Use of lean enterprise value principles in the design of a performance measurement system for a consulting business unit to avoid dysfunctional behaviors

Abstract

An unbalanced Performance Measurement System tied to employee compensation, may lead to dysfunctional behaviors, with consequent sub-optimization of business units inside a corporation and an impact to overall business performance. • We analyze the orders-revenue-profit axis inside a consulting business, with actors who are measured independently, belonging to different business units. • As a result, each actor optimizes and takes care of his own set of measures, with consequential damage to the enterprise as a whole. • We compare two success maps, actual and desired, and propose a new set of metrics based on principles of Lean Enterprise Value, more aligned to the overall strategy of a Consulting business unit inside a multinational technology company.