This Just In: Performance Measurement Works

Do management techniques like monitoring performance and setting targets really work? Most managers are convinced, and those who hire them would like to think so. Where's the evidence?

The first-of-its kind study by researchers from Stanford, the London School of Economics and the consulting firm McKinsey & Company suggests the answer is yes (see Scott Thrum’s September 8, 2008, Wall Street Journal column “Theory & Practice: The “Same 01” Is Actually Good Enough for Many”).

This is good news, especially for performance measurement. Like management in general, performance measurement needs more than anecdote to assure its widespread adoption, especially in the courts community. Unlike management in general, performance measurement and management techniques are not broadly accepted and are still widely viewed as innovative and experimental.

The study, including more than 4,600 midsize factories in 12 countries, is based on responses to surveys of plant managers and examination of financial data. Survey questions focused three main areas: management of operations, performance and people. The researchers asked roughly 50 questions such as “How do you track production performance?” Answers were scored on scale form one to five. As reported by Thrum, a plant with multiple computer screens displaying real-time production totals and progress toward target performances was scored a five. On the other hand, a plant whose managers said he tracks performance only when plant output drops was scored a one.

Generally, the study reveals that the highest scoring companies were also the most productive and profitable. We are now safe to assert that research supports the inclusion of performance measurement and management as a part of good management practice linked to success.

It seems to be that good management practice is good management practice,” says Stephen Dorgan, a co-author of the study.

And, again, that’s good news.

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