Another Case for Measurement: Investors Are Getting It!

I am an investor. I invest in equities (except right now). I was just reviewing my American Association of Individual Investors Journal from August and the headline on the front of the magazine reads, “Measuring Managers’ Mettle: A Revealing Investment Gauge.” The article points out that just reading financials is not enough when making an investment decision. Rather, “management effectiveness, quality, character and values” also are important, though these traits are “often disregarded by Wall Street.” Well, I couldn’t agree more.

One of the key indicators to me, and apparently to other investors as well, is the degree to which company “measuring managers” assess management effectiveness and stock market returns. This concept is further supported by an article published in the November 20, 2006, issue of Investors Business Daily. Author J. Bonasia references a Hackett Group study that finds, “Public companies that use BI systems have stock market returns 2.4% higher than those of peers that rely on basic spreadsheets to do budgeting and planning, according to a survey of 200 global firms.” And this only addresses one aspect of corporate performance management (budgeting). It does not address scorecard methodologies that I would expect offer an even higher return.

I’m now doing some text searches on news articles to track announcements that public companies have hired or promoted someone to “CPM Officer,” one of the key principles to corporate performance management as identified in the book Five Key Principles of Corporate Performance Management by Bob Paladino. If Measuring Managers can be an investment gauge, how much more powerful is it if we know they are implementing a CPM solution by following the key principles ?