Successful Performance Measurement in SMEs through Personnel Participation

Janne Sinisammal, Pekka Belt, Janne Harkonen, Matti Mottonen, Seppo Vayrynen

University of Oulu, Oulu, Finland.
University of Oulu, Oulu, Finland..

DOI: 10.4236/ajibm.2012.22005                

Abstract

Balanced scorecard has proven to be a functional tool for large companies, however, small- and medium-sized enter-prises (SME) have experienced it too complicated for their purposes. The aim of this research is to analyse the potential of simplifying balanced scorecard in order to acknowledge the practical realities of SMEs. The results of this study in-dicate that the viewpoints covered by balanced scorecard can be simplified into three categories of productivity, work fluency, and safety. A simplified balanced scorecard can act as a tool for internal communication in SMEs, by converting company strategy into common terms understandable by the employees. The managers of SMEs can use the results of this study as an example when considering the implementation of their business strategy. It is vital to involve employees when developing performance indicators.

Keywords

Performance Indicator; Balanced Scorecard; Employee Participation; Internal Communication; Critical Success Factor; Working Life; SME

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	J.-F. Henri, “Performance Measurement and Organizational Effectiveness: Bridging the Gap,” Managerial Finance, Vol. 30, No. 6, 2004, pp. 93-123. doi:10.1108/03074350410769137
[2]	E. G. Flamholtz, T. K. Das and A. S. Tsui, “Toward an Integrative Framework of Or-ganizational Control,” Accounting, Organizations and Society, Vol. 10, No. 1, 1985, pp. 35-50. doi:10.1016/0361-3682(85)90030-3
[3]	F. W. Taylor, “The Principles of Scientific Management,” Harper, New York, 1914.
[4]	S. Saari, “Tulosmatriisiohjaus: Ominaisuudet ja K?ytt?: Miten Saada Halutut Asiat Tehdyksi Organisaatiossa,” Mido Oy, Helsinki, 2004.
[5]	Z. J. Radnor and D. Barnes, “Historical Analysis of Performance Measurement and Man-agement in Operations Management,” International Journal of Productivity and Performance Management, Vol. 56, No. 5/6, 2007, pp. 384-396. doi:10.1108/17410400710757105
[6]	D. J. Fellner and B. Sulzer-Azaroff, “Increasing Industrial Safety Practices and Conditions through Posted Feed- back,” Journal of Safety Research, Vol. 15, No. 1, 1984, pp. 17-21. doi:10.1016/0022-4375(84)90026-4
[7]	J. Komaki, K. D. Barwick and L. R. Scott, “A Behavioral Approach to Occupa-tional Safety: Pinpointing and Reinforcing Safety Performance in a Food Manufacturing Plant,” Journal of Applied Psychology, Vol. 63, No. 4, 1978, pp. 434-445. doi:10.1037/0021-9010.63.4.434
[8]	B. Sulzer-Azaroff, “Be-havioral Ecology and Accident Prevention,” Journal of Organ-izational Behavior Management, Vol. 2, No. 1, 1978, pp. 11-44. doi:10.1300/J075v02n01_02
[9]	J. Sinisammal and A. Reiman, “R??t?l?ity Palautej?rje- stelm? Ty?turvallisuuden Kehitt?misty?kaluna Paperiteo- llisuudessa—Seurantatutkimus Yhdeks?st? Mittaristosta,” Ty?el?m?n Tutkimus—Arbetslivsforskning, Vol. 2, 2010, pp.188-195.
[10]	K. L. Saarela, “An Intervention Program Utilizing Small Groups: A Comparative Study,” Journal of Safety Re- search, Vol. 21, No. 4, 1990, pp. 149-156. doi:10.1016/0022-4375(90)90022-4
[11]	J. Saari and M. N?s?nen, “The Effect of Positive Feed- back on Industrial Housekeeping and Accidents: A Long Term Study at a Shipyard,” International Journal of Industrial Ergonomics, Vol. 4, No. 3, 1989, pp. 201-211. doi:10.1016/0169-8141(89)90003-6
[12]	R. S. Kaplan and D. P. Norton, “The Balanced Scorecard: Translating Strategy into Action,” Harvard Business Re- view Press, Boston, 1996.
[13]	J. N. Sorensen, “Safety Culture: A Survey of the State-of- the-Art,” Reliability Engineering & System Safety, Vol. 76, No. 2, 2002, pp. 189-204. doi:10.1016/S0951-8320(02)00005-4
[14]	J. L. Riggs, “The Objective Matrix: A Versatile and Proven Method to Achieve Accountability and Motivation through Productivity Measurement,” Proceedings of the 4th World Productivity Congress, Oslo, 13-16 May 1984, 12 p.
[15]	S. Tangen, “Performance Measurement: From Philosophy to Practice,” International Journal of Productivity and Performance Management, Vol. 53, No. 8, 2004, pp. 726- 737. doi:10.1108/17410400410569134
[16]	B. H. Maskell, “Performance Measures for World Class Manufacturing: A Model for American Companies,” Productivity Press, Shelton, 1989.
[17]	R. S. Kapla and D. P. Norton, “Putting the Balanced Scorecard to Work,” Harvard Business Review, 1993, pp. 134- 147.
[18]	B. Marr and G. Schiuma, “Business Performance Measurement—Past, Present and Future,” Management Decision, Vol. 41, No. 8, 2003, pp. 680-687. doi:10.1108/00251740310496198
[19]	A. M. Ghalayini, J. S. Noble and T. J. Crowe, “An Integrated Dynamic Performance Measurement System for Improving Manufacturing Competitiveness,” International Journal of Production Economics, Vol. 48, No. 3, 1997, pp. 207-225. doi:10.1016/S0925-5273(96)00093-X
[20]	H. Ahn, “Applying the Balanced Scorecard Concept: An Experience Report,” Long Range Planning, Vol. 34, No. 4, 2001, pp. 441-461. doi:10.1016/S0024-6301(01)00057-7
[21]	H. Haapasalo, K. Ingalsuo and T. Lenkkeri, “Linking Strategy into Operational Management: A Survey of BSC Implementation in Finnish Energy Sector,” Benchmarking: An International Journal, Vol. 13 No. 6, 2006, pp. 701-717. doi:10.1108/14635770610709068
[22]	A. Neely, J. Mills, K. Platts, H. Richards, M. Grogory, M. Bourne and M. Kennerley, “Performance Measurement System Design: Developing and Testing a Process-Based Approach,” International Journal of Operations & Production Management, Vol. 20, No. 10, 2000, pp. 1119- 1145. doi:10.1108/01443570010343708
[23]	H. Rantanen, J. Ukko, J. Tenhunen and M. Rehn, “The Implementation of Performance Measurement System in SMEs,” Proceedings of ICPR-16, Prague, 29 July-3 Au- gust 2001, 17 p.
[24]	A. Reiman and S. V?yrynen, “Review of Regional Work- place Development Cases: A Holistic Approach and Pro-posals for Evaluation and Management,” International Journal of Sociotechnology and Knowledge Development, Vol. 3, No. 1, 2011, pp. 55-70. doi:10.4018/jskd.2011010103
[25]	J. Wilson, H. Haines and W. Morris, “Participatory Ergonomics,” In: J. R. Wilson and N. Corlet, Eds., Evaluation of Human Work, Taylor & Francis Group, London, 2005, pp. 933-962. doi:10.1201/9781420055948.ch36
[26]	J. Ukko, J. Karhu, S. Pekkola, H. Rantanen and J. Ten- hunen, “Suorituskyky Nousuun! Hy?dynn? Henkil?-St?si Osaaminen,” Tykes Raportti 57, Helsinki, 2007.
[27]	R. McAdam, “Quality Models in an SME Context: A Cri- tical Perspective Using a Grounded Approach,” Interna- tional Journal of Quality & Reliability Management, Vol. 17, No. 3, 2000, pp. 305-323. doi:10.1108/02656710010306166
[28]	R. Kaplan and D. P. Norton, “The Balanced Scorecard— Measures That Drive Performance,” Harvard Business Review, 1992, pp. 71-79.
[29]	C. D. Itther, D. F. Larcker and M. W. Meyer, “Subjectivity and the Weighting of Performance Measures: Evidence from a Balanced Scorecard,” The Accounting Review, Vol. 78, No. 3, 2003, pp. 725-758. doi:10.2308/accr.2003.78.3.725
[30]	P. Kujansivu, “Opera-tionalising Intellectual Capital Management: Choosing a Suitable Approach,” Measuring Business Excellence, Vol. 12, No. 2, 2008, pp. 25-37. doi:10.1108/13683040810881171
[31]	I. Cobbold and G. Lawrie, “The Development of the Balanced Scorecard as a Strategic Management Tool,” Proceedings of the 2002 PMA Conference, Boston, 17-19 July 2002, 9 p.
[32]	S. Mooraj, D. Oyon and D. Hostettler, “The Balanced Scorecard: A Necessary Good or an Unnecessary Evil?” European Management Journal, Vol. 17, No. 5, 1999, pp. 481-491. doi:10.1016/S0263-2373(99)00034-1
[33]	M. Nagamachi, “Kansei Engineering as a Powerful Consumer-Oriented Technology for Product Development,” Applied Ergonomics, Vol. 33, No. 3, 2002, pp. 289-294. doi:10.1016/S0003-6870(02)00019-4
[34]	E. Ramstad, “Innovation Generating Model—Simultaneous Development of Work Organization and Knowledge Infrastructure Experimenting: In the Field of Organizational Development,” Tekes, Helsinki, 2008.
[35]	C. Ichniowski, K. Shaw and G. Prennushi, “The Effects of Human Resource Management Practices on Productiv-ity: A Study of Steel Finishing Lines,” American Economic Review, Vol. 87, No. 3, 1997, pp. 291-313.
[36]	P. Tynj?l?, “Perspectives into Learning at the Workplace,” Educational Research Review, Vol. 3, No. 2, 2008, pp. 130-154. doi:10.1016/j.edurev.2007.12.001
[37]	T. Zwick, “Employee Participation and Productivity,” Labor Economics, Vol. 11, No. 6, 2004, pp. 715-740. doi:10.1016/j.labeco.2004.02.001
[38]	J. T. Delaney and M. A. Huselid, “The Impact of Human Resource Management Practices on Perceptions of Organisational Performance,” Academy of Management Journal, Vol. 39, No. 4, 1996, pp. 949-969. doi:10.2307/256718
[39]	R. Merton, M. Fiske and P. Kendall, “The Focused Interview: A Manual of Problems and Procedures,” 2nd Edition, Free Press, New York, 1990.
[40]	J. Tuomi and A. Saraj?rvi, “Laadullinen Tutkimus ja Sis?ll?nanalyysi,” Tammi, Jyv?skyl, 2009.