Performance measurement at DHL Solutions: towards an improved performance measurement system consisting of relevant and well-designed measures

University essay from Luleå/Industriell ekonomi och samhällsvetenskap

Abstract: During the past decades, the competition for many businesses has moved from
just being based on price to include such factors as: quality, service
innovation and flexibility. Managers keep track of the performance on such
factors by means of performance measurement. This process is a way of
measuring how well the organization carries its strategies and objectives
into effect. Since the environment has changed and strategies have changed
with it, many companies need to redesign their existing performance
measurement systems with respect to the objectives they follow today.

This thesis is carried out at DHL Solutions in Sweden and aims at improving
their current view on performance measurement, their performance
measurement system and instituted individual measures by conceptualizing
the existing theories on the subject and adjusting them to fit the
situation in the organization. The most fundamental recommendation on the
subject presented in the literature is that performance measures should be
directly derived from the current strategies followed. Also, the entity of
individual measures should be integrated in a balanced system where
managers monitor multiple dimensions of performance simultaneously. These
two recommendations are the underlying principles of this thesis.

In the Swedish organization of DHL Solutions, there are many weaknesses in
the current performance measurement process. Including: weak relationships
between measures and overall strategies: ill-defined dimensions of
performance (such as productivity and quality): lack of system-view on the
issue of performance measurement (i.e. an unbalanced system): and the fact
that individual measures are not always well-designed.

To overcome these flaws in the present performance measurement process,
this thesis puts forward four recommendations for DHL Solutions to follow
in order for them to improve this whole process. Recommendations one and
two argue that they should integrate a systematic process for strategic
management in their organization where strategies and objectives are
formulated and translated into operationally relevant actions (including a
tailored measurement package for tracking the progress of the selected
strategies). The third recommendation states that DHL Solutions in Sweden
should use the so called performance pyramid as a framework for the
integration of performance measures in a balanced system. Finally, the
fourth recommendation states that they should make use of the performance
measure record sheet as a means to ensure that all instituted as well as
new individual measures are relevant and well-designed.