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Increasing the enabling use of performance measures: a longitudinal quasi natural experiment

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Abstract

In this paper, we study how organizational members’ perceptions of the enabling use of performance measures is increased when the case company adopted lean principles in one of its production-support departments. The theory of enabling formalization is applied to gauge and understand the extent to which organizational members perceive performance measures, such as key performance indicators (KPIs), as enabling (i.e. as a vehicle creating continuous improvement). We empirically confirm a positive relation between changing the context of performance measures and the perceived level of enabling use of KPIs by applying a difference-in-differences test. We also show that the increase in perceptions of the enabling use of KPIs is associated with improved perceived performance (e.g. time consumption, quality). We measure the perceived enabling use using data gathered from questionnaires distributed over several rounds in both the department implementing lean principles and a non-affected control department. As such, our study involves a longitudinal, quasi-natural experiment. We confirm the statistical results through interviews, observations, and internal documents from the case company.

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Notes

  1. We conducted more than 40 interviews lasting between 30 min and 2 h. The interviews also covered topics beyond enabling formalization and KPIs, as this study was part of a larger study on learning organizations and lean principles. Hence, only small portions of each interview targeted this study. The interviews were recorded. They were carried out during the period in which the company was implementing lean principles, and they followed the same timing as the distribution of the questionnaire.

  2. The treatment department is the department that was exposed to the lean implementation, while the control department was not exposed to this treatment.

  3. The questions are using the term “increased”, and a labeled scale from strongly disagree to strongly agree, which prevented the respondents to fully differentiate between a non-change and decrease, e.g. responding “strongly disagree” may not fully reflect a decrease. Thus, we mainly measure whether an improvement change from status-quo or decrease has incurred.

  4. To the best of our knowledge, the only other longitudinal research on enabling formalization that uses statistical testing is Wouters and Wilderom (2008). However, those authors run two separate regression analyses on each wave of survey data. Hence, they do not statistically test the difference between the waves.

  5. The study does not include a placebo-effect control. It is difficult to do this in management science. Moreover, the effects in this study are on the perception of KPIs. These are specific effects that the organizational members did not diagnose as a “disease” beforehand, which would be the case in medical studies where the treated person has a specific health problem.

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Author information

Authors and Affiliations

  1. Business School, Aalborg University, Fibigerstraede 2 , 9220, Aalborg, Denmark

    Thomas Borup Kristensen

  2. Department of Material and Production, Aalborg University, Aalborg, Denmark

    Henrik Saabye

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  1. Thomas Borup Kristensen
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  2. Henrik Saabye
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Correspondence to Thomas Borup Kristensen.

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Appendix A

Appendix A

Survey questions

All questions should be answered on the following scale of 1–7:

  • 1: Strongly disagree.

  • 2: Disagree.

  • 3: Somewhat disagree.

  • 4: Neutral.

  • 5: Somewhat agree.

  • 6: Agree.

  • 7: Strongly agree.

Enabling:

Please indicate to what extent you agree/disagree that the way you use the formal KPIs (key performance indicators—both financial and non-financial) helps you to….

  1. 1.

    Determine whether our current way of doing things is the most appropriate

  2. 2.

    Increase your knowledge about the current best way to work in your responsibility area

  3. 3.

    Communicate whether your actions support implementation of our overall business strategy

  4. 4.

    Create flexible measurement of the impact of new solutions/improvements

Perceived performance:

Please state the level of job performance.

  • (PERF_1) The level of my performance relative to my performance standards (expectations) has increased the last 3 months.

  • (PERF_2) The level of my performance has increased the last 3 months.

  • (PERF_3) Time per process has been reduced the last 3 months.

  • (PERF_4) Variability (fluctuations) of time and quality per process has been reduced the last 3 months.

  • (PERF_5) Quality of my work has improved the last 3 months.

  • (PERF_6) The value you have participated in delivering to your internal customers has increased the last 3 months.

  • (PERF_7) The level of my teams’ performance has increased the last 3 months.

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Kristensen, T.B., Saabye, H. Increasing the enabling use of performance measures: a longitudinal quasi natural experiment. J Manag Control 32, 401–433 (2021). https://doi.org/10.1007/s00187-021-00322-7

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  • DOI: https://doi.org/10.1007/s00187-021-00322-7

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