Delivering the Goods at TNT: The Role of Performance Measurement System
University of Leeds - Leeds University Business School (LUBS)
Loughborough University - Business School
MANAGEMENT ACCOUNTING RESEARCH, Vol 7, No 4, December 1996
This paper explores the characteristics of the performance measurement system at TNT (UK) Ltd. which facilitate the translation of strategy into action. TNT is a successful and growing service organisation and a market leader in the overnight distribution of parcels within the UK. The performance measurement system and how it is used at TNT are described in detail. The authors then draw on the management accounting literature to provide an analysis framework which answers three central questions for performance measurement systems: what dimensions of performance to measure, how to set standards for those measures and what rewards are to be associated with the achievement of those standards. The performance measurement system at TNT is appraised against this framework. At TNT there are five properties of the performance measurement system which have facilitated the translating of strategy into action. Three of these relate to the framework above; the company measures the right things in that dimensions are consistent with corporate strategy, it provides standards for performance through internal benchmarking, and adopts a mixture of financial and non-financial based rewards. In addition, however, there are two further properties of the system; the use of league tables to report the relative performance of the depots and the presence of a strong corporate champion who drives the message and importance of the performance measurement system from the centre to the depots.
JEL Classification: J33, M40, M46Accepted Paper Series
Date posted: November 6, 1996
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