Nature, drivers, and consequences of convergence and overlap in performance management systems

Abstract

Performance management (PMgmt) is a relatively nascent field that is still evolving to provide managers with tools, intelligence, and perspectives needed to meet challenges arising from rising competition and accelerating change. Most of the work in this field has been reactive and (over the last decade) subject to rapid obsolescence. This thesis seeks to provide PMgmt academics and professionals with the encouragement and means to shift to a more proactive and, thus, enduring stance. Long-term trends in the development and use of PMgmt systems are investigated by using relevant literature as proxies of experience. The rationale is that tracing and analysing patterns, shifts and trends in how PMgmt concepts and practices endlessly adapt to meet the evolving needs of organizations will provide important insight as to how they develop and change over time. The research operational flow is as follows: 1) The literature review gathered common perspectives on how PMgmt changed from the 1980s until now, 2) Qualitative content analysis, incorporating grounded theory, was used to identify patterns in the changes to PMgmt systems from 1998 to 2007, to reveal desired attributes of PMgmt systems which have evolved to fit current managerial needs, 3) Speculative thought was used to highlight the emerging phenomenon of functional overlap of PMgmt systems as a consequence of the forces of convergent evolution (an influence/force revealed via the content analysis). 4) A framework for creating utilities from the functional overlap is proposed. A number of key findings are deduced from this thesis: 1) Management needs, derived from a highly competitive and changing evolving business environment and focused on creating and sustaining competitive advantage, drive the development and use of PMgmt systems into an evolutionary progression. The evolutionary change occurs via four major paths: from operations to strategic, economic-profit to stakeholder, measurement to management, and static to dynamic focus. 2) PMgmt systems have evolved from differing origins toward what can be visualised as archetypical forms—including, measurement-embedded, horizontally and vertically integrated, strategic-oriented, and fact-based information systems. These systems have the common intent to perform strategic functions—including, creating and maintaining strategic alignment, supporting decision making, assisting formulation and execution of strategy, influencing organizational behaviors, and facilitating organizational learning. This is a convergent evolution of PMgmt systems. 3) Functional overlap emerges as a consequence of convergent evolution. An analysis revealed that a substantial functional overlap occurs across a broad array of extant PMgmt systems—a few, or even many, of which may operate concurrently in a given organization. 4) A framework for understanding the benefits and costs of allowing functional overlap consists of three dimensions: perspectives, processes and applications. The first dimension seeks to make sense of the positive and negative aspects of the functional overlap that occurs in rapidly changing environments; the second seeks to understand the transformation of functional overlap from a new concept toward being a tool in organizational innovation while the third focuses on how functional overlap fits into the strategy-management capability of an organisation. This thesis draws from accounting, management and other disciplines to provide an interdisciplinary perspective that seeks to reframe the mindsets of scholars and managers who deal with PMgmt systems. Ongoing research will be needed to refine and expand the notions of convergent evolution and functional overlap and to keep them current—they are dynamic and evolving concepts that risk becoming dated and irrelevant if allowed to degenerate into static/fixed forms. If established as common dynamic concepts, the notions will increase the awareness of senior managers and, by shifting organisations from reactive to proactive perspectives, should greatly enrich the flexibility and cost-effectiveness of PMgmt-systems and accelerate and their rate-of-response.