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Measuring and Managing Performance in Organizations

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Measuring and Managing Performance in Organizations

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  • Copyright 2014
  • Edition: 1st
  • eBook (Watermarked)
  • ISBN-10: 0-13-349207-9
  • ISBN-13: 978-0-13-349207-1

This is the digital version of the printed book (Copyright © 1996).

Based on an award-winning doctoral thesis at Carnegie Mellon University, Measuring and Managing Performance in Organizations presents a captivating analysis of the perils of performance measurement systems. In the book’s foreword, Peopleware authors Tom DeMarco and Timothy Lister rave, “We believe this is a book that needs to be on the desk of just about anyone who manages anything.”

Because people often react with unanticipated sophistication when they are being measured, measurement-based management systems can become dysfunctional, interfering with achievement of intended results. Fortunately, as the author shows, measurement dysfunction follows a pattern that can be identified and avoided.

The author’s findings are bolstered by interviews with eight recognized experts in the use of measurement to manage computer software development: David N. Card, of Software Productivity Solutions; Tom DeMarco, of the Atlantic Systems Guild; Capers Jones, of Software Productivity Research; John Musa, of AT&T Bell Laboratories; Daniel J. Paulish, of Siemens Corporate Research; Lawrence H. Putnam, of Quantitative Software Management; E. O. Tilford, Sr., of Fissure; plus the anonymous Expert X.

A practical model for analyzing measurement projects solidifies the text–don’t start without it!

Sample Content

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The Intended Uses of Performance Measurement in Organizations

Sample Pages

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Table of Contents

Foreword xii

Preface xv


Chapter 1: An Introduction to Measurement Issues 1


Chapter 2: A Closer Look at Measurement Dysfunction 10


Chapter 3: The Intended Uses of Measurement in Organizations 21

Motivational Measurement 22

Informational Measurement 25

Segregating Information By Intended Use 29

Chapter 4: How Economists Approach the Measurement Problem 32

Balancing Cost and Benefit Associated with Agent Effort 34

The Effort Mix Problem 37

Chapter 5: Constructing a Model of Measurement and Dysfunction 42

The Importance of the Customer 44

What the Customer Wants 45

Extra Effort versus Incentive Distortion 47

Chapter 6: Bringing Internal Motivation into the Model 52

The Observability of Effort 54

Model Assumptions 55

Chapter 7: Three Ways of Supervising the Agent 58

No Supervision 58

Full Supervision 60

Partial Supervision 62

Chapter 8: Designing Incentive Systems 66

A Better Model of Organizational Incentives 68

Chapter 9: A Summary of the Model 74

The Model Setup 74

Three Ways of Supervising the Agent 76

The Principal's Solution 79

Chapter 10: Measurement and Internal Motivation 81

Internal versus External Motivation 81

Delegatory Management 87

The Conflict Between Measurement-Based and Delegatory Management 89

Chapter 11: Comparing Delegatory and Measurement-Based Management 92

Chapter 12: When Neither Management Method Seems Recommended 102

Measurement versus Delegation in Real Organizations 108

Chapter 13: Purely Informational Measurement 114


Chapter 14: How Dysfunction Arises and Persists 124

The Earnest Explanation of Dysfunction: A Systematic Error by the Principal 126

Misguided Reflexes, Folly, and the Mystique of Quantity 127

The Difficulty of the Principal's Inference Problem 133

Chapter 15: The Cynical Explanation of Dysfunction 137

Delegation Costs, Inevitable Dysfunction, and Non-Attributional Cultures 140

Chapter 16: Interviews with Software Measurement Experts 147

Interview Results 149

Chapter 17: The Measurement Disease 159

The Malcolm Baldrige Quality Award 159

ISO 9000 Certification 160

Software Capability Evaluation 162

Similarities Between Methods 163

The Nature of the Measurement Problem 167

Chapter 18: Societal Implications and Extensions 171

Probabilistic Measurement 172

Firm Integration Theories 174

The Difficulty of Explaining Cooperation Under Assumptions of Pure Self-Interest 178

Chapter 19: A Difficult But Solvable Problem 180

Appendix: Interview Methods and Questions 183


Glossary 191

Bibliography 195

Author Index 209

Subject Index 211


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