This study focuses on understanding changes in the performance management (PM) system of a large Czech automotive company (pseudonym: PK), with a focus on understanding the role of internal and external factors in this change. The paper focuses on understanding the influence of behavioral and ownership issues on change. The study makes a significant contribution to the theory of PM where little or no research has been conducted on how changes in political and economic regimes impact post-communist enterprises.

A case study was performed during spring and summer 2018 based on interviews with company staff. A total of 25 interviews were conducted with managers and staff (6 top managers, 11 middle managers, and 8 employees) from various departments including accounting, production, and quality.

Between 1989 and 2008, PK adopted a traditional budgeting and management control system, which was based on annual financial targets and forecasts. Simple estimation of expected growth in revenues and consequent cost were conducted. Between 2002 and 2003 the company was privatized by the current owners. The first two years after the purchase, dissatisfaction with the system increased. The traditional system was inadequate in the context of changing circumstances (structure of products, higher demand on quality, more complex business model in the automotive industry). In 2008, the current owners (5 persons) took control of the company and became the managers.

Shortly after the owners' takeover of PK, the company started the process of transforming the PM system. The company started developing the system based on key performance indicators (KPI), which should closely reflect the remuneration system. After a few months, the company introduced a system based on 12 first level KPIs supported by 9 second level indicators and the system was quickly implemented. Despite KPI theory (Parmenter, 2003) most of the indicators were based on financial measures (profit, revenues, expected revenues).

The study analyzes the practice of the PM system adoption and identifies limitations of the system. Some of the indicators worked against each other, which caused rivalry between responsible employees. This discrepancy required further assistance from company managers and issues had to be solved at the board level. Another frequently mentioned problem was incompatibility between fulfillment of the KPI targets and overall financial performance. Employees frequently complained about inability to fulfill targets due to external factors and loss of the performance portion of their salary in circumstances when overall financial performance of the company was good.