Is performance measurement and management fit for the future?

Performance measurement and management (PMM) is a management and research para-dox. On one hand, it provides management with many critical, useful, and needed functions.Yet, there is evidence that it can adversely affect performance. This paper attempts toresolve this paradox by focusing on the issue of “fit”. That is, in today’s dynamic and turbu-lent environment, changes in either the business environment or the business strategy canlead to the need for new or revised measures and metrics. Yet, if these measures and metricsare either not revised or incorrectly revised, then we can encounter situations where what the firm wants to achieve (as communicated by its strategy) and what the firm measuresand rewards are not synchronised with each other (i.e., there is a lack of “fit”). This situa-tion can adversely affect the ability of the firm to compete. The issue of fit is explored usinga three phase Delphi approach. Initially intended to resolve this first paradox, the Delphistudy identified another paradox – one in which the researchers found that in a dynamicenvironment, firms do revise their strategies, yet, often the PMM system is not changed. Toresolve this second paradox, the paper proposes a new framework – one that shows thatunder certain conditions, the observed metrics “lag” is not only explainable but also desir-able. The findings suggest a need to recast the accepted relationship between strategy andPMM system and the output included the Performance Alignment Matrix that had utilityfor managers.