Management Learning Not Management Control: The True Role of Performance Measurement?

Abstract

The true role of performance measurement is to provide a means of management learning, rather than simply a means of management control. It is widely believed performance measures are essential if managers are to track progress and establish whether their organization is moving in the desired direction. In essence this is the basic philosophy that underpins ideas of management control. However, the power of measurement extends far beyond simply tracking progress to three other areas. First the act of deciding what to measure helps clarify the organization's strategy. Second, clear measures, underpinned by an explicit theory of how the business works, assist in the process of communicating strategy and achieving organizational alignment. Third, measurement data can be used to generate performance insights. These, in turn, can be used to challenge the tacit or explicit assumptions that are held about how the business operates. This article makes explicit the hidden potential of performance measurement by highlighting how measurement systems can contribute to the organization's systems for management learning as well as management control. It also illustrates how more value can be extracted from the data that exist in organizations than has traditionally been recognzed.

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