ABSTRACT
This chapter discusses why managers should be interested in performance measurement, and how performance measurement can contribute to informing and improving management. It explores the perceived limitations of performance measurement and ways to overcome those limitations. Performance indicators provide a common language for effective communication between service providers and stakeholders. In the context of performance measurement, the term benchmarking refers to comparing performance against a standard. The information allows putting the organization in context, helping to identify deviations from expected performance, and, in the cases when the comparisons are with others, to identify best practices. Performance measurement came to be the tool for addressing accountability as cost control. In 1984, the importance of systematically measuring performance in government was enhanced by the creation of the Governmental Accounting Standards Board. Performance measurement serves as an effective mechanism of feedback on various organizational systems, subsystems, and strategies.
