Management Performance Measurement in Service Industries

The problem of using management accounting techniques to measure managers' performance in the service sector is examined. The essence of the problem, it is argued, is that organisations are being judged externally on one set of criteria while the internal control system measures a different set of criteria. Using a management accounting perspective the article identifies the dominance of accounting measures in performance measurement and demonstrates how this has led to dysfunctional behaviour of managers. It is then proposed that a control system be developed that aims to achieve organisational control by the specification of a range of control measures. Measures of finance, customer service, resource utilisation, employee attitudes and service development should be included. Furthermore, no one set of measures can be expected to satisfy all organisations, the exact set and relative weighting of each component being determined by the particular organisation's objectives.