ABSTRACT
The positive effects of performance measurement were discussed in Chapter 1. Performance measurement is an incentive for production, for innovation, for adequate accountability and it reinforces an organization’s external orientation. There is another picture, however, apart from this beneficial effect of performance measurement: performance measurement creates a large number of perverse effects. I shall outline these effects in this chapter (Sections 2-6) and I shall give an initial explanation for them (Sections 7-10). I shall then indicate in Chapter 3 that the perverse effects will nearly always come to dominate the beneficial effects in the long term. This eventually prompts the question how performance measurement can be designed so as to neutralize the perverting effects as much as possible.
