Performance measurement and management: A tool for strategy execution

Abstract

In many organizations performance measurement and management (PMM) systems are little more than human resource bureaucracies with forms, rules, and review layers. These paper-driven systems are burdens to managers and hence are completed marginally, if at all. They are typically seen by raters as extra work and by ratees as at best irrelevant, at worst demotivating. Most PMM improvement efforts center on the most visible aspect of PMM—the form. But these quick fixes attempt to treat symptoms (e.g., leniency), while diseases (e.g., lack of managerial accountability for performance improvement or development) go unchecked. Rather than periodic revisions to the rating scales, PMM can be made relevant by linking it to strategy execution. PMM can be a vital tool for strategy execution by signaling what is really important, providing ways to measure what is important, fixing accountability for behavior and results, and helping to improve performance. In this article a PMM process is described which begins with identification of Critical Success Factors (CSFs) derived directly from business strategy. These are the basis for a PMM process that is a welcome managerial tool. The successful use of PMM as a device for strategy execution is illustrated via a case study.