Importance of Different Perspectives in Integrated Performance Measurement Systems

Abstract

Purpose – Performance management literature advocates the usage of integrated performance measurement systems (IPMS), which incorporate financial as well as non-financial measures of performance. One of the best known IPMS, the Balanced Scorecard (BSC), categorises performance measures into four basic perspectives: financial, customer, internal business processes, and learning and growth perspective. The aim of this paper is to find out whether the measures used by Slovenian companies can also be grouped according to these four perspectives and if yes – is there a significant difference in average overall importance of different perspectives between companies that use IPMS and companies that do not use such systems. Also, we would like to find out if performance perspectives are weighted equally by companies using IPMS or is there any weighting bias.

Design/methodology/approach – Data for the study were collected from 249 companies during the survey “Cost management and contemporary management tools in Slovenian companies”. Importance of different performance indicators was measured using a five-point Likert scale and respondents were asked to evaluate the importance of 70 financial and non-financial measures. We tested our research hypotheses using several statistical techniques, such as principal component analysis and discriminant analysis.

Findings – Overall, the results confirm that non-financial measures can be grouped according to proposed nonfinancial perspectives (according to the BSC). Also, the average overall importance of different perspectives differs between companies that use IPMS and companies that do not use such systems, even though this difference is statistically significant only for financial and learning and growth perspective. Furthermore, the results indicate that different perspectives are not weighted equally and weighting bias appears to be greater for companies using IPMS than for companies not using such systems.

Research limitations/implications – The generalisation of research results is limited because only Slovenian companies were included in the survey. This study begins to reveal possible reasons that could influence the effectiveness of IPMS. Further research should focus on studying the relationship between IPMS’s effectiveness and overall importance of different performance perspectives. In order to get a better understanding of this issue, case study approach should also be used in the future.