officially launched


The highlight of this week was the official launch of It is the culmination of over 5 years of research, 1 year of web development and 6 moths of beta testing.

I am pleased with both the quality of the website and the experience of developing it. Everyone in the project team, form the project manager, to business analysts, web developers, graphic artists, researchers and editors worked with dedication and enthusiasm, which was very rewarding.

I would like to thank all of them for achieving this milestone. Additional thanks to the project advisors, for their guidance and support, as well as to all the beta users that provided valuable feedback during testing.

Excerpt from the press release:

Melbourne, Australia, 4 November 2009 – eab group announced the launch, a free online database of Key Performance Indicators (KPIs), supported by a Performance Management knowledge base and a community of users. currently contains over 600 KPIs (performance measures), from a variety of Functional Areas, such as Finance, HR, IT, Marketing and Industries, such as Retail, Hospitality, Agriculture and the Public Service. Navigation through the database is facilitated by a user friendly web interface allowing visitors to either browse or search for relevant performance measures. Each measure is documented in a structured template, containing fields such as: definition, variations, subordinate measures and calculation formula among others. To ensure the quality of the content, 3 Subject Matter Experts review each KPI page before being published. As new performance measures are documented and posted daily, the database is expected to gradually grow to several thousand records.

In addition to a comprehensive list of performance measures, also contains a variety of Performance Management resources to support the understanding and use of performance indicators: recommended articles, relevant links, templates as well as an introductory eLearning course in Performance Management and Measurement. is designed for executives, managers, consultants, analysts and other professionals from organisations from around the globe with an interest in Strategy, Performance Management and Measurement. Over 100 registered members from around the world provided valuable feedback during the beta testing of the site, participating in defining the desired content and the interaction model. All registered members can now use the website as a platform for interaction, as they can comment on KPIs, save KPIs to their personal list and propose new ones.

The value added by is represented by the streamlined access to a rich database of well defined performance measures, along with a comprehensive set of resources to guide the users in how to select and work with KPIs“, said Aurel Brudan, founder and director of eab group. “By using the resources available on the website and tapping in the collective experience of the community of users, everyone registered on will have the opportunity to learn more and improve the outcome of their performance management efforts.

New visitors can explore the website contents or register for free to access more content and join the community of users.

2009 PMA Conference – Professor Kenneth Merchant: On accounting measures

The opening keynote speech of Day 1 of the 2009 Performance Management Association conference was given by, Kenneth Merchant, Deloitte & Touche LLP Chair in Accountancy and Professor of Accounting at the University of Southern California Marshall School of Business. Professor Merchant is an expert in management accounting and management control systems with numerous publications in this field.
His speech addressed the challenges practitioners are faced with in selecting and using performance measures. He discussed the flaws of accounting measures and presented four alternatives. I have structured below my notes from this session.

Part 1: On accounting measures

• For management purposes accounting measures are badly flawed. The primary role of a corporation is to create and maximize shareholder value. However, accounting measures tell you little about value. Accounting measures are backwards looking. Value measures are future looking.
Evidence: A research study analysed 172 large firms that averaged an earnings per share (EPS) growth of over 15% over a 6 year period. Their correlation between annual earnings (before extraordinary items) and annual value changes was not as strong as anticipated. These correlations are discussed in several research papers: Easton et al (1992): .22, Biddle et al (1997): .25 and Erkens & Merchant (2005): Annual.18 and Quarterly .13

• Alternative financial-measure specifications are not much better. Correlations with market returns, annual (Biddle et al., 1997)
* Earnings before extraordinary items: .25
* Residual income : .16
* EVA(TM): .15
* Cash flow from operations: .14

• Flaws of accounting performance measures:
* Fail to identify real problems in a timely basis
* Lead to poor decisions, resulting in allocation of resources to “dogs” and not to “stars” and excessive short term orientation (myopia)
* Gamesmanship – ethics issues

• Why using accounting measures? Why do firms use them anyway?
* Nice to have a single, global performance indicator.
* Earnings/returns correlations are positive.
* Some nice measurement properties: timely, understandable, inexpensive, precise, objective and controllability can be tailored to the role (easy to disaggregate)
* Habit – i.e. DuPont chart has a long tradition – ROI = Sales margin * Asset turnover
* Misconceptions, such as: “Profit making firms should make profits” and ” Quarterly EPS reports drive stock prices”.
* Political expediency

• Do Accounting Measures work anywhere? What do we do if they don’t work? Answer: It should be an industry by industry analysis of annual accounting earnings / market correlations. Correlations based on information obtained from Quarterly Earnings and Market Presentations (Erkens and Merchant):
* Overall: .18
* High: Oil and gas: .58, Mining/construction: .35, Manufacturing (misc.) .32
* Low: Pharmaceuticals: .04 (annual), Chemicals – .03 (Q) and Mining and construction – 0.2 (Q)