The Design of Organizational Performance Measures for Human Decisionmaking, Part, I: Description of the Design Methodology

This paper is the first of a two part presentation of a general methodology for designing organizational performance measures where the structure of the model is described in Part I, and an application illustrating how the methodology is implemented is provided in Part II. The approach is to utilize a matrix description of the objectives of management in measuring performance to develop a preference function for the properties of hypothetical performance measures. In addition to measuring the value of information provided by performance measures, this function is embellished to account for the effects of information overload on the decision process. An overall objective criteria trading off the value of information content and the effects of information overload is then placed within an optimization framework aimed at determining the properties of an "ideal" performance measure.