Strategy Communication and Measurement Systems

29 Pages Posted: 24 Jun 1998

See all articles by Pascal Courty

Pascal Courty

University of Victoria; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Date Written: October 1, 1997

Abstract

Organizations often face the challenge of communicating their strategies to local decision makers. The difficulty presents itself in finding a way to measure performance which meaningfully conveys how to implement the organization's strategy at local levels. I show that organizations solve this communication problem by combining performance measures in such a way that performance gains come closest to mimicking value-added as defined by the organization's strategy. I further show how organizations rebalance performance measures in response to changes in their strategies. Applications to the design of performance metrics, gaming, and divisional performance evaluation are considered. The paper also suggests several empirical ways to evaluate the practical importance of the communication role of measurement systems.

JEL Classification: L21, D21

Suggested Citation

Courty, Pascal, Strategy Communication and Measurement Systems (October 1, 1997). Available at SSRN: https://ssrn.com/abstract=100988 or http://dx.doi.org/10.2139/ssrn.100988

Pascal Courty (Contact Author)

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