Composite measures of performance

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Instead of quantifying performance using multiple measurements, we could think of an algorithm to add all the criteria together, with explicit weights. Once the metric is defined, if companies must improve performance by rising the quantified value without increasing their means, it can generate cultural shifts, violation of norms, decrease of integration[@ridgway1956Dysfunctional Consequences of Performance Measurements].

This can also lead to the Ratchet Effect:

ratchet effects refer to the tendency for central controllers to base next year's targets on last year's performance, meaning that managers who expect still to be in place in the next target period have a perverse incentive not to exceed targets even if they could easily do


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Aquiles Carattino
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