Local environment as a pitfall in the performance measurement of multi-site operations

The purpose of this paper is to disseminate an empirical observation that the external environment influences the data from performance metrics in a multi-site field service setting. The observation is made from real performance measurement data from 29 local units of a machinery manufacturer. We pr...

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Bibliographic Details
Published in:Operations management research 2012-12, Vol.5 (3-4), p.81-86
Main Authors: Helkio, Pekka, Ala-Risku, Timo
Format: Article
Language:English
Subjects:
Business and Management
Business metrics
Business performance management
Case studies
Collaboration
Corporate culture
Decision making
Distortion
Empirical analysis
Engineering Economics
Errors
Heterogeneity
Industrial and Production Engineering
Influence
Information systems
Innovation/Technology Management
Logistics
Machinery
Management
Marketing
Measurement
Operations Management
Operations research
Operations Research/Decision Theory
Organization
Performance evaluation
Performance measurement
Preventive maintenance
Studies
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Summary:The purpose of this paper is to disseminate an empirical observation that the external environment influences the data from performance metrics in a multi-site field service setting. The observation is made from real performance measurement data from 29 local units of a machinery manufacturer. We propose that the heterogeneity of local environments increases Type I and Type II errors in evaluating performance against targets and reduces the comparability of local units. These findings imply distortions in the managerial control effect of performance measurement and in decision making on interventions and improvements. As a practical implication, this study emphasizes the need for contextual understanding in the proper use of performance measurement numbers.
ISSN:1936-9735
1936-9743
DOI:10.1007/s12063-012-0069-7