Indicators’ adequacy issues in performance measurement systems

Abstract

The aim of this article is to analyse the problems of performance measurement systems in relation to the adequacy of indicators. The requirements for modern performance evaluation systems, their classification criteria, and the peculiarities of performance measurement in the public and private sectors are reviewed. One of the most popular performance measurement systems developed into a strategic management tool, the balanced scorecard, is considered, along with other systems. One of the main issues of performance measurement systems is that the set of indicators remains practically unchanged. Some indicators are changed only after changing the strategic goals, and this circumstance prevents the timely identification of emerging problems within adequacy of indicators. The article proposes to enrich performance measurement in process improvement systems, and suggests breaking down the measurement process into cycles by reviewing the set of indicators after each step of the cycle and, if necessary, adjusting them. This could make a significant contribution to ensuring the adequacy of indicators, one of the most important prerequisites for proper measurement, and would bring the performance measurement systems closer to the requirements of third generation systems.