Implementation issues and their impact on strategic performance management system effectiveness – an empirical study of Indian oil industry

Abstract

Purpose – The paper aims to study the implementation issues and managerial practices impacting the success of strategic performance management system in Indian industry. It has been empirically validated in Indian oil industry. As number of companies adopting SPM has not been able to reap benefit of SPM implementation, a study has been conducted to find reasons in Indian industry. The findings are discussed, and implications for researchers and practitioners are provided in this paper. Limitations and suggestions for further research are also given at the end of the paper. Design/methodology/approach – From the literature review, research problem, critical implementation issues and dimensions of effectiveness of the SPM system have been identified. Accordingly research objectives and hypothesis have been designed and tested by conducting survey in Indian oil industry. The hypothesis that implementation issues are positively impacting the effectiveness parameters of SPM system has been empirically validated using univariate, correlation analysis and multi-variate analyses, t-test, F-test and regression analysis. The validated model has been presented. Findings – A number of critical implementation issues are positively impacting different dimensions of the SPM system effectiveness. SPM managerial/implementation issues such as the use of SPM by top management, selection of right and adequate performance measures, SPM implementation by champions, the use of SPM as a strategic tool, quality and flow of data, incentive scheme aligned with SPM and good organisational acceptance of SPM are critical implementation issues of SPM which affect different dimensions, viz., strategic alignment, strategic monitoring, financial, customer, internal process and learning objectives of the enterprise. Research limitations/implications – The objective was to study SPM implementation issues and its impact of SPM effectiveness. Indian oil industry being early adopters of the advance SPM methodology and tools, has been chosen for the study and empirical validation. The validated model provides a better insight on the linkages of SPM implementation factors with different dimensions of SPM to researchers and practitioners. The validated model can be help tool in SPM implementation, making SPM a success in driving performance improvements in the organisations. Though recommendations are general, a comparatively large sample size across different industries and sectors combining quantitative and qualitative study would further enhance the utility and reliability of the model. Practical implications – The validated model provides guidelines to practicing managers on critical implementation and managerial issues to be taken care of in the SPM system implementation. Originality/value – The research problem has been identified based on literature review. Research objectives and hypotheses have been framed and empirically validated. It provides insight of the effect of implementation issues on different dimensions of SPM effectiveness. The study has filled the research gap of such a study in Indian industries. The validated model provides guidelines to practitioners and researchers and contributes to the literature.