The verdict is that they are interesting but not that useful: Performance Measurement Systems (PMS) do not meet the practical expectations about their use. In other words, the effectiveness of PSM has been disappointing. Such are the results of a research on the use of PMS in 141 multinational companies, conducted by AKN (Accounting Knowledge Network), the observatory on professional levels in business administration of SDA Bocconi School of Management.

  PMS offers two things to a business organization. The first is an informational advantage, that is, continuous monitoring of results. The second is a managerial advantage, by influencing strategic decision-making.
However, faced with an increase in the quantity and variety of performance indicators (which makes PMS interesting), these are considered marginal when it comes to take decisions (which makes PMS not very useful). The latter is a crucial point, considering that 15 types of critical operational decisions, in marketing, production and human resources management, were the least affected by PMS.

  But without increased rationality in decision-making, the implementation of strategies is at risk, thus ultimately jeopardizing the long-term sustainability of business results. This affects the cost-benefit relation of investing in PMS: with no influence on decisions, there are no benefits (of monitoring) sufficient to justify the (design, information, management) costs of such systems.
The analysis of data and cases of excellence suggests three fundamental aspects to get the most in terms of value from PMS, which should be considered a sort of language. Its system of measures enables codified communication, which is the way PMS should be looked at.

  If top management designs PMS without involving staff employees, it lays the foundations for incomprehension about future performance. PMS is a valid model of analysis, since it expresses relations of cause and effect among indicators. Only by making the expected relations among the various measures of performance explicit, and between these and the company's strategic vision, the foundations are laid for a consistent implementation of strategies in day-to-day decisions.

  PMS achieves its potential in the processes of strategic planning and managerial control. A measure is a good that augments in value as its use increases. Often, innovative PMS are associated with long and inconclusive strategic plans, traditional extrapolative budgeting processes, and incentive systems totally rooted in financial indicators. In such organizational contexts, PMS cannot release its value.

  In conditions of strategic uncertainty, it is vital that there be dialogue with the periphery of the organization, more exposed to external trends and from which the most important signals to redefine strategy invariably come. PMS can thus act as an interactive tool, apt to interact with key actors in redefining the strategic model of a business.