Performance measurement and target-setting: achieving balance in a Chinese state-owned enterprise
This academic case study explores the role of a strategic performance measurement system in balancing stability and flexibility in a multi-divisional organisation.
Organisations are operating in an increasingly global, dynamic and competitive environment. On top of this they have to deal with the often-conflicting needs of numerous stakeholders. This academic study examines the use of strategic performance measurement systems in a Chinese state-owned enterprise facing such multiple demands. It will be of interest to anyone involved in setting targets and success measures within an organisation, in particular CFOs, financial controllers, finance business partners, and those working in financial planning and analysis roles.
The research team used a case-study approach focusing on one organisation in China. They interviewed 18 senior members of staff in different business units and looked at archive data, including all versions of the SPMS manual from 2009 to 2015, along with other external and internal documents.
The case study shows how a strategic performance management system can usefully integrate opposing forces and balance the “push and pull” of objective and subjective performance measures. The team liken it to the “opposition in unity” of Chinese Yin-Yang heritage.
The way forward?
The findings have practical implications for multi-divisional firms facing ambiguity and complexity. Target-setting is a complex process for a large firm that has to embrace multiple and often competing demands simultaneously. But this report shows how, using both objective and subjective measures, an SPMS can help to integrate these opposing forces with the one system, helping management control for organisations in the future.