Guide to Setting Metrics and Targets for a JV

Like any other well-run business, joint venture shareholders and managers need to establish goals for the venture, measure performance against them, and link performance to compensation. But JVs introduce unique challenges and needs when it comes to developing an appropriate set of performance metrics and targets.

We believe that JVs need to put in place a process – and ultimately a scorecard – that properly addresses those challenges and needs. This requires balancing measurement philosophies and needs from the parents, choosing a set of traditional performance metrics (like EBITDA or ROIC), and supplementing them with unique JV metrics that would never appear in an independent company or business unit scorecard.

This work explores what a variety of JVs are doing to come up with an appropriate set of performance metrics that track the success of the business while capturing the unique nature of being a joint venture.

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