KPI as Performance Management Systems

Running head: IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
Impacts of Performance Measurement Systems (KPIs) On Creativity in Organisations
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1IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
Table of Contents
1. Introduction............................................................................................................................2
2. KPI as Performance Management Systems...........................................................................2
3. Characteristics of KPIs...........................................................................................................3
4. Impact of KPI in Creativity of Organizations........................................................................4
5. Conclusion..............................................................................................................................5
References..................................................................................................................................6

2IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
1. Introduction
Bititci, Cocca and Ates (2016) indicated that performance management systems or
KPI facilitates in collecting knowledge along with analysing the best manner in which
organizations can attain their business objectives. Considering the same, the current literature
review will focus on analysing the impacts of KPI’s on attaining creativity within the
organizations through evaluating previousresearch on the subject. Through review of the
previous literature it has been gathered that researchers have offered several ideas in order to
determine KPI’s manually, automatic along with being semi-automobile that in applied
within distinct fields.
2. KPI as Performance Management Systems
Kairuzet al. (2016) stated that within the business environment Key Performance
Indictors or (KPIs) are majorly quantitative information as it explains the processes or
structures of an organization. These researches are also important in controlling and planning
by means of supporting information, generating transparency through supporting the decision
makers of the management. Santos, Pache and Birkholz (2015) indicated several
organizations are working with wrong measures and many of them are not considered within
this performance management system. As a performance management system, KPI indicates
the appropriate actions through which organizations can enhance their creativity to increase
performance. Peters et al. (2016) stated that it can also elaborate the relationship between the
four measures such as Key result indicators (KRIs), Result indicators (RIs) and Performance
indicators (PIs) through employing an onion strategy indicated in the diagram below.

3IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
Figure 1: Key Performance Indicator Based Onion Strategy
(Source:Santos, Pache and Birkholz 2015)
3. Characteristics of KPIs
Santos, Pache and Birkholz (2015) explained certain characteristics of KPI that facilitated
in maintaining effective performance management systems those are explained under:
 Simple: Peters et al. (2016) indicated that users understand the KPIs which clearly
signifies the actions that are needed by the employees of theorganizations.
 Drillable: Users of the KIP’s performance measurement can drill into details.
 Owned: KPI’s are observed to have an owner considering which an organisation’s
CEO and senior management team. The CEO calls for important employees in order
to enquire the activities of the organizations.
 Actionable: Santos, Pache and Birkholz (2015) stated that the ways in which
consumers can be affected. This also have a significant impact on more than one
critical successfactors for attaining effective performance management goals.
 Correlated: KPIs derived certain desired results that facilitates in taking suitable
action. This is tested in order to make sure that it has positive impact on performance
and along with that poorly designed performance measures can result in dysfunctional
behaviour.

4IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
 Balanced: KPIs within an organisation includes financial as well as nonfinancial
metrics.
4. Impact of KPI in Creativity of Organizations
According to Parmenter (2015) KPIs serve as a set of measures that focussing on all
the sides of the organizational performance that are vital for the organizational success. These
reasechers also indicated that the KPI performance management system measures the
activities that have a considerable impact on the company’s creativity strategies in
maintaining better future performance against more than one or more lagging indicators. In
contrast, Peterset al. (2016) evidenced that increased creativity in the business can be ensured
by organizations in case they consider selecting best-fit KPIs along with accepting and
documenting them. These researchers also elaborated that the companies are required to
maintain flexible as well as creativeapproacheswhile developing KPIs as efficient
performance management systems.
Santos, Pache and Birkholz (2015) stated that the system scheme for the KPI Analysis
Leading Indicator Discovery consist certain steps indicating an iterative learning
methodology that is aligned with organizational creativity. KPIs areemployed by the
organisations in identifying a problem, situation along with objectives that are desired o be
attained by organizations. Siham et al. (2015) indicated that creativity objective can be
maintained by the organisations through decreasing the number of defecting products at the
end of the industrializing process. Moreover, business monitoring is relied on analysis of
mass values of KPIs by the users those constantly check the scorecard for ensuring that every
process is correct within the organizations.

5IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
5. Conclusion
The current literature reviewfocussed on analysing the impacts of KPI’s on attaining
creativity within the organizations through evaluating previousresearch on the subject. It has
been gathered from the review of the existing literature on the subject that Key Performance
Indictors or (KPIs) are majorly quantitative information as it explains the processes or
structures of an organization. Moreover, KPIs derived certain desired results that facilitates in
taking suitable action. Creativity of the companies are also attained through facilitating the
organizations in considering reengineering the overall processes. Moreover, it can also be
attained through introducing quality affirmation review at various production stages in
organizations.

6IMPACT OF KPI’S ON ORGANIZATIONAL CREATIVITY
References
Bititci, U., Cocca, P. and Ates, A., 2016. Impact of visual performance management systems
on the performance management practices of organisations. International Journal of
Production Research, 54(6), pp.1571-1593.
Kairuz, T., Andriés, L., Nickloes, T. and Truter, I., 2016. Consequences of KPIs and
performance management in higher education. International Journal of Educational
Management, 30(6), pp.881-893.
Parmenter, D., 2015. Key performance indicators: developing, implementing, and using
winning KPIs. John Wiley & Sons.
Peters, M.D., Wieder, B., Sutton, S.G. and Wakefield, J., 2016. Business intelligence systems
use in performance measurement capabilities: Implications for enhanced competitive
advantage. International Journal of Accounting Information Systems, 21, pp.1-17.
Santos, F., Pache, A.C. and Birkholz, C., 2015. Making hybrids work: Aligning business
models and organizational design for social enterprises. California Management
Review, 57(3), pp.36-58.
Siham, L., Jean-Claude, B., Laurent, G., Yves, D. and Zied, J., 2015, May. Designing supply
chain performance measurement and management systems: A systemic perspective.
In Advanced Logistics and Transport (ICALT), 2015 4th International Conference on (pp.
211-216). IEEE.