Long Range Planning 43 (2010) 465e476 http://www.elsevier.

com/locate/lrp

Strategic Performance
Measurement: Benefits,
Limitations and Paradoxes
Pietro Micheli and Jean-Francois Manzoni

Strategic Performance Measurement (SPM) can be both functional and dysfunctional for
organisations. SPM can help organisations define and achieve their strategic objectives,
align behaviours and attitudes and, ultimately, have a positive impact on organisational
performance. However, SPM has also been criticised for several reasons, such as encour-
aging perverse behaviours, stifling innovation and learning, and having little effect on
decision-making processes. If both perspectives are valid, how can organisations make
SPM more of an asset and less of a liability?
In this article, we argue that the design of an SPM system (SPMS) and the definition of its
roles are fundamental factors determining its success and impact on business perfor-
mance. Indeed, only by carefully considering characteristics and roles will managers reap
the full benefits, and SPMSs make a substantial contribution to the achievement of
organisations’ strategic goals.
Building on the papers selected for this Special Issue, we draw conclusions that are
relevant for both the theory and the practice of SPM. First, the benefits and limits of
SPM depend on the very definition of what SPM should be, and on whether the mea-
surement of performance is linked to both formulation and implementation of strategy.
Secondly, the types of behaviour promoted by the SPMS are determined primarily by
the uses of the system, particularly whether it is adopted for control or learning
purposes. Thirdly, organisations should regard their SPMS as a means of fostering
alignment to an existing strategy, but also of supporting empowerment and the
continuous adaptation of strategy and tactics. Finally, in order for SPM to support

The design of an SPM system and the definition of its roles are
fundamental factors determining its success

0024-6301/$ - see front matter Ó 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.lrp.2009.12.004
decision-making processes and positively impact on organisational performance, targets
and indicators have to be linked to strategy and considered in strategic reviews.
Following an introductory section on the theme of SPM, we examine the benefits, limits
and paradoxes of SPM. We conclude by arguing for intelligent and purposeful designs of
performance measurement systems, and for research that breaks the barriers of academic
silos and puts an end to sterile contrapositions between advocates and critics of SPM.
Ó 2009 Elsevier Ltd. All rights reserved.

Introduction
Since the early 1990s, organisations have invested increasing amounts of money and resources in mea-
suring their performance. Recent reports suggest that an average company with $1 billion sales spends
over 25,000 person-days per year planning and measuring performance.1 In the public sector, following
the recent introduction of ‘New Public Management’ reforms in a number of OECD countries, consider-
able attention has been paid to strategic performance measurement by governments. UK government
departments recently estimated they spend over £150 million per year solely to monitor progress on na-
tional targets. This excludes the cost of front-line organisations gathering, analysing and providing data.2
A number of studies have found SPM generally productive and helpful in improving organisa-
tional performance.3 Specifically, research has shown that, through appropriate measurement and
management of performance, organisations can benefit in the following areas:

 Formulation, implementation and review of organisational strategy4

 Communication of results achieved to stakeholders, thus strengthening corporate brand and
reputation5
 Motivation of employees at all levels, promotion of a performance improvement culture, and
fostering of organisational learning6

Other studies, however, show that despite the substantial resources invested by organisations, SPM-
related initiatives such as the implementation of scorecards can often fail to bring the intended benefits.
Worse, if done poorly, they can be very expensive, and not only ineffective but harmful and indeed de-
structive.7 Therefore, if organisations are to realise value and become more sustainable in the longer
term, it is crucial to understand how appropriate SPM practices deliver improved performance.

If organisations are to realise value and become more sustainable, it is

crucial to understand how appropriate SPM practices deliver improved
performance

In spite of decades of research in this area, evidence on the benefits and limits of SPM is still
inconclusive. Indeed, authors from areas as diverse as strategy management, human resources,
management accounting and control, operations management, public administration, organisa-
tional behaviour, information systems and marketing have paid considerable attention to strategic
performance measurement. However, lack of cross-disciplinary studies has resulted in the fragmen-
tation of this field e as well as the polarisation of the debate e among advocates of specific tools
and techniques, and critical investigators of behavioural and cultural implications.
Conflicting research findings and lack of agreement over the benefits and limits of SPM prompted
the development of a call for papers on the theme of SPM. The purpose of this Special Issue was to
examine the state of the art and identify directions for the development of SPM as a field of research.

466 Strategic Performance Measurement: Benefits, Limitations and Paradoxes

Therefore, we invited cross-disciplinary submissions that could bring together different approaches
and make substantial intellectual and practical contributions. The call for papers attracted 77 extended
abstracts; the main academic fields to be represented were strategy, management accounting and con-
trol, and operations. Following the review of the abstracts, we asked for 25 full papers. Of these, eight
were subsequently selected and presented in a workshop organised at IMD, Lausanne on 24/25
January 2008.8 After a further three rounds of review, four papers were selected for publication.
The next section provides an overview of these papers, outlining the main themes they investigate
and the contributions they make to theory and practice. Subsequently, we discuss a number of
emerging themes. In particular, several benefits, limits and (apparent) paradoxes of SPM are exam-
ined. We conclude with final remarks and implications for practice and academic research.

Overview of the Special Issue

The relationship between performance measurement and strategy has been the subject of several stud-
ies. However, the vast majority of scholars have looked at performance measurement systems purely as
a means for strategy implementation. In doing so, they have not addressed a fundamental question:
are performance measurement systems mere tools to implement strategy, or could they play an active
role also in strategy reviews? In other words, is strategy driving the design and use of measurement
systems, or is there a mutual relationship between the two? The opening paper, by Gimbert, Bisbe
and Mendoza, considers the role of performance measurement systems in strategy re-formulation
processes. To do so, the authors differentiate between performance measurement systems (PMSs)
and strategic performance measurement systems (SPMSs), the latter being a subset of the former
and characterised by four main attributes: integration of long-term strategy and operational goals,
presence of multi-perspective indicators, inclusion of cause-effect linkages, and presence of a sequence
of goals-targets-action plans. Building on a survey of 349 CEOs of medium and large Spanish com-
panies, the authors find a positive association between the use of SPMSs and both the number and
variety of decisions taken in each strategic review. While this result confirms the potential impact
of performance measurement on reviews of strategy, it also highlights the fundamental difference be-
tween PMSs and SPMSs. Indeed, no difference was found between firms that use measurement sys-
tems which do not qualify as strategic, and firms that do not have any PMS at all. This finding is
fundamental for both the theory and practice of strategic performance measurement: while many or-
ganisations have invested considerable resources to implement strategy and inform strategic reviews
by means of measuring performance, they have effectively failed to do so, because of the inappropriate
design of their measurement systems. Unless specific attributes are included, these systems will remain
merely operational and will fail to inform strategic decisions.

Are performance measurement systems mere tools to implement

strategy, or could they play an active role also in strategy reviews?

The second paper, by Dossi and Patelli, examines the inclusion of non-financial indicators in
PMSs used in relationships between headquarters and subsidiaries. The distinction e and, often,
contraposition e between financial and non-financial indicators has already been studied by a num-
ber of scholars. However, the authors consider performance measurement as a means of establish-
ing a dialogue between headquarters and subsidiaries, looking at the changes in emphasis placed by
headquarters on financial indicators to control subsidiaries, depending on subsidiaries’ perfor-
mance. After analysing the results of a survey conducted among the Italian subsidiaries of foreign
companies, Dossi and Patelli conclude that, for headquarters, non-financial indicators have incre-
mental but not superior information content to financial indicators.
Nevertheless, the inclusion of non-financial indicators is positively associated with subsidiary
profitability, subsidiary participation in the design of PMSs and their interactive use. Importantly,

Long Range Planning, vol 43 2010 467

the authors find that headquarters emphasise the financial indicators of performance in negative
financial situations. The rationale provided by the study’s respondents is not unreasonable, as
the priority for failing subsidiaries is indeed to turn the situation around. At the same time this
is potentially dangerous, as that turnaround could be achieved through actions that will signifi-
cantly hurt the subsidiary’s long-term success. In that sense, using a more diverse set of indicators
could help headquarters and subsidiaries to understand better the causes of poor performance and
identify appropriate courses of action, while not focusing solely on short-term results.
Finally, the authors argue that, through an enhanced use of non-financial indicators, PMSs could
contribute more effectively to strategic alignment, organisational learning and diffusion of knowledge
throughout organisations. The implications of these findings are substantial: while decisions over the
inclusion of financial and non-financial indicators in the design of PMSs are certainly important,
changes in emphasis with regard to specific indicators are equally relevant. If measurement systems
are to be an effective means of communication between headquarters and subsidiaries, or between
different functions, organisations must resist the temptation of focussing on purely financial aspects
when they are faced with negative financial results. This would be detrimental, as it would make
information flows less effective, stifle learning and encourage dysfunctional behaviours.

Through an enhanced use of non-financial indicators, SPMSs could

contribute more effectively to strategic alignment and organisational
learning
Following two prevalently quantitative pieces of research, the third and fourth paper report the
analyses of two in-depth case studies. In ‘Dynamic strategic performance measurement systems:
balancing empowerment and alignment’, Kolehmainen discusses how dynamism can be built
into SPMSs and how such systems can be used for strategy development/revision and implemen-
tation. While building on and contributing to the literature on SPMSs as a means of promoting
strategy alignment, the author stresses the importance of locating focal responsibility for perfor-
mance indicators at the individual manager’s level. She concludes that it is possible to develop
flexible SPMSs suitable, and often necessary, for multinational companies and organisations that
operate in dynamic environments. These systems can allow the organisation simultaneously to
achieve high empowerment (necessary to adapt to rapidly changing circumstances) and high align-
ment (necessary to make sure the various parts of the complex organisation work effectively
together).
These findings have important implications for both the design and the use of SPMSs. Although
scholars have put increasing emphasis on organisational alignment, it is important to recognise
that, especially in dynamic environments, measurement systems have to be flexible, as they might
otherwise hinder change and inhibit organisational transformations. Systems which combine align-
ment and empowerment, and make appropriate use of performance targets and indicators over
time, could prove an effective means of implementing changes in strategy and promoting intended
behaviours.
The fourth paper, by Melnyk, Hanson and Calantone, investigates the links between SPM, pro-
cess management and innovation. To do so, the authors look at the case of a large multinational
home supplies firm trying, like many others, to change its strategic focus from cost leadership to
market differentiation through radical innovation initiatives. Although the firm had achieved op-
erational excellence through process management and the use of an SPMS in the past, these very
aspects inhibited it from making a profound shift in its strategy. Effectively, the SPMS served to
operationalise and crystallise a specific paradigm, and to create capabilities needed for incremental
innovation. However, such capabilities turned out to be unsuitable for radical innovation. In agree-
ment with the literature on organisational ambidexterity, the organisation’s SPMS was found to

468 Strategic Performance Measurement: Benefits, Limitations and Paradoxes

play an important role in encouraging a culture of process improvement, but, at the same time,
helped create a core rigidity. This, in turn, made the organisation incapable of moving from a cul-
ture that promoted operational excellence and incremental innovation to one that rewarded crea-
tivity and radical innovation. This paper is particularly interesting, as it shows how measurement
systems can promote and sustain the adoption of a particular paradigm. Clearly, this is advanta-
geous when an SPMS is introduced in line with the specific culture the organisation is aiming to
create. However, during processes of strategic change, if the existing measurement system is not
radically modified and its role rethought, it will work as a spring, pulling the organisation back
to where it started.
The themes examined in the selected papers give us the opportunity to discuss several benefits,
limits and paradoxes in the field of SPM. In particular, a number of questions emerge as fundamen-
tal if we want to advance the theory and practice of SPM: what are the roles of SPM in organisa-
tions? Which factors should be considered while designing and using SPMSs? Is SPM necessarily
wedded to a specific paradigm and, thus, a potential inhibitor of changes in strategy? Moreover,
can SPM only be aimed at promoting strategic alignment, or could it play an active role in shaping
strategy and supporting empowerment and continuous adaptation?

Can SPM only be aimed at promoting strategic alignment, or could it

play an active role in shaping strategy and supporting empowerment
and continuous adaptation?

Discussion
Strategic performance measurement
Our understanding of the benefits and limitations of SPM depends on the very definition of what SPM
is. The results of the study conducted by Gimbert et al., and their operational definitions of strategic
performance measurement systems (SPMS) and PMS, are in line with recent contributions in this
area,9 showing how crucial it is to differentiate between strategic and operational PMSs. Far from being
solely a difference in terminology, the strategic connotation of certain PMSs has fundamental impli-
cations for their use at different organisational levels and their impact on strategy. In particular, the
inclusion of multi-perspective indicators and cause-effect linkages in the design of the SPMS are fac-
tors of primary importance, if we focus on the links between performance measurement and strategy
reviews. This conclusion also has relevant implications on future studies in the field of SPM. In order to
have comparability and generalisability of research findings, authors will have to clarify what type of
PMS they are considering, rather than examining ‘generic’ performance measurement systems.

The different roles of SPM

Authors of the selected papers considered SPM as a means to: implement and reformulate strategy;
communicate key objectives and corporate priorities; provide strategic alignment; support process
improvement; and encourage incremental innovation. Previous studies have looked at other roles
of SPM, such as: promoting specific behaviours and attitudes at different organisational levels; re-
sponding to rules and regulations; providing greater accountability within and between organisa-
tions; communicating financial and non-financial results to key stakeholders, etc. Building on
Simons’ work on control systems,10 it is possible to define four key roles of SPM. The ‘diagnostic’
use of SPMS relates mainly to the implementation of strategy; the ‘interactive’ role is linked to the
concept of organisational alignment and regards the SPMS as a means of communication within
the organisation and between the organisation and its external stakeholders, and as support to
the emergence of new strategies. Additionally, performance indicators can be seen as communica-
tion tools when they are introduced to communicate core values such as mission statements, credos

Long Range Planning, vol 43 2010 469

and vision statements, or to drive desired behaviours. In this sense SPM is linked to the firm’s ‘be-
lief system’. Finally, indicators can be used to set ‘boundary systems’ designed to restrain employee
behaviour and define limits of freedom within the organisational context.
Currently, organisations introduce performance indicators for ‘diagnostic’ reasons, in order to
monitor performance; however, SPMSs should be considered also as effective means of establishing
common rules and boundaries for action. Furthermore, SPM can contribute to the identification of
new opportunities and to stimulate organisational learning.11 For instance, as the authors of the se-
lected papers emphasise, balancing financial and non-financial indicators e or lagging and leading
indicators e can generate both feedback and feedforward loops. In so doing, SPM can be used to gather
data about past performance, but also to implement strategic objectives. This plurality of roles is not
necessarily positive or negative, but rather emphasises how different SPMSs fulfil different needs and
how there is no ‘one-size-fits-all’ measurement system. As a consequence, the drivers and purposes of
every performance indicator and of the whole SPMS should be explicitly defined in the process of
design, and communicated during implementation. This is particularly important, as the benefits
of the measurement system strongly depend on both its characteristics and its intended roles.

SPM can be used to gather data about past performance, but also to
implement strategic objectives
SPMS can be used in relationships between headquarters and subsidiaries, and between corporate
and business unit levels. In their study of Italian subsidiaries of foreign multinationals, Dossi and
Patelli show how non-financial indicators are still treated as complementary and not substitute
measures of performance. Although increasing emphasis has been placed on the importance of
using non-financial indicators, this is not necessarily a negative finding. As previous studies dem-
onstrate, it is fundamental for organisations to decide which type of SPMS to introduce, in line with
their approach to strategic control.12 Indeed, if the headquarters of a multinational company wants
to exert financial control over its subsidiaries and keep the learning generated within those
subsidiaries, the inclusion of predominantly financial indicators would be appropriate. However,
if headquarters want to stimulate knowledge flows and the diffusion of good practices across
subsidiaries, then mere financial control would be insufficient.
SPM is a means by which to establish a dialogue between different functions within an organi-
sation; between headquarters and subsidiaries; and between an organisation and its environment. In
the context of multinationals, the participation of subsidiaries in designing an SPMS is likely to re-
sult in the inclusion of a higher number of non-financial indicators. Therefore, headquarters seek-
ing dialogue with local managers should design measurement systems that are not there solely for
‘diagnostic’ purposes, but also include more ‘interactive’, non-financial indicators. Moreover,
although the ‘diagnostic’ use of SPMSs could work against deploying certain capabilities, it would
not necessarily have a negative impact on performance. In fact, it could make a positive contribu-
tion by monitoring performance against goals, providing boundaries for action, restricting risk-
taking, and monitoring the efficiency and effectiveness of processes and activities.13 It is the lack
of clarity over these issues and inconsistencies (e.g., efforts to promote communication and diffuse
good practices across a group of firms using mostly financial indicators) that create considerable
problems and may eventually lead to the failure of the whole SPMS.

Headquarters seeking dialogue with local managers should design

measurement systems that include more ’interactive’, non-financial
indicators

470 Strategic Performance Measurement: Benefits, Limitations and Paradoxes

 Finally, it is interesting to notice the shift in emphasis over elements of the SPMS. Surely, the
importance attributed to certain performance indicators should change over time, depending on
the how the organisation is performing and where it wants to be. A typical example would be
the choice made by GE to modify its SPMS several times in a relatively short period, depending
on which type of strategy it wanted to implement.14 However, Dossi and Patelli find that shifts
in the emphasis on specific elements of the SPMS depend on changes in the performance of
subsidiaries and the environment in which they operate. Although headquarters often adopt mul-
tiple perspectives in order to more comprehensively assess and evaluate performance, they tend to
restrict their focus to financial indicators in the presence of poor financial results. This is particu-
larly dysfunctional as the noise and volatility of traditional financial indicators can limit their use as
a performance evaluation tool for the relationship between headquarters and subsidiaries. Also,
non-financial indicators would be more suitable to identify the very reasons for those unsatisfactory
results.

SPMS: static systems for dynamic environments?

Thanks to data collection automation and improvements in data analysis, organisations have intro-
duced increasing numbers of performance indicators. The inclusion of more performance indica-
tors could be welcome. Indeed, research in cognitive and social psychology shows that an SPMS can
help frame managers’ mental representations of the business, due to the system’s informational ef-
fects. As Gimbert et al. notice, SPMSs encourage extensive scanning behaviour and help produce
more informed assessments than mono-dimensional non-causal PMSs do. Furthermore, compre-
hensive SPMSs can increase managers’ goal clarity and process clarity in business units and
subsidiaries. Performance information also affects intrinsic motivation and empowerment, since
‘a more comprehensive PMS can make business unit managers believe their jobs are more meaning-
ful by helping them to determine how their work fits within the broader scope of the organisa-
tion’.15 These aspects, in turn, have been found to have a positive impact on organisational
performance.
On the other hand, several studies have criticised SPM as it can promote organisational inertia
and create ‘ossification’, i.e. organisational paralysis caused by an excessively rigid SPMS.16 Partic-
ularly when a system is pervasive and consists of large number of indicators, organisational inertia
and ossification may arise. This may not be a major problem for organisations competing in rela-
tively stable markets, but it could become a serious issue for firms operating in very dynamic en-
vironments. Authors have remarked how in dynamic environments only a few indicators and rules
should be introduced, and those mostly to set boundaries.17 However, Kolehmainen, in her study of
a leading telecommunications company, also argues for the possibility of embedding dynamism in
SPMSs. To do so, an organisation has to adopt an empowering and flexible approach to the design
and use of such systems. While alignment processes are needed to ensure that performance indica-
tors and behaviours are in line with the organisation’s strategic priorities, empowerment at the in-
dividual managers’ level is needed to build sufficient dynamism into the SPMS. In other words,
empowerment and HR management can promote dynamism and responsiveness, by building
flexibility into the system in order to allow for local adaptation of the indicators.

Several studies have criticised SPM as it can create ’ossification’ -

organisational paralysis caused by an excessively rigid SPMS
The introduction of new performance targets and indicators can kick-start the implementation of
new strategic objectives and promote different ways of working. Therefore, the introduction of
a new SPMS, or the review of an existing one, can support and enable change management initia-
tives. A good example of the introduction of new performance indicators to support a corporate
turnaround within an organisation is the case of Continental Airlines in the mid 1990s.18

Long Range Planning, vol 43 2010 471

Essentially, Continental’s new management team promoted a radical change in strategy and values
through SPM, by linking a limited number of key performance indicators to the company’s mission
and making the whole organisation accountable for them.
Although SPM has been successfully used in conjunction with change management initiatives,
several studies have remarked how SPM can actually act as an obstacle to change. Certainly, the
latter happens when the SPMS is too pervasive, rarely reviewed or not subdivided in levels of
importance, and when responsibilities are not delegated. Nonetheless, even when an SPMS is
reviewed and redesigned to support a change in strategy, it can push the organisation in a direction
opposite to the one intended.

Even when an SPMS is reviewed and redesigned to support a change in

strategy, it can push the organisation in a direction opposite to the one
intended

The paper by Melnyk et al. sheds light on this apparent contradiction. In the organisation con-
sidered, the authors find that SPM supported the development of particular capabilities and the
crystallisation of a specific organisational culture, linked to process improvement driven by
a cost leadership strategy. When the organisation tried to change its strategic focus to differentia-
tion through radical innovation, the capabilities that SPM had contributed to create became core
rigidities and the SPMS subverted this movement into a shift to incremental innovation.
Other studies have also emphasised how measurement systems, particularly if used for ‘diagnos-
tic’ purposes, could have a negative effect on innovation and the capacity of the organisation to
transform itself.13 On the other hand, the ‘interactive’ use of SPMSs could foster capabilities of en-
trepreneurship, market orientation, organisational learning and innovation. As Dossi and Patelli
suggest, they could be used as a means to generate and disseminate new strategic objectives and
knowledge across the organisation. Therefore, as previously remarked, the different roles of SPM
should be considered, especially when organisations are involved in processes of substantial
transformation.

SPMS: a powerful tool or a tool for power?

The previous discussion shows how powerful SPM systems can be as a management tool. However,
SPM could also be regarded as a ‘tool for power’. Indeed, SPM is often used as a way to introduce
a rational discourse in complex situations. According to a rational paradigm, performance informa-
tion is communicated with the aim of demonstrating results within the organisation or to key ex-
ternal stakeholders. Consequently, if performance information is related to the strategic objectives
of the organisation, it is used to show that progress is being made against these objectives. On the
other hand, performance indicators are often utilised for symbolic purposes; in this case, their aim
is to increase the relative power of a business unit or department within an organisation, or to
(apparently) satisfy the demands of external stakeholders.19
This is evident if we consider how a number of functions within organisations have tried to ac-
quire greater legitimacy and power by relying on the measurement of their performance. This is the
case with R&D departments and functions involved in new product development and marketing,
for example, as they have invested substantial resources to ‘demonstrate’ their value through the
introduction of increasingly sophisticated performance indicators.20 However, particularly in pe-
riods of recession, budgets allocated to these functions tend to be cut first. As the paper by Gimbert
et al. shows, the reason is that it is not so much the accuracy of data that counts, but the level at
which that data is considered. If performance indicators pertinent to product design or marketing
are utilised at an operational level, they are not likely to influence the strategy and the strategic

472 Strategic Performance Measurement: Benefits, Limitations and Paradoxes

decisions of the organisation. Therefore, in order for performance measurement to be used as an
effective ‘tool for power’, it is important that performance indicators are linked with strategy
and that they are considered in strategic reviews.

For performance measurement to be used as an effective ’tool for

power’, it is important that performance indicators are linked with
strategy
Conclusions
In spite of decades of practical experience and academic research, strategic performance measure-
ment is still under scrutiny and little consensus has been reached over its benefits and limitations. In
this paper we have shown how the design and purposes of an SPMS are fundamental aspects to be
considered if we want SPM to effectively contribute to organisational performance. Also, clarity
over the nature and aims of an SPMS is fundamental if we want to resolve a number of apparent
paradoxes. First, organisations should explicitly decide whether their measurement system is stra-
tegic or solely operational. This choice is likely to determine the link between strategy and perfor-
mance measurement, and the relevance of the PMS within the organisation.
Second, the design of the SPMS should depend on the roles the organisation assigns to the SPM.
These roles should therefore inform decisions over the types of performance indicators to introduce
(financial and non-financial; leading and lagging) and the use of performance information as
a means to generate single and double learning loops.
Third, the balance between ‘diagnostic’ and ‘interactive’ uses of SPM has relevant consequences
on the possibility of SPM playing an active role in the introduction of change initiatives and inno-
vation strategies. SPM can also contribute to the creation of capabilities and the establishment of an
organisational culture. Therefore, in case of substantial transformations, the organisation should
reflect on the role played by the SPMS and not only redefine the targets and indicators, but also
rethink the balance between alignment and empowerment. Only by doing so will the organisation
make the system flexible and use it as a lever for change.
Finally, although SPMSs are certainly powerful tools, in isolation they cannot guarantee business
performance. They should be seen as part of a wider whole, and be used in conjunction with other
mechanisms including, for example, rituals and routines, reward and recognition systems, and
training programmes.21

A purposeful design
The design of an SPMS is fraught with difficulties and, to date, many measurement initiatives can
be considered outright failures.22 This paper shows not only how performance measurement
systems can differ from each other in nature, but also how they can be developed for different pur-
poses. The plurality of roles of SPM indicates the importance of defining from the outset the roles
of every performance indicator and the SPMS as a whole. In this sense, we could argue that the
design of such systems should be an intelligent and purposeful creation. Key questions managers
should ask themselves include:

The plurality of roles of SPM indicates the importance of defining from

the outset the roles of every performance indicator and the SPMS as
a whole

Long Range Planning, vol 43 2010 473

 Why is the organisation introducing (or reviewing) an SPMS?
 Which roles do we want it to play?
 Will its characteristics be consistent with its aims?

Answers to these questions should then determine the number and kind of performance indica-
tors, the type of reviews that will be conducted, and the main features of the SPMS as a whole. In
particular, the organisation will have to decide the degree of flexibility it wants to embed in the
system, according to its envisaged use in both the short and the long term. The balance between
alignment and empowerment, and the frequency of reviews and audits will determine the dyna-
mism of the system. Also, the design of the SPMS will have to depend on the environment in which
the organisation operates, its strategy, its links with key stakeholders, and the implications the mea-
surement system may have in maintaining the current, or shaping the future, organisational culture.
Indeed, in a world where the pace of change has increased markedly over the last few years, firms
will increasingly need their SPMS not only to help get alignment to an existing strategy, but also to
support the empowerment and continuous adaptation of strategy and tactics. And this will be valid
not only for successful subsidiaries and operations, but for all operations, particularly for less well-
performing ones. We believe that the papers presented in this Special Issue offer some very helpful
suggestions on how to achieve this, and how to embed a strategic performance measurement system
in organisations.

Academic research in SPM: perpetuating the past or looking at the future?

Over several decades, academics from a wide range of areas have researched the field of strategic
performance measurement. Although the use of different perspectives, theories and paradigms
has contributed to the development of the field, the lack of cross-disciplinary studies has also helped
to determine its fragmentation. Furthermore, scholars have tended to polarise the discussion
around either practical or theoretical aspects of SPM. Some have studied the tools and techniques
of SPM; others have focused on behavioural and cultural determinants and implications. Both are
critical, and this Special Issue attempts to look at SPM in a more holistic and comprehensive way.
The selected papers build on research conducted in various fields such as strategy, management
accounting and control, international business and operations. Moreover, the authors adopt both
qualitative and quantitative methodologies. We believe that for SPM to move forward as a field of
research, methodological and paradigmatic differences should be regarded as resources, rather than
barriers. Furthermore, if we want to ensure comparability and generalisability of findings, future
studies will have to provide a clear definition of both key features and teleological aspects of the
PMS (or SPMS) under consideration.

Acknowledgements
Our thanks and appreciation go to Professor Charles Baden-Fuller, Editor-in-Chief of Long Range
Planning, for his kind invitation to be Guest Editors of this Special Issue and his support and en-
couragement during the process. Special thanks also to all authors, reviewers and colleagues at
Cranfield’s Centre for Business Performance for making this publication possible.

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474 Strategic Performance Measurement: Benefits, Limitations and Paradoxes

 3. K. S. Cavalluzzo and C. D. Ittner, Implementing performance measurement innovations: evidence from
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and methods for collecting and analysing data were used. The initial call did not ask for complete papers,
but for extended abstracts. The result was very encouraging, as we received 77 submissions, of which 12
were submitted by practitioners. The large majority reported research conducted in private sector orga-
nisations in Europe and North America. The workshop held at IMD was organised in conjunction
with the Performance Measurement Association Symposium and served three main purposes. First, the
authors received feedback from a wide audience of senior academics and practitioners interested in
SPM. Second, in opposition to the typical fragmentation of SPM as a field of research, it was possible
to exchange ideas and comments that, in line with Long Range Planning’s editorial policy, cut across dis-
ciplines and aimed at bridging the gap between theory and practice. Third, the authors were encouraged to
develop their contributions consistently within the scope of the Special Issue.
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Biographies
Pietro Micheli is a Lecturer at Cranfield School of Management’s Centre for Business Performance, and Fellow of
the Advanced Institute of Management, UK. His research and consulting interests focus on organisational per-
formance, particularly in the areas of strategic performance measurement and continuous improvement. He has
carried out extensive research on the design, use and impact of performance measurement systems, and on the
introduction of performance improvement initiatives in both private and public sector organisations. As
a founding member of the Evidence-Based Management collaborative and an organiser of events that bring to-
gether academics and practitioners, he is a keen advocate of original research that influences management practice.
Jean-Francois Manzoni is Professor of Leadership and Organisational Development at IMD (Lausanne,
Switzerland). His research, consulting and teaching activities are focused on the management of change at the
individual and organisational level. At the organisational level, he studies the content of change (including the use
of levers such as strategy, structure and systems), the management of the change process and the role of leaders
therein. At the inter-personal level, he focuses on helping management teams to improve their effectiveness and
performance. His work in these areas has appeared in a number of articles, cases and books.

476 Strategic Performance Measurement: Benefits, Limitations and Paradoxes