Measuring and Managing Performance in Organizations

Chapter One. An Introduction to Measurement Issues

Charles Schwab, the first president of Bethlehem Steel, liked to tour his steel-making plant daily. During one inspection he came on a group of employees who had just finished pouring ingot. Schwab quickly counted the ingot and without saying anything wrote “78” in bold figures on the hearth with a piece of chalk. Then he continued his tour. When he came to the same station a day later “78” had been crossed through, and beside it his employees had written “80.” One day later, “80” was crossed out in favor of “85.” Production continued to increase in this manner (Mason and Swanson, 1981, p. 224).

Stories like this are told in management circles to show how measurement can be used to improve organizational ...