Understanding the features of performance measurement system: a literature review

The purpose of this paper is to identify the required factors that can be considered necessary in conceptualizing the features of an efficient and effective performance measurement system (PMS) that is appropriate in the modern organizational setting. The field of PMS is heavily researched and yet certain fundamentals of PMS, in particular the precise meaning and application of the features of PMS: data, measuring attributes consisting of measures, metrics and indicators, and methods of measurement remain unclear.

The paper uses a systematic approach in reviewing and examining existing PMS and non-PMS articles that focus on the features for measurement from 1990 (January) to 2012 (November). Further, citation analysis was used to support the review as well-cited articles are considered well-read by researchers, and hence they should have sufficient impact in the academic community.

The outcomes of this review contribute and update existing literature on PMS in three ways: identification of gaps in terms of practical usefulness and academic research; suggestions of solutions in the form of a conceptual framework to improve measurement and performance measurement using the correct features of PMS; and recommendation of a direction for future research with regard to the features of PMS.

Although the proposed concept has many merits, the conceptualized features (as yet) have not reached the stage beyond normative reasoning.

The paper defines a measure, metric and an indicator which relates to the use of accounting and non-accounting data, and suggests some of the non-accounting methods of measurement and performance measurement that can be used generally in various organizations. Using an illustration, this paper suggests appropriate ways to construct and implement the measuring attributes using appropriate measuring methods in a car maker. This paper also warns users to construct and use the features of PMS judiciously as incorrect uses of these attributes can easily be misconstrued, and thus causing incorrect inferences in decision-making.

This is a seminar paper that defines the measuring attributes of PMS for the conceptualization of a workable framework of the features of PMS.