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Corporate Performance Measures
American Productivity & Quality Center (APQC), Jan 1996, Pages: 110
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.
- Management’s compensation is substantially affected by the results of corporate performance measures. Non-management’s 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.
METHODOLOGY
The collection tools used in the Corporate Performance Measures Consortium Benchmarking Study were the detailed questionnaire and facilitated site visits. Ten companies served as study partners. Representatives of seven of the 10 companies completed the detailed questionnaire. The Clearinghouse
compared the answers they provided with responses to the questionnaire of the 21 sponsors. The results formed the basis for this final report.
Representatives of the 10 partner companies hosted subsets of the Corporate Performance Measures Study Team in half-day site visits. During the site visits, key personnel were interviewed using the Site Visit.
Guidelines (refer to Appendix B). The site visit format allowed the sponsor subset to have extensive discussions of the issues raised by the detailed questionnaire and to experience the partner organizations’ culture.
The networking initiated should serve to foster continued relationships. Research tools were utilized as noted on the previous page (Table 1).
The sources used to select partners included the research group (identifying companies as having innovative practices in corporate performance measures
systems through primary and secondary research), Carl Thor, and sponsors. The initial list of potential partners was screened and 11 partners were selected
by the consortium based on screening data. One selected company declined to participate in the study.
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