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An empirical investigation of the metrics alignment process

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Abstract:

Purpose ? To understand the use of metrics to attain alignment between the needs of the customer, strategic objectives, and the execution system. This paper examines the process by which metrics at the various levels are developed and the factors affecting this process. Design/methodology/approach ? The paper draws on a series of ?deep? case studies and 45 interviews of key managers at various levels within three related businesses. Open and axial coding on the data was performed and themes reported. Findings ? The findings show how metrics can generate two types of synergy, financial, and strategic and that numerous factors affect metrics deployment and alignment. There also exists a tension between those metrics that encourage sales growth through innovation and market development (i.e. the so-called top line metrics) and those metrics that reduce costs or asset investments (i.e. bottom line metrics). Research limitations/implications ? Selective coding of the data to develop theoretical insight has yet to be performed. Practical implications ? Alignment is affected by both the goals used and the processes used in developing and implementing metrics. Furthermore, the study shows that those actions that foster cost reduction (e.g. through lean systems) may unintentionally hinder and limit those actions aimed at encouraging innovation. Originality/value ? The metrics alignment process is vital to effective management, yet the mechanisms of this process leading from understanding of the customer goals appropriate metrics for the execution system is effectively unexplored ? a shortcoming that this paper begins to rectify.

Keywords: Performance management; Performance measures; Strategic alignment

Document Type: Research Article

DOI: http://dx.doi.org/10.1108/17410400510604494

Publication date: July 1, 2005

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