2. Performance management and performance measurement

PM and performance measurement can generally be associated with a strategic management and control to focus on long-term financial success. To realise this objective, to implement strategies promisingly and for the alignment of the entire organisation to a consistent development of success potentials, the strategic factors relevant for financial success need to be identified. Through the control of the critical SFs via measureable key performance indicators (KPIs), the company´s financial performance can be influenced beneficially [1, 2]. This requires the identification of upstream causes of the financial success, which can be dimensioned financially or non-financially. With the subsequent consideration of non-financially dimensioned SFs, which often are deeply rooted in the intuitive knowledge of managers and employees, PM offers a concept of steering and control extending the restrictions of traditional control procedures entirely based on logical decompositionally constructed financial ratios [3–6].

from the efficient use of general and specific knowledge. Accordingly, knowledge is becoming a competitive factor and provides an essential cause for company success. Therefore, it is important not only to consider obviously accessible knowledge but also to directly accomplish a performance-related use of the specific, implicit knowledge of a company. These individual experiences and knowledge such as fundamental components of human capital inhere a huge chance to improve the steering and control processes of performance generation and hence to master competition successfully. In the context of such a performance management (PM), expert knowledge is indispensably focused on relations between causes and effects to generate financial performance. By considering cause-and-effect relationships underlying the financial performance generation process the traditional perspective of measuring value realisation is extended to causally ambitioned value generation management. As a consequence, such a causal knowledge reveals options for actions influencing the financially as well as nonfinancially dimensioned causes, which are linked to future financial performance. Thus, PM provides relevant starting points to control the financial performance generation process.

In reality, companies comprise many departments with multiple environmental factors and, as a consequence, there exist many latent or manifest interdependently structured characteristics relevant for performance generation. Without knowledge of such relations, the management cannot efficiently control desirable effects by their causes. A map of causal relationships could care for more transparency in this respect. However, expert knowledge on success factors (SFs) and their causal relations is usually not available in the explicit form of a graphical representation. Instead, subjectively based knowledge, stemming from individuals´ observations and experiences, which are called implicit or tacit knowledge, might be identifiable and pending to

Knowledge management (KM) recognised as a subdiscipline of PM can be applied to convert this implicit knowledge into explicit subjective knowledge on causal relationships, which can be identified and depicted by construction of a tailor-made causal map. Through the construction of the causal linkages during the mapping process, a subjective judgment bias can arise. With regard to this problem of subjectivity, specific methods of the multi-criteria research field, in particular the decision-making trail and evaluation laboratory (DEMATEL), can be used in the mapping context. DEMATEL provides a reduction of a potential personal bias when applying one of the common mapping methods. For this, a fictional case study will be

PM and performance measurement can generally be associated with a strategic management and control to focus on long-term financial success. To realise this objective, to implement strategies promisingly and for the alignment of the entire organisation to a consistent development of success potentials, the strategic factors relevant for financial success need to be identified. Through the control of the critical SFs via measureable key performance indicators (KPIs), the company´s financial performance can be influenced beneficially [1, 2]. This requires the identification of upstream causes of the financial success, which can be dimensioned

presented adopting the target of achieving intersubjectivity.

2. Performance management and performance measurement

be elicited.

104 Knowledge Management Strategies and Applications

According to Neely et al. [7], performance measurement can be described as the 'process of quantifying the efficiency and effectiveness of action'. An evaluation of the efficiency and effectiveness of action always requires the reflection of the corporate strategic objectives [3]. Thus, performance measurement enables a holistic assessment of the company's performance. For analysing the whole performance generation process, it necessitates the additional identification of cause-and-effect relationships. The specific SFs of a company are integrated into a cause-and-effect network. Each factor can directly or indirectly be linked with the company's financial performance [8–10]. A cause-and-effect relationship will only be defined as causal, if a strong correlation between cause(s) and effect(s) exists and the cause of action temporally precedes the effect. Additionally, the relationship has to be plausibly explicable [11]. With an accurate specification of the causal relationships among the factors, a comprehensive understanding of the performance generation is provided. Moreover, in decision-making situations, the consequences of chosen actions on the company's success can be estimated [5, 9].

Within this context, the 'performance' is determined as a multi-criteria and therefore multidimensional construct, which—in a causal sense—cannot only be measured ex post, but also ex ante. Performance measurement thereby is classified in a superordinate control context of PM as an integral part of it. At this point PM describes the process of planning, implementing and executing the corporate strategy by a coherent system of actions. In linkage with a strategy, it determines values of measurable KPIs respectively operating numbers. If, due to the permanent monitoring of the operating numbers, a significant variance is identified, the PM can initiate appropriate (feedback- or feedforward-directed) strategic action [1, 6]. In conclusion, for a comprehensive analysis and control of the performance generation, SFs and their company-specific causal relationships need to carefully be identified and examined in depth. Therefore, PM captures KM as a complementary discipline.
