The application of performance measurement systems at the electricity sector of Lithuania

Abstract

This article presents the results of the empirical research performed in Lithuanian grand electricity companies in order to reveal the application of performance measurement systems (PMSs) at the electricity sector. The relevance of the performance measurement at the electricity sector is determined by starting the process of gradual electricity market liberalization which changes performance conditions of companies operating in this sector. Scientific literature within the context of the analysis of such processes impact on the performance measurement and PMS in this sector is poor and fragmentary. This paper is the first one in which it is analyzed the performance measurement in Lithuanian electricity companies. Theoretical background of the research is based on the assumptions that the changing environment of an organizational the performance has a direct impact on the changes of performance measurement which, in its turn, are realized in close connection with the projects on reorganizing PMS (Ponikvar, Tajnikar and Pushnik, 2009; Gimzauskiene and Valanciene, 2009; Gimzauskiene and Kloviene, 2010). According to this approach, the appropriate changes in electricity market allow to presume by increasing the importance of the evaluation of nonfinancial indicators, herewith and the relevance of the application of modern PMSs. Following these presumptions, the features of the performance measurement and changes of PMS due to electricity market liberalization were analyzed. The research was performed in free types of electricity companies in order to explore the specification of performance measurement and the impact of market liberalization on it in different types of companies. In total four Lithuanian grand electricity companies were researched which were selected by handily selection method. The main results disclosed that due to short time electricity market liberalization still has not had considerable impact on the performance measurement of companies. Traditional attitude to performance measurement mostly based on financial indicators and traditional functions of performance measurement was dominant. However, the research revealed that the importance of nonfinancial indicators was growing. These changes were mostly related with the increasing relevance of the measurement of strategy implementation, customers and other stakeholder satisfaction and workers evaluation. Together with the indicators of these ranges it was envisaged the increasing relevance of the application of modern PMSs, especially in the company of electricity generation. The research disclosed that the increasing competition between independent suppliers gradually increased the importance of a competitive strategy formation and the measurement of non-financial indicators. Therefore, in this company the application of modern PMS as the means of strategy implementation was foreseen more relevant in comparison with other types of electricity companies.