Performance measurement systems (PMS), as a fundamental element of management control, are used for the efficient and effective management of organisations (Langfield-Smith et al., 2009). These systems are mainly designed to provide useful information to support strategic decision making, planning, and the control of activities in order to accomplish organisational goals (Merchant and Van der Stede, 2007; Neely et al., 2002; Kaplan and Norton, 1996). Traditionally these systems have been dominated by financial measures, such as Earnings per Share, Return on Investment, and Return on Equity. The aim of such systems was to ensure that, from a shareholders’ point of view, the organisation’s performance was financially successful and that progress was in accordance with the business plan (Bititci et al., 2000; Neely, 1998; Dixon et al., 1990). While such traditional PMSs were developed in the early 20th century, their usefulness has become limited over the years due to the rapid change in the organisational environment. For instance, Burns and Scapens (2000) state that:
The environment in which management accounting is practised certainly appears to have changed, with advances in information technology, more competitive markets, different organizational structures, and new management practices.(p. 3) The complexity and scope of change 1 in the organisational environment has led management accounting researchers (e.g., Kennerley and Neely, 2003; Norreklit, 2000; Neely, 1999; Otley, 1999; Ittner and Larcker, 1998; Atkinson et al., 1997; Johnson and Kaplan, 1987) to criticise traditional PMSs 2 for their excessive reliance on financial performance measures. Johnson and Kaplan (1987), in this context, claim that financial information used for measurement purposes has been too late, too aggregated, and too distorted to be relevant to managers’ planning and control decisions. Consequently, there have been various attempts to develop systems that overcome the limitations of traditional financial-based PMSs with new (or contemporary) PMSs including the Performance Measurement Matrix (Keegan et al., 21989), the performance (SMART) Pyramid (Lynch and Cross, 1991), the Results and Determinants Framework (Fitzgerald et al., 1991), the Balanced Scorecard (Kaplan and Norton, 1992), the Performance Prism (Neely and Adams, 2001), and the Comparative Business Scorecard (Kanji and Moura, 2002). A detailed review of these contemporary PMSs is provided in Chapter 2 of this book.