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Performance Measurement System
Evaluation / Assessment
Step 1 Documentation
Step 2 Analyze Usage
Step 3 Analyze Processes
Step 4 Feedback
Step 5 Report 

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Recommended Reading:
A. Neely
R. Simons
R. Kaplan & D. Norton

Why Performance Measurement?

Figure 1: Hierarchy of Business Strategy by R. Simons

Innovative companies are using the balanced scorecard as a strategic management system, to manage their strategy over the long run. They are using the measurement focus of the scorecard to accomplish critical management processes (Kaplan & Norton, 1996):

1. Clarify and translate vision and strategy
2. Communicate and link strategic objectives and measures
3. Plan, set targets, and align strategic initiatives
4. Enhance strategic feedback and learning

Simons (2000) sees performance measurement and control systems as a tool to achieve balance between five major organizational tensions:

1. Balancing Profit, Growth, and Control
2. Balancing Short-Term Results Against Long-Term Capabilities and Growth Opportunities
3. Balancing Performance Expectations of Different Constituencies
4. Balancing Opportunities and Attention
5. Balancing the Motives of Human Behavior

Marr (2004) found three general reasons to measure performance based on data collected from 780 large organizations in the United States:

1. Implement and validate strategy
2. Influence employees’ behavior
3. Report externally on performance and corporate governance

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