Management by Market

Management by Market steers the company by comparing company performance with market performace. This is called indexed performance measurement. Instead of judging performance as a target deviation like in Management by Objectives, performance is assessed as a market deviation.

With indexed performance measurement, company performance can be better evaluated because it shows performance independent of external factors, such as economic or business cycles, the ups and downs of exchange rates and raw material prices and extraordinary events such as mergers & acquisitions.

Management by Market is used in pay for performance and strategy controlling:

Examples of indexed performance measurement are the Obermatt CEO of the Year rankings.

The CEO rankings meaure growth performance, operating performance and strategic (investment) performance based on publicly availble balance and profit and loss statements. Subjective judgements do not play a role. This makes the Obermatt rankings more objective and reliable then expert opinions. In addition, the rankings provide an alternative perspective to the general public opinion.