System Dynamics Approach to Performance Measures.

Abstract

Performance measures have become a main topic within the organizational environment. Approaches to this subject have been going from the merely operational to the inclusion of performance measures as part of strategic planning, as in the Balanced Scorecard approach, where measures are linked with strategic objectives through causal relationships.

This article intends to show, by means of an example model, the potential of system dynamics for establishing causal relationships between measures, verifying the validity of hypotheses implicit in these relationships, and showing the need for trade-offs between different objectives.