Why Decision-Makers May Learn More From a Less Comprehensive Performance Measurement System

Much literature on performance management has focused on the multidimensional nature of performance and the risk of distortionary behaviors like effort substitution. Following this, some recommend measurement on as many... [ view full abstract ]

Much literature on performance management has focused on the multidimensional nature of performance and the risk of distortionary behaviors like effort substitution. Following this, some recommend measurement on as many performance indicators as possible. We argue, however, that a comprehensive, multidimensional performance measurement system may come at a price in the form of increased ambiguity, which may lead to decreased learning due to motivated biases when people interpret performance information. We use a survey experiment on 988 Danish city councilors to show how decision-makers do, when holding attitudes towards ambiguous performance information, switch between different evaluative criteria in ways that allow them to justify desired conclusions. Thus, although it may not be possible to entirely rule out ambiguity when measuring performance, it may be a good idea to prioritize what is important and to leave out indicators that are not central to an organization’s core mission when designing performance measurement systems.