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Performance measurement systems and smes. The need for a revisited model
SANTINI F.
Assistant Professor, Department of Accounting, Business and Law, University of Perugia E-mail: oliviero@unipg.it
Abstract: The paper analyzes the main models of integrated performance measurement focusing on the difficulties of their application to small and medium-sized enterprises.In particular, the work focuses on the role of the entrepreneur in the process of implementation by emphasizing strengths and weaknesses and suggests some principles that can be useful for the construction of a revisited model. Keywords: SMEs; performance measurement; management accounting.
системы оценки результатов хозяйственной деятельности и предприятия малого и среднего бизнеса. необходимость уточненной модели
САНТИНИ Ф.
доцент кафедры бизнеса и закона университета г. Перуджи, Италия E-mail: oliviero@unipg.it
Аннотация: В статье приводится анализ основных моделей интегрированных оценок результатов хозяйственной деятельности, особое внимание уделяется трудностям их применения на предприятиях малого и среднего бизнеса. В частности, работа посвящена роли предпринимателя в процессе их применения, выделяются сильные и слабые стороны и предлагаются некоторые принципы, которые могут оказаться полезными при построении уточненной модели. ключевые слова: МСБ (малый и средний бизнес), оценка хозяйственной деятельности, управленческий учет.
1. The evolution of management accounting in accordance with the social and competitive context
Since the seventies of the past century, the businesses' gradual shift of attention from the single efficiency of internal processes to the combination of this and the effectiveness in the management of interrelations between enterprise and the environment, has resulted in a review of the function and content of management accounting, intended to be the system useful to «provide the business managers with an analytical information grid so that they can manage more efficiently and effectively the company assets and, at the same time, assess whether their actions combine to achieve the prefixed goals' [1].
Until that time, the performance appraisal of Western companies was based on financial indicators such as sales, productivity, efficiency and ROI (Return on investment) and the monitoring was conducted mainly in
the form of mind-analysis of variance between planned results in the preparation of the annual budget and financial statements. This approach, which has proven effective in a relatively stable economic environment in which prevailed an alignment between technical and economic efficiency and in which it was pretty easy to decipher the causes of inefficiencies, came into the crisis with the intensification of competitive pressure and the final transition from the logic of mass production to variety production [2]. In addition not having considered other than strictly productive elements, traditional variance analysis was used only to report the existence of wastes that, at the timewere extremely difficult to detect. Going into more detail in the technical and accounting dimension of management accounting, among the instruments most widely used in this period it is possible to include:
a) traditional cost ana/ysistechniques (break-even analysis; calculation of direct and fu// costsof the
productsusing, for the allotment of the overhead expenses, a single or multiple bases for cost centers);
b) planning and scheduling techniques (planning, budgeting, zero-based budgeting; flexible budgeting);
c) control techniques and performance measurement (synthetic analysis of economic-financial performances such as Return on Investments, Return on Equity or Return on Assets; offset analysis between budgeted data within budget and final data).
Only in the late 1980s and the 1990sfor businesses came out the ideato focus more on how the results were achieved rather than concentrating only on the achievement itself. Faced with the phenomenon of the complexity of the internal environment (variety of productions under the same processes, interchangeability of productive resources, proliferation of overheads) and the external business environment (product marketing problems, variability in consumer demand, more attention to production quality and timeliness, increasing distribution costs). Business management has acknowledged the riskof cripplingbusiness decisions in the absence of an information system capable of identifying the interrelationships between organizational variables and give an account of the «determinants» of the results achieved.
As a result of the Johnson and Kaplan work entitled «The Rise and Fall of Management Accounting», business literature has started a debate about the limits of those traditional instruments, considered inadequate to support businesses facing the increasing complex issues. It is only with the introduction of the Activity-based costing model by Cooper and Kaplan [3] who has set an end to the financial impasse that has characterized much of the twentieth century gave impetus to the development of a range of new tools aimed at coping with the most important features of the new production context.
Such tools (management accounting tools), responding to the growing need to support management from a strategic perspective, were built on two main principles [4]: i) a clear orientation for a long period of time, as opposed to the traditional tendency to focus attention on an annual period; ii) prospect of predominantly external analysis, as opposed to a focus on just set internal processes.
It is, in particular of:
a) Activity-based costing (Cooper e Kaplan, 1999; Cooper, Kaplan, Maisel, Morrisey, Oehm, 1992); attribute costing (Bromwich, 1990; Roslender e Hart, 2003); life cycle costing (Czyzewski e Hull, 1991; dunk, 2004; shields e young, 1991; wilson, 1991); quality costing (Belohav, 1993; Heagy, 1991); target costing (Cooper
e Slagmulder, 1999; Monden e Hamada, 1991; Morgan, 1993); capacity costing (McNair e Vangermeersch, 1998); value chain costing (Dekker, 2003; Hergert e Morris, 1989; Porter, 1985; Shank e Govindarajan, 1992);
b) Benchmarking (Brownlie, 1999; Elnathan, Lin, Young, 1996; McNair e Leibfried, 1992); integrated performance measurement (Kaplan e Norton, 1992, 1996; Lynch e Cross, 1992; Nanni, Dixon, Vollman, 1992);
c) Customer profitability analysis (Bellis-Jones, 1989; Guilding e McManus, 2002; Ward, 1992; Zeithaml, 2000); lifetime customer profitability analysis (Foster e Gupta, 1994); valuation of customers as assets (Foster, Gupta, Sjoblom, 1996; Slater e Narver, 1994; Zeithaml, 2000);
d) Competitor cost assessment (Bromwich, 1990; Jones, 1988; Simmonds, 1981; Ward, 1992); competitive position monitoring (Rangone, 1997; Simmonds, 1986); competitor performance appraisal based on public financial statements (Moon e Bates, 1993);
e) Strategic cost management (Shank, 1996; Shank e Govindarajan, 1988, 1993); strategic pricing (Simmonds, 1982); brand valuation (Cravens e Guilding, 1999; Guilding, 1992).
It should be noted that not all instruments can be placed on an equal footing. In fact, while it is possible to say that each of those included in paragraphs a), c), d) and e), go in the direction of providing information in relation to a limited thematic area (profitability, costs and market positioning), the integrated performance measurement systems (under point b) play a broader role by setting up anout-and-out full-interface management accounting system. These instruments, in fact, taking the entire articulation of the management accounting system, make explicit the «vertical» links between strategic and operational aspects, identifying and exploiting the random relationships of «horizontal» type among the areas deemed critical for business success. In other words, they act as information synthesis tools arising from multiple sources of various kinds (including those arising from the implementation of other specific instruments) adapting them in accordance with the principles of policy coherence and integration.
The complexity faced by enterprises not only implies the risk of inconsistency between internal processes but also a strong asynchrony between these and the demands posed by external environment resulting in a mismatch between the technical and economic results.
Ultimately, the concept of integrated performance measurement system (PMS) may be defined as an
interconnected and strategically coherent collection of useful indicators to appreciate the effectiveness and efficiency of the various activities carried out by the company allowing them to take decisions in an informed and conscious way, identifying critical areas on which to intervene, stimulating the motivation also using appropriate communication policies [5]
The attribute of the strategic policy coherence requires the existence of a dynamic equilibrium between company and environment based on the following criteria: orientation to the mid-long term; strategic alignment, to be construed as a measurement system conform to corporate strategy; convergence, balance and identification of random relationships between indicators so as to express how the results are according to specific determinants.
In particular, the requirement for balance and convergence can only be achieved by putting appropriate measuresto your system:
I) the global indicators, expression of the strategic objectives of the enterpriseand lower-level analytical indicators, put at different levels of the organization;
II) Quantitative measures: economic-financial and non-monetary quantitative measures;
III) internal environment-oriented measures and measures to the external environment;
IV) static measures, addressed to the investigation of past phenomena (i.e. lagging indicators) and current measures, representative of conditions necessary to ensure future development (leading indicators);
2. Performance measurement in small and medium-sized enterprises
Some authors argue that SMEs, by virtue of the characteristics possessed, do not require formal management control tools because the business success or failure are all ascribed to the ability of the owner/manager, which is the result of subjective factors such as «its goals and motivations, previous work experience, the absence (or presence) of managerial culture, the personal leadership style, thepersonal conception of its tasks, being in the first or later generation, the presence in the company of family members, the interests that they proceed, age and State of health»1 [6].
This approach is based on the assumption that, by exploiting the organizational flexibility, the owner/ managereffectively and efficiently plays the informal role of identifier and assimilator of critical information for the decision-making activities. Similarly, other authors come even to believe that, in these contexts, formal management control tools can be
counterproductive because they tend to give rigidity to the organizational structure limiting innovation and creativity [7].
If until the end of the last century such positions could be, at least in part, understandable, considering instead the social economic context in which many SMEs are inserted and the growth rate of bankruptcies (six times higher than that of big business, in recent years,), they become unsustainable.
To understand the importance and the social function of the small and medium-sized enterprises just think that in Europe they represent 99.8% of the total, employing the 66.9% of the labor force and generating the 58.4% of the total added value (table 1).
Micro Small Medium Big
Relative numerosity 98,1% 6,6% 1,1% 0,2%
Employment Rate 29,8% 20,4% 16,8% 33,1%
Value added Rate 21,6% 18,9% 17,9% 41,6%
SOURCE EUROPEAN COMMISSION, 2011
Although we tend to attribute to big businesses more advanced management control requirements with respect to small and medium-sized enterprises, it should be noted that the latter face sometimes managerial complexity problemswhich instead do not have big companies. In this sense, it is now shared opinion that, in the new competitive scenario, for all businesses, success strongly depends on the quality of the information available to the person who makes decisions: when the difficulty of deciphering the signals coming from the environment increases, the availability of formal tools and structured reporting can reduce uncertainty and improve the efficiency of decision-making activities [8].
The investigation about the applicability, for SMEs, of the integrated performance measurement systems currently set about, shows clearly the existence of many problems arising [9] from the fact that they cannot be treated as if they were large enterprises. Although the world of micro, small and medium-sized businesses is extremely diverse and composite, there are certain common characteristics, which should be taken into account. Among these, the economic-corporate literature generally shows:
а) the coincidence between ownership and management, which results in overlap of functions of direction and control with limited use of delegation mechanisms.
This can cause the «Sub-Directorate» creating gaps as regards the market knowledge, the administrative procedures and the programming and control tasks [10];
a) the possible overlap between «enterprise» in-stitutionand «family» institution taking the form of a massive presence in the corporate key rolesin order to maintain control;
b) an organizational structure not so formalized, resulting from a modest management complexity and/or by poor management guidance;
c) tasks built around people and not vice versa, with multifunctional assignments and low specialization. To this can be added the tendency, on the part of the owner/manager, to define the structure of tasks according to individual preference rather than to rational choices;
d) little attention to environment variablesin-duced bythe awareness of not being able to exercise control on the market and on the institutions. On the contrary, the customer control it is normally developed, implemented by building stable relationships founded on interpersonal relations;
e) trend no strategic planning activities, geared to an anticipatory management, where it connects the non-awareness of their critical success factors; The limited planning horizon is also induced by the absence of specific technical skills and the lack of financial and human resources to dedicate. The owner/manager, «in-volved in almost all aspects, has to deal with pressing and immediate problems and, therefore, does not have time to plan»;
f) insufficient use of information systems and management techniques by ascribing to the small size and the owner/manager's idea of having immediate knowledge of the management facts in an informal way; the owner/managerhaving too many multifunctional tasksto comply with; the result is less time to perform managerial functions. This condition dangerously binds the owner/manager's style and fortune with his business activity, but having his firm a particular flexibility, precluding communication problems, so to handle well confrontations and manage conflicts;
g) resistance to change, produced by both the centralization of decision-making and the mutual influence between objectives that satisfy personal motivations and profit and growth targets. Typically, there is a propensity to deal with discontinuities in a reactive logic, that is, only after having recorded adverse effects;
i) excessive focus on technical-manufacturing processes and insufficient consideration of the role played by other functions.
In view of the mentioned limiting features, there are also many advantages generally ascribed to small size businesses.
Among the most common are: the organizational flexibility, low levels of bureaucracy, so more informal relations, better communication skills, and more effective knowledge sharing and experience gained; the production flexibility, i.e. the ability to offer customized products or services and to adapt the offer considering the market demand variability; a strong ability tobuild customer loyalty ascribing to the aptitude to develop personal relationships with customers that go beyond the simple commercial aspect; the localism, such as ability to establish constructive relations with the local social and economic context, sharing values and traditions [11].
Returning to the subject of this work, among the critical factors listed, those considered as primary barriers to successful implementation of performance measurement systems are many. These are: limited human resources to dedicate to the project (i.e. lack of time to be used for the purpose), lack of managerial culture and tendency to consider formal control tools as a barrier to flexibility [12]; scarce financial resources, the absence of formalized strategies and short-term orientation, the absence of IT support infrastructures [13]. In this last aspect that you can add the possible problems related to the collection and processing of data, which may not be readily available, resulting in having to activate a specific information flow, or may come from different sources and different formats, so as to require a process of convergence and homogenization.
Of particular interest are also the contributions that have attempted to understand the reasons for the success or failure of the instrument once implemented.
In fact, generate information on the performance does not warrant, in and of itself, improved corporate results as the real success of these instruments lies in the behavior that are able to induce in individuals who use it [14].
In this regard, within the framework of this work are emblematic case studies relating to the implementation of the Balanced scorecard by two different companies: the SAO Thai company limited and the italianMonnal-isa Smile srl.
The first is an example of a failure to be ascribed to the incompatibility between the stability required by the instrument, in terms of strategic orientation, and the frequentchanges of strategywhich small and medium-sizedenterpriseshave in consideration of the flexibilitythatcharacterizesthem. This conclusion
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appears understandable when you consider the lack of resources to be allocated for the purpose, and the possible increase in financial needs induced by the need for constant adjustments to model changes in the relationship between the enterprise and the environment.
The second case is an example of success, by ascribing to the choice of simplification carried out by identifying, for each card's perspective, a single key indicator and activating only the strictly necessary information flows [15].
Such experiences confirm the results which reaches an important study aimed at understanding the determinants of success in the implementation of this instrument in SMEs. These include: the narrow deriving from corporate strategy; the clear definition of the objectives and performance measures; focusing on the aspects and measures most relevant to business success; ease of maintenance and supply (burden of managing information flows); the simplicity and ease of use; the ability to generate a feed-back fast and accurate; the link between strategic objectives and operational activities; the stimulus to continual improvement [16].
3. The need for a reference model for SMEs
The need to propose a new model of corporate performance measurement comes from the fact that existing ones are built on big businesses and collide with some specificity of SMEs. You might even say that they are meant to capture the first the connotations of the latter in terms of communication skills, flexibility and customer orientation.
The only model that relates specifically to the small size business is the Integrated Performance Measurement for Small Firms which, however, at sixteen years since its introduction, it hasnot had a particular success, possibly because of excessive focus on variables of economic-financial nature.
The model proposed in this work is different from existing onesin the doctrineeither for what concerns the design phase (identification of areas and performance measures; corporate relations strategy), and in reference to that, equally important, the implementation phase (modalities and phases in the introduction of the instrument in the company). Nevertheless, the objective is not to propose a novelty but in exploiting certain aspects of existing instruments by adapting them to the characteristics of small and medium size businesses.
It should be pointed out that the beneficiaries of this work are, without doubt, owners/managers of small and medium-sized enterprises but also — and perhaps
above all — business consultants whoplay a key role in urging the adoption of accounting management tools, when there is an underestimation of the usefulness of this instrument because of a shortage of managerial culture by the entrepreneurs.
As regards the design phase, the principles underpinning this proposal are those of:
a. clarity and comprehensibility;
b. explicitation of the proper business driver;
c. harmonization between current business strategy support and complexity management skills
a) clarity and comprehensibility
The requirement of clarity and understandability must not be understood only as a simplification of the structure of the existing performance measurement so as to adapt it to small size businesses. In fact, although this requirement represents in itself a factor for success in the implementation phase, in the present context we mainly relate it to the «deconstruction» rate of the process of strategy formulation.
As stated earlier, although small and medium-sized enterprises can brand themselves for business formula, based on a solid, although latent, «strategic orientation» (where, why and how to do business), the coexistence of factors such as the scarcity of human resources, time and financial availability to devote to issues not strictly related to operational activities, in most cases, can lead to a business formalization failure.
The absence of a business strategy explicitationcan certainly have the advantage of giving greater flexibility to the organization in terms of adaptability with respect to changes in the environmental context but, at the same time, involves two main risks whose severity increases with the growth of the complexity rate faced: the first concerns the possible discrepancy between strategic choice orientation and context conditions; the second, which tends to increase in the presence of weak and poorly charismatic leadership, concerns the inability to translate consistently the strategic intent into specific addresses of operational activities.
On the other hand, the explicitationof the business strategy requires a strong involvement of the corporate and entrepreneur, especially if this is represented by a single entrepreneur who has to be «convinced» of the instrument usefulness. There is often a significant resistance. This resistance derives mainly from his tendency to reject what, outside of his own more direct responsibilities, is not immediately understandable and so he does not see that immediate usefulness; it may also be compounded by the tendency, on the part of the
proponent (generally an advisor with no specialization), to start the discussions moving from existing theoretical models (e.g., income goals or competitive positioning choices in terms of cost leadership, differentiation or focus) rather than from the everyday business.
The principles of clarity and simplicity therefore relate mainly to the choice to derive business strategy from the analysis of the reciprocal expectations between company and single stakeholders, as well as what happens with the Performance Prism. Suchapproache-sallowusat the same time:
I. making the explicitation of the strategic orientation more understandable as based on the simple response to specific questions about expectations;
II. implement the requirement fordynamic and simultaneous equilibrium positioning for the stakeholders, as well as for the markets [17]
A further element of simplification consists in limiting the analysis to the really critical stakeholders who, in small and medium-sized enterprises tend to identify themselves with the four types of customers: suppliers, lenders and owners, except expanding their number when there is a real need (e.g. local authorities, or institutions), and limiting the number of strategic objectives and indicators to those really critical for business success.
b) explicitation of the proper business driver
In most small enterprises the entrepreneur can undertake both the legal and the economic role characterizing himself not only for the rightsand the obligations arising from his business activity but also for the unitary nature of the exerted function, strong-willed, strategic and implementativetogether.
In such circumstances, it is not uncommon for the owner/manager to be conceived as a useful tool to satisfy own (or a small group of members) needs, be they of a material or immaterial nature, leaving in the background the concerns of other stakeholders.
In such behavior can emerge in its entirety, the problems of poor managerial culture that is revealed in the inability to understand that only through creating value for customers and for the other stakeholders, we build the conditions for the preservation of the economic and financial balance out over time [18]. In turn, they are essential for the same growing business phenomenon, and they are, a fortiori, for the goal achievement set by the owner/manager.
Ultimately, in SMEs, particularly high is the risk that the entrepreneur took over as an «improper business driver» holding, for own purposes, prerogatives and expectations which instead are for the stakeholders, i.e. the number of people who are depositaries of a specific interest on business and are able to markedly affect its survivability [19].
Extending and developing the concept, the identikit of aproper business driverjust coincides with that of an owner/manager that recognizes the interrelationships between business and environment by understanding which social instances, seen as «forces expressed by the environment» are able to influence and convey the management tasks and must be met to ensure business durability. To this end, he adopts appropriate policies by conducting a careful management to prevent possible crisis and reach at least the development necessary to ensure the survival of the company recognized as a social institution having a life of its own.
As stated, in a complementary way, this allows us to understand that the owner/manager become an»improper business driver» when: it does not recognize major social instances by placing ahead its interests to those of the enterprise; neither has the skills or the foresight needed to develop policies necessary for the enterprise, nor the ability to recognize limits, with the consequence of putting at risk the management survival.
The first things that should be investigated to build a performance evaluation system in small and medium
enterprises concern the relationship between the own-er/managerand the company and consist of:
I. identificationof thecharacteristics of the owner/ managerand of the personal expectations which appeal expressly or impliedly to the company. Expectations reflect in large part the system of values and personal characteristics possessed. Identification may be difficult because some of them may be latent or consciously unrecognized. For this reason, it is not usually helpful to ask the entrepreneurdirect questions about what business expectations he has and what tangible and intangible benefits he wants to have. Instead, you must resort to more far-reaching interviews and observations of reality in order to locate its positioningwith regard to latent social identity (craftsman, classic or manager style), leadership style (directive leadership style, participatory, consultative or delegation-oriented) [20] and managerial culture skills (skills regarding critical business functions, clear and coherent ideas about the present and perspective business situation and critical success factors).
II. identification of organizational and managerial needs of the enterprise according to the characteristics possessed. The hypothesis made in the present work consists in assuming that the company's expectations with regard to the owner/manager derive essentially from the discrepancy between the latter's characteristics and the requirements set by the business life cycle in which the company is incorporated. One of the most interesting models regarding business life cycle is the one devised by Churchill and Lewis that distinguish the phases of existence, survival, success, takeoff and maturity also due to the circumstance that they deny the possibility of a «necessity» of the growth processes, excluding the fact that alternatives could be dimensional growth or dissolution, and claim that «development» could happens without increasing the company's size.
Through these steps, it is possible to define the framework within which to develop strategies that go in the direction of mutual satisfaction with the constraint of the primacy of the company economic balance on business instances. The identified strategies, whether they actually sprang from the mediation of divergent interests, represent, for the first time, the expression of the proper business driver typical of the enterprise, a sort of «metasubject» in which the owner/manager is called, over time, to recognize himself in it. Of course it is possible that this divergence between proper and improper-driveris not detected and it is possible to proceed to the next step without having to resolve conflicts.
c) harmonization between current business strategy support and complexity management skills
The high variability of the strategic orientation of SMEs induced by the relationship between environmental turbulence and internal flexibility, forces to structure a management accounting system that avoids giving rigidity to the organizational structure by focusing excessively on the support of the current strategy.
The case studies mentioned in the last paragraph clearly show that one of the major factors that hinder the use of the performance measurement system in such companies is the high variability of corporate strategy. It is very probable that in the everyday business activitiescan emerge and consolidate a gap between the set out and the actually realized strategy.
Undoubtedly the unrealized part may become a source of collective learning on the part of the corporate social nucleus as it involves an analysis of the causes that have generated the deviation. Such causes may include uncontrollable factors connected to competitive, social or political dynamics; but they can also relate to structural controllable factors (unsuitability
of the materialsand/or of the human resources necessary to pursue the assigned objectives), infrastructural (lack of administrative systems, inadequate personnel organization) or variables bound to the functioning of the corporate complex (efficiency level of productive combinations) [21].
In that case it is very important to verify if the new conditions require a review of performance measures, a reformulation of strategic and operational objectives, to involve the sameBasic Strategic Business Orientation (OrientamentoStrategico di Fondodell'impresa), or just a better use of the means and instruments available.
We must, however, point out that limited resources available to SMEs do not allow themto implement frequent strategic analysis and, in particular, preclude the implementation of the continuous updating of the performance measuresand the organizational routines concerning the collection and data processing.
In this respect, it is necessary for the management information system to be structured not only according tothe current strategy, explained and translated into the performance measurement system, but also according to the emerging strategies.
This is, ultimately, to enable information flows about aspects of managing which are complex and difficult to decipher for the owner/manager but not considered at present, from a strategic perspective, a priority (these can be internal processes, benchmarking against competitors, sales and distribution processes). Such a choice would simply put at the disposal of the decision maker a large database (more or less relevant depending on the current situation) to which apply different filters depending on the information deemed desirable.
Obviously the production of information can be expensive from the organizational point of view. This
is why the selection of the most critical ones should still be based on a closer cost-benefit analysis, taking advantage of the opportunities offered by information technology.
The information in excess as opposed to the minimum necessary, if managed well allows the owner/manager to have a clear picture of the overall situation of the enterprise, useful to support decision-making activities in environmental turbulences.
Besides the three principles concerning the systems design, they proposed a fourth specifically referred to the implementation phase. This is:
d) implementation of the integrated performance measurement system step by step, depending on the growth of the entrepreneur's understanding and appreciation
It is not necessary, nor convenient, that the performance measurement system is implemented in a single solution but is preferable a subdivision in modules, with consistency among them, sorted chronologically by application. Such an approach, the validity of which is already recognized in the doctrine, is particularly useful for SMEs in which the owner/managerscould have an attitude of distrust towards tools that, outside of their specific expertise, could be complex (despite their simplicity compared to the most popular models) and, in any case, do not demonstrate in the near future their usefulness.
The proposed model is presented in the diagram below.
The first perspective provides business strategies making them explicit with primary measures and performance drivers. Ultimately, by building strategic maps, you must answer the following questions: without prejudice to the requirement of the overall enterprise balance, what strategies must be put in place to reconcile
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what the critical stakeholders' demands (clients, suppliers, lenders, owners/managers) express in relation to the company and the instances that this expresses toward the first? What measures and what performance drivers are best suited for this purpose? As mentioned above, at this stage the entrepreneur takes on a leading role acting as a privileged interlocutor [22].
The second perspective relates to processes and the basic question to ask is: what processes must be in place to implement the strategies? What measures and performance drivers should you choose? The main instrument in this phase is the mapping of business processes. Once you have identified the critical ones, make sure they are carried out effectively and efficiently using measures regarding cycle times, flexibility, technical quality and costs.
The third perspective concerns the human factor and brings together aspects of motivation and know-how. Employees are considered both in the initial phase of the definition of enterprise proper manager, and in the final stage in which one tries to give answer to the following question: what are the characteristics desired by men so that the processes are conducted as intended? What measures and what drivers should you choose? This perspective is particularly complex since it contemplates the human aspects of corporate activities, concerning the knowledge, skills, expectations, motivations and individual value systems that make up the social corporate structure. In this perspective, the performance measures are limited to three key factors: motivation, flexibility and know-how. By virtue of the distinguishing characteristics of SMEs, the process of esplicitation of corporate strategy could be divided as follows:
1. identification of expectations of the formal manager (owner/manager) and analysis of the dyscrasia between proper and improperbusiness driver;
2. identification of other critical stakeholders;
3. identification of the expectations of each of the stakeholders to the company and expectations that the latter has towards stakeholders;
4. construction of a strategic map for each stakeholder;
5. construction of a strategic map for the enterprise as a whole (as a synthesis of those mentioned in the preceding issue) and esplicitation of policy measures;
6. identification of areas of most significant external complexity that could be critical for future strategies;
7. business process mapping and identification of critical processes for the implementation of the corporate strategy;
8. identification of areas of most significant internal complexity that could be critical for future strategies;
9. identification of desired characteristics of the human factors;
10. construction of a strategic map which systematizes strategies, processes and characteristics of the human factors;
11. identification of performance drivers for the three prospects;
12. information needs analysis;
13. cost-benefit analysis.
Notes
1. SeeG. Cavazzoni, Il sistema del controllo di gestione, Giappichelli, Torino, 2004, p. 8. Similarly Catturi defines control as «the set of mechanisms and processes put in place by eachindividual company in order to prevent or eliminate deviations of management trends from the model or set standardswhich to adaptthosesamemutations trends of the environment in which the company itselfisinserted and operates». SeeG. Catturi, L'Azienda universale, Cedam, Padova, 2003.
2. See F. Santini, Il costo di produzione tra cost accounting e strategic cost management, Giappi-chelli, Torino, 2010, pp. 187 et seq.
3. Cf. R. Cooper, R.S. Kaplan, How cost accounting distorts product costs, Management Accounting, April, 1988; R. Cooper, R.S. Kaplan, How cost accounting systematically distorts product costs, in W. Bruns, R.S. Kaplan, Accounting & Management: field study experiment, Harvard Business School Press, 1988;
4. Cf. C. Guilding, K.S. Cravens, M. Tayles, An international comparison of strategic management accounting practices, Management Accounting Research, 11 (1), 2000, pp. 113-135.
5. Popoli designates this system as «the set of measures which make it possible to represent, in a unitary framework, all dimensions or perspectives of the capacity of the firm to pursue its objectives of short, medium and long term, in reference to the strict interpretation of its strategic choices to be selected and the relationship with the external environment». See P. Popoli, La dimensionestrategica del controllo di gestione, Giappichelli, Turin, 2002, p. 135.
6. Asregards the entrepreneursubjectivefactors of, see I. Marchini, Il governo della piccola impresa, Vol. I, Aspi/Ins, re-edit, Genoa, 1995, p. 71.
7. In this regard, see. B. Sodergren, J. Soder-holm, Silferledningellerkunskapsledarskap? In S.E. Sjostrand, j. Sandberg, m. Tyrstrup (ed.), Osynlingforetagsledning, EFI, Stockholm, 1999, pp. 246-264.
8. On this topic, see F.A. Gul, Y.M. Chia, The effects of management accounting system, perceived environmental uncertainty and on decentralization of managerial performance: A test of three-way interaction, Accounting, Organizations and Society, no. 19, pp. 413-426.
9. Cf. H. Andersen, I. Cobbold, G. Lawrie, Balanced scorecard implementation in SMEs: reflection in literature and practice. Proceedings of SMESME 2001 Conference, Denmark,, Copenhagen, May, 2001; R. Baghwat, M.K. Sharma, Performance measurement of supply chain management: A balanced scorecard approach, Computers & Industrial Engineering, n. 53, 2007, pp. 43-62; K.J. Fernandes, V. Rajab, A. Whalley, Lessons from implementing the balanced scorecard in a small and medium sized manufacturing organization, Technovation, 2006, pp. 623-634; G. Manville, Implementing a balanced scorecard in a not for profit SME, International Journal of Productivity and Performance Management, Vo. 56, 2007, n. 2, pp.162-169; N. Rompho, Why the balanced scorecard fails in SMEs: A case study, International Journal of Business and Management, Vol. 6, n. 11, November 2011, pp. 39-46.
10. See A. Lorenzo, La definizione di piccole e me-dieimprese: un problemaaperto, RivistaItaliana di Ragioneria e di EconomiaAziendale, May-June, 2009, pp. 321-322; I. Marchini, op. cit., 1995, p. 71.
11. For a full review of the advantages and disadvantages associated with small size see A. Cor-tesi, F. Alberti, C. Salvato, Le piccolo imprese. Struttura, gestione e percorsievolutivi, Carocci, Rome, 2004, pp. 31-32.
12. Cf. I. Marchini, op. cit., 1995; P. Garengo, S. Bi-azzo, U.S. Bititci, Performance measurement system in SMEs: A review for a reserch agenda, International Journal of Management Reviews, Vol. 7, n. 1, 2005, pp. 25-47.
13. Cf. U. S. Bititci, T. Turner, S. S. Nudurupati, S. Creighton, Web enabled measurement system. Management implications, International Journal
of Operations and Production Management, n. 22, 2002, pp. 1273-1287.
14. Cf. K. Brouthers, F. Andriessen, I. Nicolaes, Driving blind: strategic decision-making in small companies, Long Range Planning, n. 31, 1998, pp. 130-138.
15. In thisregard, see. C. Garnett, Agedpioneer to retire — gradually: New clinicalresearch information systemplanned to replace MIS, The NIH Record, Vol. LIII, no. 21, 2001, pp. 10-16.
16. Cf. M. Hudson, A. Smart, M. Bourne, Theory and practice in SME performance measurement systems, International Journal of Operations & Production Management, Vol. 21, n. 8, 2001, pp. 1096-1115.
17. Coda arguesthat «If the end of incomeharmo-nizes with competitive and social objectives, itisclear a conception of business interest of a broader scope, alien from dangerousconfu-sionbetween corporate interest and the prop-ertyinterest, more aware of the various social questionsthatcater to the enterprise and the implicationsthattheirfulfilment or lessmay-have on long-termprofitability. Consequently, the destination of the incomewill be subject to institutionallogics, worried more about the survival and prosperity of the enterprise over the long haulthan the interests and desires of quotas and control groups «. SeeV. Coda, L'orientamento strategico di fondo, Utet, Turin, 1988, p. 198.
18. Onidastatedthat «the needs of the masses of workers, capital, masses of direct and indirect consumers cannotdurablythriveassystemcon-ceivedas afunctiononly of profit». SeeP. Onida, Economia aziendale, Utet, Turin, 1960, p. 81.
19. Cf. C. Masini, il sistema dei valori d'azienda, Gi-uffre, Milano, 1977.
20. Cf. V.H. Vroom, A.G. Jago, The new leadership, Englewood Cliffs, Prentice Hall, N.J., 1988.
21. In thisregard, cf. F. Fontana, S.M. Esposizione, Il cambiamento strategico, in «Rivista italiana di ragioneria ed economia aziendale», novembre-dicembre/2004, p. 569.
22. The inability to put back the entrepreneur's personal instances, however distant may result from economic rational hypothesis, appears even more evident when you consider that he might be the only interlocutor with which to confront in a project for the improvement of the control system of the enterprise.
