Centre for Strategy and Performance

Roles of Performance Measurement in the Gas and Electric Supply Industry

Aims

• To investigate the structure and procedures of performance measurement in the gas and electric supply companies..
• To identify the functions performance measurement fulfils at different hierarchical and functional levels of the utility companies.
• To develop a conceptual framework linking performance measurement with other coordination mechanisms such as organisational structure, culture and leadership.

Industrial issues

Over the last fifteen years, performance measurement has gained vast interest from business consultants, practitioners, and academics alike. In the face of a growing demand for efficiency and effectiveness in an increasingly information-driven decision making environment, the capability to obtain and act upon performance information becomes crucial for business success.

The demand for such capability becomes especially apparent in the utility companies, manoeuvring between the threats and opportunities of increasingly deregulated markets. The incumbent players in former monopolies seek for clues how to adjust to the changing market environment and, how to manage their performance. The literature, though rich in academic frameworks and success stories of business consultants, offers little empirically tested guidance for these issues.

Research approach

This research combines a conceptual analysis with an empirical study of the interaction of performance measurement between the stakeholders, organisation and individuals at energy distribution companies in the UK, Germany California. All interest groups (the state regulators, shareholders, customers, etc.) impose different demands and promote different targets for the utility companies. This study explores how these targets are being prioritised in the corporate strategic objectives, how they are integrated in performance measurement systems, how they impact on the employees and, in consequence, how these targets are being achieved.

A resulting conceptual framework will capture the interplay of performance measurement with other mechanisms for organisational coordination. It will form a base for building performance measurement systems in the utility sector. In addition, the outcomes of the empirical study, analysed in the context of their implications for the overall quality of supply and service, will provide guidance for the stakeholders (mainly shareholders and the state regulator) on effective incentive schemes.

Collaborators

• EWE AG, Germany
• PG&E Co., California

Researchers

• Michal Sobotka
• Ken Platts