ABSTRACT
This chapter focuses on the major theoretical and empirical considerations pertaining to the measurement of corporate, divisional, team, and individual performance. It sets out the theoretical background of performance measurement and potential issues that arose when organizations adopt various performance measures. The specifications that performance measures must meet in order to be appropriate for their use in incentive systems are reviewed along with the choices that organizations must make when defining performance measures. The chapter explores the reasons behind performance measurement, the issues associated with the measurement of performance, the specifications that appropriate performance measures must meet, and the set of choices organizations must make when identifying and creating their measures of performance. In sum, the work suggests that the measurement of performance is a complex task, which requires careful consideration and attention to the environmental contingencies that influence it.
