The British Accounting Review 35 (2003) 367–384

www.elsevier.com/locate/bar

The usefulness of a performance measurement

system in the daily life of an organisation: a note
on a case study
Valentı́n Azofraa, Begoña Prietob, Alicia Santidriánc,*
a
School of Business Administration, University of Valladolid, Avda. Valle Esgueva 6, 47011, Valladolid, Spain
b
School of Business Administration, Universidad de Burgos, Avda. Parralillos s/n, Burgos 09001, Spain
c
School of Business Administration, Universidad de Burgos, Avda. Parralillos s/n, Burgos 09001, Spain
Received 28 February 2002; revised 1 July 2003; accepted 8 July 2003

Abstract
The design and introduction of performance measurement systems in business organisations
continues to be one of the areas within Management Accounting that attracts a great deal of interest. We
have focused on this field using the case study method, a research approach which is helpful for the
development of greater understanding of innovative management accounting systems, discarding other
methods, such as data collection through surveys.
The research work we present here aims to examine the usefulness of performance indicators in a
Spanish subsidiary of a North American multinational company dedicated to the car sector. The present
performance measurement system, which undergoes annual revisions, was designed and introduced by
the management team of the Spanish plant and does not exist in any other plant in the group with the same
structure and complexity. How it works is not therefore the result of any imposition by headquarters but is
rather the result of negotiation and consensus within the plant itself, its main aim being to
motivate behaviour.
Access to a wealth of both quantitative and qualitative information has enabled us to (i) observe the
integration of this performance measurement system within the organisational structure of the plant, its
continuing revision, the resources it has at its disposal, its usefulness for achieving employee
involvement, its capacity to motivate learning, its relation with the incentive system, and also (ii) to
suggest a correlation between certain measures of the performance measurement system and
profitability.
q 2003 Elsevier Ltd. All rights reserved.
Keywords: Performance indicators; Case study

* Corresponding author. Fax: þ 34-947-25-89-60.

E-mail address: alisant@ubu.es (A. Santidrián).

0890-8389/$ - see front matter q 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/S0890-8389(03)00058-1
368 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384

1. Introduction

The circumstances of complexity and continuous change that characterise the current
economic and production context have increased the competition which companies face,
leading them to modify substantially the way in which they carry out their production
processes. Thus, for example, approaches such as total quality management (TQM) and
Just-in-Time production, seek the rationalisation of the productive processes as well as
continuous improvement with respect to the generic parameters of quality, cost and time.
Now, the introduction of these practices cannot be done in an isolated and unconnected
way, but rather, they must necessarily be accompanied by innovations in other areas of the
organisation and, specifically, in the area of Management Accounting.
It was precisely these actions in the area of production which brought to light the
shortcomings of information derived from the use of only financial indicators. Among
the consequences of this use, as Eccles and Pyburn (1992) point out, is the fact that the
inherent historical nature of financial accounting measures means they provide delayed
information as to performance. They are the result of past actions and not their cause, and
therefore lack the capacity to anticipate future performance. The attention they pay to the
past prevents them from helping to elucidate questions relative to the way in which value
is generated and the interests of the different stakeholders can be satisfied and, in short, fail
to reveal the factors which lead an organisation to succeed.
In order to overcome the limitations of financial indicators, the need arises to
complement them with a monitoring of non-financial indicators—quantitative and
qualitative—which, given their very nature, seem to be more appropriate, to follow
operations closely and in real time, thus making it possible to carry out revisions and
corrections as needed.
Reviewing the performance measurement literature allows us to highlight some
interesting tools which, suggesting a balanced use of financial and non-financial
performance, try to focus managers’ attention on the strategy’s key success factors and
communicate them throughout the whole organisation. Among these tools we could
mention the Tableau de Bord—Guerny et al. (1984), Chiapello and Delmond (1994),
Lebas (1994), Epstein and Manzoni (1997) and Mendoza and Zrihen (1999)—the
Performance Pyramid—Lynch and Cross (1991)—the Performance Measurement
System for Service Industries—Fitzgerald et al. (1991) and Moon and Fitzgerald
(1996)—and the Balanced Scorecard—Kaplan and Norton (1992, 1993, 1996a,b,c,d,
2000, 2001a,b). Undoubtedly, the Balanced Scorecard, which focuses on different
dimensions of performance, is the best-known technique. It is in fact, as Otley (2001, p.
252) affirms, “a stakeholder approach… where at least two stakeholder groups are
explicitly mentioned (providers of finance and customers) and one is implicitly lurking in
either the business process box or the being trained innovation and learning box
(employees)”.
Issues involved in the performance measurement field, such as the usefulness of
appropriate performance indicators for orienting behaviour, motivating or blocking
learning processes, regulating incentive systems and influencing the achievement of the
financial results of a company, are subjects of great interest, judging by the conclusions of
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several reviews of the state of research into management accounting (Atkinson et al.,
1997; Foster and Young, 1997; Shields, 1997).
This paper offers a rich description of the performance measurement system put into
practice by a plant of an American multinational in the car sector, located in Spain, and
examines how and why this system is currently being used in its daily organisational life.
This case is interesting because it provides an example of a company making extensive use
of both financial and non-financial indicators. The stimulus for this was from an important
customer, but the management of the plant then saw the value of the approach and
extended it so that virtually all plant activities were measured in some way. The key
driving force in this company for the use of its performance measurement system has been,
without any doubt, the competitive environment that pushes managers to employ any
technique that gives them advantage.
The approach used does not seem to be driven by one of the ‘off-the-shelf’ packages
previously mentioned; instead it seems to have evolved in response to discussions and
experience within the plant. One would therefore expect the system to be different from
approaches described in the literature—and it is. For example, it differs from the balanced
scorecard in its identification of five (rather than four) key areas of measurement, in not
assigning causal relationships between different areas of measurement and in the number
of indicators employed.
After a brief introduction, Section 2 of this paper is centred on the research design.
Section 3 is a presentation of the firm studied and its performance measurement system
while Section 4 reports the results derived from the empirical study. The paper ends with a
series of conclusions (Section 5).

2. Research design

To approach the proposed objectives we have opted for a case study. The main reason
for adopting this research strategy is that, in agreement with Yin (1994) it allows
investigation of a contemporary phenomenon, within its real context, when the limits
between the phenomenon and the context are not clear and when the main questions
needing an answer can be classified in terms of ‘how’ and ‘why’ (for details, see Scapens
(1990) and Otley and Berry (1994)).
In our research, the understanding of how and why performance indicators are being
used requires an in-depth study of the interactions which are established between these
indicators and different elements of the organisational environment in which they operate.
In short, the case study method has allowed us to take an inside look at the nature of
internal accounting practices, at the reasons why they are introduced, at how they evolve,
situating them in the specific time and organisational context in which they acquire
meaning.
The field work was carried out over a 3 year period, in which both qualitative and
quantitative information were collected, from the introduction of the performance
indicator system up until June, 2001, when data collection ceased. During this time a close
relationship was maintained through monthly semistructured interviews with the directors
of each of the functional areas and with the works committee. In addition, we had access to
370 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384

internal documents, attended public presentations given by company executives, and

obtained evidence from direct observation.
The theoretical framework underlying this paper is the Contractual Theory of the Firm
and, specifically, one of its branches, the Positive Agency Theory, more concerned with
explaining the real behaviour of organisations than with the design of optimal contracts.
Our work specifically makes use of the Positive Accounting Theory to explain the role
played by management procedures within the organisational design (Watts and
Zimmerman, 1986; Jensen and Meckling, 1992).

3. The case company and its performance measurement system

3.1. The organisation

The company selected belongs to an important North American multinational. The

group had sales of 11 billion dollars in the year 2000 with plants dedicated to the
automobile sector in 25 countries, employing a total of some 73,000 people.
Production is currently divided into three sections: occupant safety systems,
which include seat belts, steering wheels and airbags; chassis systems, which include
steering and suspension systems, brakes and engine components; and automotive
electronics.
The case company is located in Spain and is in the occupant safety systems division. It
had sales of around 87 million dollars in the year 2000, and employed 340 people. Its
principal clients, in order of 2001/2002 sales importance were: Volkswagen, General
Motors, Renault, The PSA Group, Ford and Mercedes Benz.

3.2. The performance measurement system

The rigorous use of practices for performance assessment goes back to 1993 when the
group established a commitment with one of its clients, the Ford company, to carry out
the monitoring of joint proposals for cost reduction, the two companies agreeing to share
the savings deriving from this initiative. Thus, what began as an imposition became the
germ of what is now the complex Performance Indicators System for Continuous
Improvement, henceforth referred to as PISCI, respecting the name used in the plant.
The reasons which justify the introduction of the PISCI are to be found in the very
nature of the market for car components, a tremendously competitive market currently
bringing in reduced margins. The pressures in the market can be judged by the fall of 40%
in the price during the period 1994– 2000. This means that if the plant is to be able to act
and respond appropriately and at the right moment it must be aware of its position in
relative and absolute terms at any given time. It is precisely this need that has led the plant
to design its PISCI.
The plant operates in what its managers call: “a war economy, in which any slip up
affects our profits and in all probability the level of employment we maintain”. We should
add the concern of the management team to introduce a performance measurement system
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in the plant that would contribute to making its results stand out from those of the rest of
the subsidiaries.
As Fig. 1 indicates, the PISCI is the result of the disaggregation in the plant of the major
lines of action designed at group level, which are the starting point for the sequential
formulation of strategic objectives, key success factors and plans of action. These form the
basis for the identification of the key variables which, according to the area of autonomy of
the plant, require continuous attention for the successful achievement of strategic aims. In
the company studied, the key variables, quality, costs, times, flexibility and safety, are
controlled in each of the areas in which the management of the plant is decentralised,
through the establishment of a set of indicators. The PISCI therefore plays the role of
specifying and communicating the objective function of the organisation.
The sequence described, in which the PISCI maintains complete congruence with
another management control system, the budgeting system, is ultimately aimed at creation
of value, materialised in obtaining of the financial results which allow the plant to continue
operating competitively and thus contribute to the consolidation of its position within the
group.
The PISCI (Fig. 2) is organised and constructed around each of the five areas into which
the plant’s activities are divided: finance, production, materials, quality and human
resources, with no apparent supremacy of one area over others visible during the study
period. Its principal characteristics are:

(a) It combines financial and non-financial, quantitative and qualitative indicators.

(b) The number of indicators which make up the system, when presented in aggregate
form, is 90, but, because some of them are grouped together, the real number of
indicators is 164. The 90 indicators are listed in Fig. 2, where we find 70 specific
indicators and 4 which are monitored in each of the five areas ½70 þ ð4 £ 5Þ ¼ 90
indicators:
(c) All the workers qualified as indirect work force are ‘owners’ of at least one indicator,
having to answer for its evolution and take charge of the specific actions necessary
to achieve the target level. In this way the indirect personnel are bound to the
incentive system, thus achieving the involvement of all the workers, given that the
direct workers are closely connected to the indirect work force.
(d) Each indicator has a comprehensive definition including: name of the indicator,
area to which it is linked, code, definition, unit of measurement used, how it is
calculated and the person responsible for the target level.

In relation to the degree of reliability of the measurements made by the firm, the
interviewees are aware of the need to adopt ways which guarantee information quality,
anticipating and detecting opportunistic behaviour. It is a very common practice to
exchange data between the different areas, in order to check the level registered by the
indicators and detect, if appropriate, any manipulations. The computerization of the
system and the exchange of information between areas reduce the possibility of having
false data.
Nevertheless, the system is revised each year and throughout the study period we
witnessed the inclusion of new indicators and the abandonment of a handful, after
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Fig. 1. Disaggregation of the objective function.

belonging to the system for 2 or 3 years. Some were dropped because they were providing
duplicated information or because they proved to have little significance as the PISCI
matured, while others were rejected because they could not be controlled by the plant.
They represented activities which fell outside the plant’s field of action and thus it would
 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384
Fig. 2. Performance indicator system for continuous improvement (PISCI).

373
374 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384

have been unfair to make specific workers responsible for them, especially if their pay was
to depend on the evolution of the indicator.
The system is continuously revised in the heart of the plant, given the plant’s autonomy
in its running. In our opinion the fact that the PISCI is the result of consensus and
negotiation within the study plant, and not something imposed from headquarters, is a key
to achieving its main objective: motivation.

4. Research results

In this section the functions and consequences of the PISCI are analysed.

4.1. The PISCI assigns decision rights and information and promotes teamwork

The wide ranging PISCI disaggregates the activities of the plant, and assigns decision
rights by marking out the field of activity to which each indirect worker must be
committed and responsible. As one interviewee said: “The tasks which have not been
assigned a person suffer in the end; if reports are not compulsory, nobody feels committed
and the system finally fails”. In addition, the PISCI enables rapid transmission of both the
target and actual levels of the corresponding indicators in order to question, if necessary,
the way in which the firm is currently operating.
Deviations from target are the starting point from which the person responsible can
evaluate his or her own capacity to deal with the problem detected, depending of course on
the nature of the malfunction, or lead the formation of a working group to identify and
apply actions in order to eliminate, or at least reduce, the causes which are preventing
achievement of predetermined levels.
The solutions developed by each working group are in no way improvised, but almost
literally follow the sequence set down by TQM for problem solving:

(a) Presentation, through different types of graphs, of the indicator studied, on a monthly
basis, comparing its current level with previous periods and with the target.
(b) Identification, by means of a Pareto analysis, of the principal causes that the working
team considers responsible for the level of the indicator.
(c) Finally, an action plan is drawn up, detailing: a set of corrective actions to be
taken to remedy the causes identified; the person in charge of those actions and
deadlines for the solution of the problems identified. As the actions are taken, the
obstacles to the problem solving process and the current state of the corrective
actions (in progress, completed, proposed, etc.) must be reported.

In the words of one of those interviewed, “the PISCI is useful because it means that
people are becoming accustomed to team work and to reaching agreements. This is a goal
to which we are dedicating a great deal of time. Learning to communicate and to reach
consensus is vital in relation to all the indicators and for any daily activity”.
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4.2. The PISCI influences managerial behaviour through three main analytical and
presentational devices

(a) Firstly, internal control is formalised through the so-called Internal Management
Report, which includes all the documentation relevant to the monitoring of each and
every PISCI indicator.
(b) Secondly, the performance indicators control and influence the behaviour of
subsidiary organisations because they are used in the process of monthly
benchmarking in the occupant safety systems division. Levels are recorded for the
following indicators: gross margin, return on sales (ROS), return on assets employed
(ROAE), asset turnover, inventory turnover, inventory days, receivable days, funds
generated, indirect workers/total workforce, sales per person and capital
expenditures.1
(c) Regarding the third control method, we have seen how the plant, through its
Monthly Management Report, reports its contribution to the group’s objectives.
This formalised control instrument is sent by intranet and uses traffic light
colours to highlight the position of the indicators considered by the group as
most representative of its routine management (Fig. 3).

One of the people interviewed offered this view in relation to the control function
of the PISCI: “we started from a very simple premise: controlling our activities is
essential if we are to improve. Even when we know that this relation is not always so
linear and immediate, what we are convinced of is that if we did not have a control
instrument, our management would be chaotic and we would not have been able to
remain in this market”.

4.3. The PISCI is integral to the incentive system

The level of performance achieved is associated with both monetary and non-monetary
incentives. This link, in relation to monetary incentives, is formalised in three ways.
Firstly, the collective agreement specifies the different types of remuneration conditional
upon the levels reached by certain indicators, both financial and non-financial, with a
distinction between direct and indirect workers (Fig. 4).
Secondly, all indirect workers are subject to an annual evaluation of effort, on
which a part of their variable remuneration depends. This evaluation consists of an
examination of the situation of the indicator or indicators for which each person is
responsible, together with consideration of some issues which are to a degree
subjective, such as the worker’s knowledge of his own post, his degree of initiative
and collaboration or his capacity to analyse problems, etc. Finally, the managing
director and directors of each area receive a part of their remuneration according to
the plant’s results.
1
The PISCI, under Finance in Fig. 2, shows repetitive, systematic financial operations. It does not include
indicators such as the gross margin, ROS or ROAE, which are taken account of in the process of benchmarking
and are useful to summarise the effect of the firm’s monthly operations on Financial statements.
376 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384

Fig. 3. Management report to the head office.

As for non-monetary incentives, these recognise the satisfactory participation and

involvement of employees through working groups and suggestion systems. This
recognition takes the form of congratulations by managers, the inclusion of a note in a
personal file or the concession of gifts.

4.4. The PISCI is correlated with profitability

From the PISCI we have selected those indicators which allow us to observe most
clearly the development of the internal tasks carried out by the firm, because of the fact
that (i) these indicators have maintained the same definition during the study period and
(ii) it is quite reasonable to determine if their desirable trend should be an increasing or
decreasing one. Then we asked ourselves whether the evolution of these operative
 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384 377

Fig. 4. Collective agreement.

indicators—in which financial and non-financial indicators co-exist—has any correlation

with the evolution of the financial results. In order to find an answer to this question, we
took the following steps.
Tables 1 –6 present the indicators chosen grouped according to their nature in the
following categories: Production, Quality, Working Capital, Deliveries, Computer
Applications, and Human Resources, where we have classified the indicators in a more
consistent way than originally suggested by the PISCI and where we have quantified the
level of each indicator in relation to that reached in the remaining years of the period, using
the following process. For each level reached by each indicator,2 we have associated an
index from 1 to 5—since the study period from 1996 to 20003 is of 5 years—such that the
worst of the levels is accompanied by a one and so on, with the best level being given a
five. By adding up the score obtained in each year and by comparing it with the rest, we
can deduce the trend in each of the categories during the period 1996– 2000. Figs. 5 –10
show the evolution of these global indices.
Fig. 11 adds the corresponding indexes to the first five categories—which are the result
of the internal processes—while Fig. 12 incorporates, in addition, those relative to Human
Resources.
2
At the express request of the plant, we are not able to present the real values of each indicator in this paper.
This does not alter the fact the plant showed no hesitancy in providing us with these data during the entire study
period and in explaining the causes which motivated them. The result of this magnificent disposition is the
analysis we go on to present.
3
Although we have data of the majority of indicators since 1994, for the study of their evolution we have
omitted the years 1994 and 1995, since the people interviewed coincide in their opinion that the very immaturity
of the PISCI during these first years could be a factor that distorts analysis of some of them. That is to say, a period
of time needed to elapse until a satisfactory and stable criterion was established as to the composition and
calculation of each indicator.
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Table 1
Production

Production 1996 1997 1998 1999 2000

Efficiency 3 4 1 2 5
Real performance 2 3 1 4 5
Unproductive hours 5 4 2 1 3
Machine breakdown hours 5 4 2 1 3
Preventive maintenance 1 3 2 4 5
Number of changes/shifts/lines 1 2 3 4 5
Polyvalence of direct workers 4 5 1 2 3
Training polyvalence 3 1 4 5 2
Internal auditing commentaries 4 5 5 3 5
Total score 28 31 21 26 36

Table 2
Quality

Quality 1996 1997 1998 1999 2000

Customer rejects 1 3 4 2 5
Internal failures 2 1 3 4 5
Traceability 2 3 1 4 5
Cost of faults 4 5 2 1 3
Scrap 4 5 1 2 3
Errors in tests 1 2 3 4 5
Fulfilment of suppliers’ schedules 1 2 3 4 5
Suppliers’ assessment (ISO-A) 1 2 4 3 5
Agreed quality purchases 1 3 5 4 2
Internal auditing commentaries 5 5 5 5 5
Environmental auditing commentaries 5 5 5 5 5
Total score 27 36 36 38 48

The case plant is involved in continuous and compulsory relationships with the head
office and subsidiaries, either for commercial purposes, or in order to transfer results from
one plant to another. These obligatory transactions have prevented us from observing
clearly either the creation or destruction of value during the study period. Only tentatively,
Table 3
Working capital

Working capital 1996 1997 1998 1999 2000

Receivable days 4 1 3 2 5
Payment period (direct material) 2 1 4 5 3
Number of invoices paid after deadline 1 4 2 3 5
Inventory days 2 1 3 4 5
Purchases on consignment 1 3 2 4 5
Adjustment of components inventory 2 4 3 1 5
Internal auditing commentaries 5 4 5 5 5
Total score 17 18 22 24 33
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Table 4
Deliveries

Deliveries 1996 1997 1998 1999 2000

Transport of sales 2 3 1 4 5
Fulfilment of client schedules 5 5 5 5 5
Number of late deliveries 5 4 5 5 5
Transport of purchases 1 2 4 5 3
Total score 13 14 15 19 18

Table 5
Computer applications

Computer applications 1996 1997 1998 1999 2000

Fulfilment of computer applications schedule 3 2 5 4 1

Reliability of computer applications 2 1 3 4 5
Total score 5 3 8 8 6

Table 6
Human resources

Human resources 1996 19997 1998 1999 2000

Training (direct workers) 1 4 5 2 3

Training (indirect workers) 5 5 5 5 5
Training hours (direct workers) 3 2 5 4 1
Training hours (indirect workers) 3 5 4 1 2
Suggestions (direct workers) 2 1 3 5 4
Suggestions (indirect workers) 1 2 3 4 5
Number of suggestions 1 2 3 4 5
Work accidents (frequency rate) 5 1 4 3 2
Work accidents (Severity rate) 5 1 4 3 2
Work safety and health auditing comment 1 2 3 4 5
Internal auditing commentaries 5 5 5 5 5
Absenteeism (direct and indirect workers) 2 4 5 1 3
Total score 34 34 49 41 42

and recognising its limits, have we tried to look into the plausible association between
PISCI indicators and value. We have done so by isolating two important circumstances
which prevent us from seeing the results due exclusively to the management of the plant
itself: (a) loss of income each year due to a reduction in the sales price; (b) annual charges
made by the central plant for centralised services and royalties. In Table 7 we present the
figures for income from sales, using the 1996 price as a base, and the annual charges.
Consideration of these items enables one to calculate hypothetical gross margins and
returns on sales.4

4
The ROS was calculated as the ratio between the gross margin—income from net sales minus cost of
production sold—and income from net sales.
380 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384

Fig. 5. Production.

Fig. 6. Quality.

Fig. 7. Working capital.

After refining profit and loss accounts with respect to the items mentioned, we obtained
the ROS (Fig. 13), a time series which shows a growing tendency through time. It is
interesting to observe how the trend of these margins is in some ways similar to that of
Fig. 11.
The margins rise, with the exception of 1998, and the indicators summarised in Fig. 11
also rise with the exception of 1998. This year saw deterioration in several indicators—
especially in those relative to production—when the company manufactured a new variant
of its component with different characteristics, which meant taking on 30% more workers.
This seems to have affected the purely financial indicators, as the literature suggests.
 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384 381

Fig. 8. Deliveries.

Fig. 9. Computer applications.

Fig. 10. Human resources.

Taking on new employees required a large investment in training which explains, in part,
the increase in the level of the aggregate index of Human Resources in 1998. This effort
affected the results of this year and also had a great influence on the improvement shown in
the following years by the categories of indicators which represented the development of
internal processes, an improvement which also had its impact on profitability.
The correlation of improving plant results with improving trends in the indicators has
reinforced the contribution of the PISCI in the detailed monitoring of a set of parameters
382 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384

Fig. 11. Production þ quality þ working capital þ deliveries þ CC.AA.

Fig. 12. Production þ quality þ working capital þ deliveries þ CC.AA þ HH.RR.

Table 7
Hypothetical gross margins and returns on sales

1996 1997 1998 1999 2000

Income from sales (Euros) 50,796.581 66,057.829 88,111.806 81,437.861 88,957.376

Group charges (Euros) 2301.876 2171.456 3371.677 3795.391 7289.675
Gross margin (Euros) 3798.883 5500.853 7221.418 7073.269 7884.148
Return on sales (%) 7.478 8.327 8.195 8.685 8.862

Fig. 13. Return on sales (%).

 V. Azofra et al. / The British Accounting Review 35 (2003) 367–384 383

for which the plant has decision responsibility and with respect to which it can attempt to
maximise its efficiency. In fact, the plant affirms that its activity would be uncontrollable in
the absence of a control instrument such as that established.

5. Discussion and conclusions

This paper reports the careful observation of the implications of the use of a
performance measurement system in the daily life of an organisation. The fact that this
performance measurement system is not an imposition of the headquarters, but the result
of the interest and consensus achieved within the plant is, in our opinion, a key factor in
explaining its contribution in relation to a number of aspects:

† The inclusion of non-financial performance indicators is a valuable means of

disaggregating strategy and, therefore, of transmitting the objective function of the
company to all its levels and functions. The introduction of organisational practices
such as TQM emphasises the usefulness of these indicators, clarifying the need for
innovations in internal accounting systems to occur parallel with those arising in the
production sector.
† The existing hierarchical structure uses the association between the PISCI and workers
to mark the limits of the area in which each person in a position of responsibility has
decision capacity. The large number of indicators that the plant maintains and improves
year to year does not seem to cause any confusion or tension, contradicting the widely
held view in the literature that this is so. Instead it proves to be a useful way to mark
responsibilities and achieve the involvement of workers.
† The PISCI provides the control function in two ways; on the one hand, control of an
internal nature, carried out by the management of the company to observe the
behaviour of its workers through the results of their actions. Secondly, the control of
the head office which centres its attention on 12 indicators (Fig. 3). Additionally, the
PISCI at plant level is intended primarily to influence behaviour, since it is linked to
monetary and non-monetary incentives. Finally, the PISCI goes beyond the limits of
the plant and is used in the benchmarking done within the division the firm belongs to.
† The verification of the link between PISCI indicators and value creation is
enormously conditioned by factors exogenous to the firm. Nevertheless, after
allowing for some uncontrollable variables, we can suggest a double correlation,
firstly between some PISCI measures and, secondly, between certain PISCI measures
and profitability.

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