Adaptation of performance Adaptation of performance management systems to changing management systems to changing organizations’ performance driversorganizations’ performance drivers

[first draft of international research project][first draft of international research project]Submitted by: Jaroslav Wagner, University of Economics, Submitted by: Jaroslav Wagner, University of Economics,

Prague, Czech RepublicPrague, Czech Republic

Premises for researchPremises for research(What we want to do and achieve?)(What we want to do and achieve?)

To enhance research on performance management To enhance research on performance management issues for business firms in the Central and Eastern issues for business firms in the Central and Eastern Europe CountriesEurope Countries→ Respecting contemporary research findingsRespecting contemporary research findings→ Recognizing and analyzing crucial external and internal Recognizing and analyzing crucial external and internal

determinants of performance as dimensions that encourage determinants of performance as dimensions that encourage business growthbusiness growth

To improve integration of knowledge base introduced by To improve integration of knowledge base introduced by managerial and controlling theories and concepts with managerial and controlling theories and concepts with professional experiences from business sector professional experiences from business sector specialistsspecialists

Central research hypothesisCentral research hypothesis

Changes in external business environment and in Changes in external business environment and in internal characteristics of business process cause internal characteristics of business process cause alteration of key drivers of companies’ performance. alteration of key drivers of companies’ performance.

Recognizing of changing dimensions and their Recognizing of changing dimensions and their integration in performance management systems integration in performance management systems influence the opportunity for survival and growth of the influence the opportunity for survival and growth of the company significantly.company significantly.

Definition of performanceDefinition of performance

The ability of company to achieve its goalsThe ability of company to achieve its goals→ ““What are the right things we can/shall do?”What are the right things we can/shall do?”→ Roots: Strategy formulation/ definition and goals settingRoots: Strategy formulation/ definition and goals setting→ Manifested by effectiveness of companyManifested by effectiveness of company

The ability of company to realize it in a rational wayThe ability of company to realize it in a rational way→ ““How to realize them right?”How to realize them right?”→ Roots: Strategy implementation/transformation and management Roots: Strategy implementation/transformation and management

controlcontrol→ Manifested by efficiency of organizational processesManifested by efficiency of organizational processes

Dimensions of performance focused Dimensions of performance focused in research projectin research project

Three crucial dimensions examined in correspondence Three crucial dimensions examined in correspondence with both components of performance definition:with both components of performance definition:

EthicalEthical→ Basis: managerial view on human behaviors and motivationBasis: managerial view on human behaviors and motivation→ Focus: organizational ethical control systems emphasizing Focus: organizational ethical control systems emphasizing

compensation and rewarding systemscompensation and rewarding systems

EnvironmentalEnvironmental→ Basis: stakeholder approach to Corporate Governance issues Basis: stakeholder approach to Corporate Governance issues → Focus: environmental accounting and realization of concept of Focus: environmental accounting and realization of concept of

sustainability growthsustainability growth

InnovationalInnovational→ Basis: intellectual capital as key performance driverBasis: intellectual capital as key performance driver→ Focus: control systems for innovational processes emphasizing Focus: control systems for innovational processes emphasizing

efficiency measures for innovational processes evaluationefficiency measures for innovational processes evaluation

Ethical dimensionEthical dimension

Hypothesis:Hypothesis:

Separating owners` and managers` role in large companies, Separating owners` and managers` role in large companies, differences in motivation and potential goals incongruence initiate differences in motivation and potential goals incongruence initiate need for formulation of organization's ethical code and need for formulation of organization's ethical code and implementation of ethical control system in these companies.implementation of ethical control system in these companies.

Related questions:Related questions:→ Which management accounting tools serve as information, Which management accounting tools serve as information,

communication or control element of organization's ethical communication or control element of organization's ethical control system?control system?

→ Are these tools implemented consistently through the hierarchy Are these tools implemented consistently through the hierarchy of organizational structure?of organizational structure?

Environmental dimensionEnvironmental dimension

Hypothesis: Hypothesis:

Global environmental agenda influences accountability and Global environmental agenda influences accountability and environmental management accounting in business sector. environmental management accounting in business sector. Companies monitor and evaluate their impact on environment Companies monitor and evaluate their impact on environment increasingly which is significant for reduction of this negative impact.increasingly which is significant for reduction of this negative impact.

Related questions:Related questions:→ Which concepts and approaches of environmental accounting Which concepts and approaches of environmental accounting

are realized in inspected companies?are realized in inspected companies?→ Does the realization of sustainability growth concept influence Does the realization of sustainability growth concept influence

Corporate Governance issues?Corporate Governance issues?

Innovational dimensionInnovational dimension

Hypothesis:Hypothesis:Innovational processes represent key performance driver Innovational processes represent key performance driver nevertheless they bear enormous costs and risk. Companies nevertheless they bear enormous costs and risk. Companies measure and control related costs and effects to enhance efficiency measure and control related costs and effects to enhance efficiency and diversify risk.and diversify risk.

Related questions:Related questions:→ Which management accounting tools are used for control of Which management accounting tools are used for control of

innovational processes?innovational processes?→ How effects and probability of innovational processes’ impact How effects and probability of innovational processes’ impact

can be measured?can be measured?→ What approaches can be applied to diversify risk and prevent What approaches can be applied to diversify risk and prevent

pitfalls of innovational processes?pitfalls of innovational processes?

Focused performance dimensions Focused performance dimensions in extended BSC frameworkin extended BSC framework

VISION VISION AND AND

STRATEGSTRATEGYY

SHAREHOLDERS

STAKEHOLDERSADAPTING AND

INNOVATING PROCESSES

HUMAN AND ORGANIZATIONAL

CAPITAL

Environmental

Innovational

Ethical

Comments at the first meetingComments at the first meeting

There's no way of showing that a specific critical success factor has There's no way of showing that a specific critical success factor has impact on corporate financial performance. That research direction impact on corporate financial performance. That research direction would be a far too generalised one.would be a far too generalised one.

Environmental reporting. We will be using the wider concept of ER – Environmental reporting. We will be using the wider concept of ER – covering both environmental and societal issues according to the covering both environmental and societal issues according to the concept of sustainable development. For greater acceptance by concept of sustainable development. For greater acceptance by target audience we will use the „buzz“ words such as Corporate target audience we will use the „buzz“ words such as Corporate Social Responsibility.Social Responsibility.

Harmonisation/congruence between strategy and Harmonisation/congruence between strategy and environmental/CSR activities can be studied. See Kaplan's Strategic environmental/CSR activities can be studied. See Kaplan's Strategic Alignment and Porter's work on whether CSR has a positive impact.Alignment and Porter's work on whether CSR has a positive impact.

Research DesignResearch Design

Two-phase research process proposed:Two-phase research process proposed: First phaseFirst phase

→ Empirical research based on questionnaire realized in specified Empirical research based on questionnaire realized in specified sample of business companies in participating countriessample of business companies in participating countries

→ For increasing of data validation two different respondents will For increasing of data validation two different respondents will be contacted in each company – CEO or other member of top-be contacted in each company – CEO or other member of top-management and chief of controlling departmentmanagement and chief of controlling department

→ Data will be analyzed by quantitative method primarilyData will be analyzed by quantitative method primarily

Second phaseSecond phase→ Research based on interviews with selected companies Research based on interviews with selected companies

contacted in first phasecontacted in first phase→ According to conditions different case studies can be focused on According to conditions different case studies can be focused on

particular dimension particular dimension

Comments at the first meetingComments at the first meeting

The research design will have to balance global and local research The research design will have to balance global and local research practices not to force all local differences into one global template practices not to force all local differences into one global template (and thus erase them). A possible solution is to make the first (and thus erase them). A possible solution is to make the first research phase network-wide with a single research framework for research phase network-wide with a single research framework for all local partners followed by the second phase with a single all local partners followed by the second phase with a single research methodology (case studies) emphasising/highlighting local research methodology (case studies) emphasising/highlighting local specific issues.specific issues.

How will performance measurement systems (PMS) and How will performance measurement systems (PMS) and performance drivers be measured and researched? How do we performance drivers be measured and researched? How do we want to refer to changes in them? How to describe the state before want to refer to changes in them? How to describe the state before and after? Are we able to describe all aspects of PMS? Should we and after? Are we able to describe all aspects of PMS? Should we focus only on organisational or information aspects of drivers? We focus only on organisational or information aspects of drivers? We will also have to describe relationships between the different will also have to describe relationships between the different aspects...aspects...

Sample specificationSample specification

Non-financial business companiesNon-financial business companies

For comparison reasons sample determination according For comparison reasons sample determination according to industry is appliedto industry is applied

Following industries are suggested for researchFollowing industries are suggested for research→ Automotive industryAutomotive industry→ Food industryFood industry→ TelecommunicationsTelecommunications

Comments at the first meetingComments at the first meeting

When speaking about automotive industry what kind of firms do we When speaking about automotive industry what kind of firms do we have in mind? Are they final product (car) producers or second have in mind? Are they final product (car) producers or second tier/third tier suppliers? The same question is valid for tier/third tier suppliers? The same question is valid for telecommunications and food industries.telecommunications and food industries.

Usually it is wiser to adopt a much narrower focus, may be a single Usually it is wiser to adopt a much narrower focus, may be a single one (out of the proposed three)? How shall it be chosen? All of them one (out of the proposed three)? How shall it be chosen? All of them have own methodological limits. What if we discussed that with our have own methodological limits. What if we discussed that with our research network partners? They might feel better about some of research network partners? They might feel better about some of them due to their sources of financing – they may say “we are them due to their sources of financing – they may say “we are interested in axis 1 because we can obtain money for that particular interested in axis 1 because we can obtain money for that particular issue...”issue...”

Participating countriesParticipating countries

Czech RepublicCzech Republic→ University of Economics, PragueUniversity of Economics, Prague

GermanyGermany→ International Performance Research InstituteInternational Performance Research Institute

HungaryHungary→ Corvinus University, BudapestCorvinus University, Budapest

PolandPoland→ University of LodzUniversity of Lodz

EstoniaEstonia→ University of TartuUniversity of Tartu

Next steps …Next steps …

All partners are asked to give feedback to first draft and All partners are asked to give feedback to first draft and provide their ideas for common research.provide their ideas for common research.

A General Meeting with all partners in Prague is A General Meeting with all partners in Prague is proposed for June 24-27 or July 1-4 (to be confirmed).proposed for June 24-27 or July 1-4 (to be confirmed).