Analysing the requirements of performance measurement systems

Performance measurement is a subject that has been high on the agenda for over two decades. This article proposes making a contribution to this field by discussing how to deal systematically with all the requirements a performance measurement system (PMS) should fulfil.

Different requirements suggested in the performance measurement literature from the past 20 years have been analysed in order to structure the different tasks to conduct when designing a PMS.

The article explains how to separate requirements that can be linked to a PMS and to an individual performance measure. It also suggests three system classes depending on what requirements a PMS fulfils. Finally a three‐step procedure is proposed that describes how to evaluate and improve an existing PMS in a company.

In practice, it is difficult to deal with numerous requirements simultaneously when designing a PMS. The article supplies measurement practitioners with tools to identify any priority important requirements.

Several new ideas to the field of performance measurement are introduced and explained: the concept of system classes, classification of requirements and a simple three‐step procedure to evaluate and improve PMS.