Measuring general managers' performances: Market, accounting and combination‐of‐measures systems
Accounting, Auditing & Accountability Journal
ISSN: 0951-3574
Article publication date: 1 November 2006
Abstract
Purpose
This paper discusses how to choose a measure or set of measures for the purposes of evaluating and rewarding general managers' performances.
Design/methodology/approach
The paper describes a set of criteria that is useful for evaluating any measure or set of measures. Then it applies the criteria to an evaluation of three measurement alternatives in common use at general management organization levels: market measures, accounting measures, and combinations of measures.
Findings
The paper shows that all of the measurement alternatives fail to satisfy one or more of the evaluation criteria and, hence, lead to less than optimal outcomes. But it also shows that some alternatives are better than others in specific situations.
Originality/value
While comprehensive sets of evaluation criteria have been applied to financial accounting choice issues, this is the first such approach in management accounting. This approach can lead to improved performance measurement system choices. It can also be used to guide future research because the analysis also reveals major gaps in our knowledge about the qualities of performance measures in common use.
Keywords
Citation
Merchant, K.A. (2006), "Measuring general managers' performances: Market, accounting and combination‐of‐measures systems", Accounting, Auditing & Accountability Journal, Vol. 19 No. 6, pp. 893-917. https://doi.org/10.1108/09513570610709917
Publisher
:Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited