The validity of measurement frameworks: measurement theory

doi:10.1017/CBO9780511488481.013

10 - The validity of measurement frameworks: measurement theory

Published online by Cambridge University Press: 22 September 2009

Stephen Pike and

Goran Roos

Edited by

Andy Neely

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Stephen Pike: Affiliation:
Director Research at Intellectual Capital Services Ltd
Goran Roos: Affiliation:
Professor Cranfield School of Management
Andy Neely: Affiliation:
Cranfield University, UK

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Summary

Introduction

When considering measurement, the first practical questions faced by managers should be: what is it that requires measurement, and what is measurement? Answering these two questions at something more than a superficial level can take managers a long way towards the design and development of a measurements system suited to their needs.

One surprising issue often overlooked when measuring systems are designed concerns the nature and purpose of the measurement. Quite often this is brutally exposed by the chief executive if, when presented with new results for the first time, he or she says “So what?”. A considerable benchmarking industry has grown up around the subject of performance measurement. Performance measurement assumes that the results it provides and the benchmarking activities that accompany it are useful in themselves. The motivation of the chief executive in the statement above is to question value – that is, how valuable this performance is to the company. Would it make a difference to any of his/her stakeholders or shareholders if the performance of certain factors were to increase by 10 per cent or if they were to decline by 10 per cent? The distinction between value and performance is critical, and, in general, performance measurement should be seen only as the first step on the way to providing useful value-based output. Measuring value adds some particular difficulties, especially with the definition of value, and involves the axiology of the individual.

Type: Chapter
Information: Business Performance Measurement
Unifying Theory and Integrating Practice
, pp. 218 - 236

DOI: https://doi.org/10.1017/CBO9780511488481.013 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2007

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