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Although most companies recognize the importance of R&D for future competitiveness, they often struggle to assess its contribution to the organization. Performance measurement in R&D is particularly difficult because (1) effort levels may not be observable, (2) project success is uncertain, influenced by uncontrollable factors, and (3) success can be assessed only after long delays, or it accrues to other units of the organization. Based on existing literature on the problem, we developed a performance measurement system for the process technology research group of an industrial company. This measurement system systematically supported the business strategy. Moreover, the measures were adjusted for different project profiles: short-versus long term, hardware versus software, routine support services versus breakthrough ideas and knowledge development. The contribution of this article is a description of the process of developing and implementing a comprehensive performance measurement system in a company, based on previous performance management research, and supporting the company's strategy. It is noteworthy that the system was implemented in a research group (as opposed to development), where the measurement problems are the most severe.
Christoph H. Loch (Wed,) studied this question.