in operationalising performance management in a complex, diversified and decentralised organisation.
The researcher�s story explains the importance of understanding the highly interconnected nature of Sensol�s performance management framework and of understanding the behavioural issues (e.g., intense sibling rivalry, short-termism). It includes the importance of history, context (e.g., hierarchical culture), decentralised structure (e.g., interrelated business units), the trade-offs between financial and social objectives (and signalling effect of weightings), performance measurement issues (e.g., EVA�, scorecard, dominance of EBIT, transfer pricing), the subjectivity of objective setting and performance management processes (e.g., averaging, little differentiation between good and poor performers), problems with the annual incentive scheme (e.g., double dipping, risk and penalties, lack of understanding and line of sight, low trust), strategic programmes (e.g., lack of visibility), target-setting (e.g., conservative targets, impact of capping), and information flows (i.e., poor data, black boxes).
The research also highlights the importance of understanding how the formal and informal performance management systems operate. There are considerable differences between the designers� rhetoric on the formal HPMF system (i.e., the intended design), compared to the system in use (e.g., formal and informal systems). This point has been recognised in some prior field studies but is an under-researched area. An understanding of the impact of the background to the performance management literature from classical management theory provides some insights into why the value-based management literature focuses on formal system design control tools, goal congruence, top-down focus, and the universal applicability of their techniques. Ignoring informal systems may be one reason that the traditional control problems remain evident with the new value-based management techniques.
A final contribution of this PhD research is to use historical documents to identify how little change there has been over time and how performance management issues keep going around in circles (e.g., lack of accountability, transfer pricing). Some reasons for these circles include that history is lost, complacency, culture, communication issues (e.g., good news, blocking behaviours, standardisation). A feature of Sensol�s performance management framework is how it used EVA� and the balanced scorecard in a complementary manner. However, rather than adopting these new techniques as prescribed by consultants, Sensol built these new techniques onto their existing performance management system. This highlights the importance of understanding the history of an organisation�s performance management framework, so as to understand the reasons for the current design and operation.
| Identifer | oai:union.ndltd.org:ADTP/266412 |
| Date | January 2006 |
| Creators | Stringer, Carolyn Patricia, n/a |
| Publisher | University of Otago. Department of Accountancy and Business Law |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | http://policy01.otago.ac.nz/policies/FMPro?-db=policies.fm&-format=viewpolicy.html&-lay=viewpolicy&-sortfield=Title&Type=Academic&-recid=33025&-find), Copyright Carolyn Patricia Stringer |
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