Understanding Performance Measurement Systems


Earlier, we mentioned that many companies use formal performance measurement systems. In this section, we shed additional light on such systems.

What is a formal performance measurement system?

A formal performance measurement (PM) system is a set of strategic objectives and performance metrics (including KPIs) applied throughout the entire enterprise. PM systems enable executives to see how business results generated in the company’s many different units combine to influence the enterprise’s overall results.

Thus, a PM system gives executives and managers a comprehensive, high-level view of their ...

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