Identifying and Evaluating Corporate Performance Measures Systems

Research and Markets have announced the addition of the 'Corporate Performance Measures report to their offering.

The objective of the Corporate Performance Measures Study (CPMS) was to identify innovative and proven practices in developing, implementing, and evaluating corporate performance measures systems.

The scope of the study included:
1. Types of Measures
2. Alignment of Organization Through Measures
3. Management and Use of Measurement

The study yielded the following findings:

1. Types of Measures

- The top five or six performance measures used by the CEO vary widely by type of organization. In practice, organizations trade off " between using financial measures and using quality and productivity measures.
- The top management of partner and sponsor organizations uses a broad range of measures. No single measure is used universally and only 14 measures are used by as many as 70 percent of the sample.
- Few of the organizations surveyed make adjustments
for inflation in financial trend data.

2. Alignment of Organization Through

Measures

- Partner and sponsor organizations demonstrate strong intentions to vertically align the corporate performance measures system and plans/measures used at the lower levels of the organizations.
- Partner companies align processes horizontally through a balanced system of measures.
- Partner companies (as compared to sponsor organizations) use more participative and evolutionary approaches in the selection of measures.
- The most difficult measures with which to work are related to customer satisfaction, employee satisfaction, and market share.
- Partner and sponsor organizations provide much evidence of vertical alignment between the strategic plan and the corporate performance measures system.

3. Management and Use of Measurement

- Goals are set for most of the CEOs performance measures.
- The majority of top CPMs are reviewed monthly.
- People in a wide range of positions within partner and sponsor organizations assume the roles of initiating, designing, leading, and administering the measures system.
- Communication at all levels is very important. Relatively formal methods of communication are judged to be more effective than casual methods.

- Managements compensation is substantially affected by the results of corporate performance measures. Non-managements compensation is not substantially affected unless gainsharing/ Goal Sharing is in place.
- Participating organizations are investing a great deal of energy in the development of new measures, especially non-financials. Representatives of sponsor and partner companies identified a wide variety of short-term and longterm benefits of having a performance measures system.
- Organizations are moving toward performance measures systems containing fewer financial measures.

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