Definition of ‘performance management’ in academic literature
Bititci, Carrie & McDevitt, 1997 define performance management as a “process by which the company manages its performance in line with its corporate and functional strategies and objectives”. This definition is often used in management research studies. According to Bititci, Carrie & McDevitt, it is the objective of that process to provide an integrated control system, where the corporate and functional strategies are deployed to all business processes, activities, tasks and personnel, and feedback is obtained through the performance measurement system to enable appropriate management decisions. The ultimate purpose of that process is to improve company performance.
Performance measurement is an essential part of the performance management. By measuring, people transform complex reality into simplified numerical concepts that can be easily communicated and acted upon (Lebas, 1995). According to Lebas, the simplification of reality by measuring is the prerequisite of successful management. Similarly, Bititci et al., 1997 argue that performance measurement is at the heart of the performance management process and it is of critical importance to the effective and efficient functioning of performance management. Performance measurement (PM) can be defined from different perspectives. These perspectives are:
- processual perspective (e.g. Neely, Gregory & Platts, 1995; Neely, Gregory & Platts, 2005);
- technological perspective (e.g. Chenhall & Langfield-Smith, 2007; Grafton, Lillis & Widener, 2010);
- business perspective (e.g. Bourne, Neely, Mills & Platts, 2003; Henri, 2004).
3 suggestions for further reading
A more detailed discussion regarding the “good definition” of performance management is to be found in Franco-Santos et al., 2007. The authors review several definitions from literature and identify the key characteristics of performance management. To better understand why a “good definition” is so important, you may want to look into the guidelines on the concept definitions in management research by Bisbe, Batista-Foguet & Chenhall, 2007. They provide an easy to understand “how to” description. Finally, if you are interested in a recent overview the latest performance management literature, Franco-Santos, Lucianetti & Bourne, 2012 is a good choice. The authors propose a 4-dimensioanal framework how to structure performance management literature, which can be used for literature reviews.
Bisbe, J., Batista-Foguet, J.-M., & Chenhall, R. H. (2007). Defining management accounting constructs: A methodological note on the risks of conceptual misspecification. Accounting, Organizations and Society, 32(7-8), 789–820.
Bititci, U. S., Carrie, A. S., & McDevitt, L. (1997). Integrated performance measurement systems: A development guide. International Journal of Operations & Production Management, 17(5), 522–534.
PDF: Bourne, M., Neely, A., Mills, J., & Platts, K. (2003). Implementing performance measurement systems: A literature review. International Journal of Business Performance Management, 5(1), 1–24.
PDF: Chenhall, R. H., & Langfield-Smith, K. (2007). Multiple perspectives of performance measures. European Management Journal, 25(4), 266–282.
PDF: Franco-Santos, M., Kennerley, M., Micheli, P., Martinez, V., Mason, S., Marr, B., … (2007). Towards a definition of a business performance measurement system. International Journal of Operations & Production Management, 27(8), 784–801.
Grafton, J., Lillis, A. M., & Widener, S. K. (2010). The role of performance measurement and evaluation in building organizational capabilities and performance. Accounting, Organizations and Society, 35(7), 689–706.
PDF: Henri, J.-F. (2004). Performance measurement and organizational effectiveness: Bridging the gap. Managerial Finance, 30(6), 93–123.
Lebas, M. J. (1995). Performance measurement and performance management: Proceedings of the 12th International Conference on Production Research. International Journal of Production Economics, 41(1-3), 23–35.
PDF: Neely, A., Gregory, M., & Platts, K. (1995). Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, 50(4), 80–116.
Neely, A., Gregory, M., & Platts, K. (2005). Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, 25(12), 1128–1263.