Performance measurement is the process whereby an organization establishes the parameters within which programs, investments, and acquisitions are reaching the desired results.^[1]

Performance Reference Model of the Federal Enterprise Architecture, 2005.^[2]

This process of measuring performance often requires the use of statistical evidence to determine progress toward specific defined organizational objectives.

[edit] Performance Measurement topics

Most of us have heard some version of the standard performance measurement cliches: “what gets measured gets done,” “ if you don’t measure results, you can’t tell success from failure and thus you can’t claim or reward success or avoid unintentionally rewarding failure,” “ if you can’t recognize success, you can’t learn from it; if you can’t recognize failure, you can’t correct it,” “if you can’t measure it, you can neither manage it nor improve it," but what eludes many of us is the easy path to identifying truly strategic measurements without falling back on things that are easier to measure such as input, project or operational process measurements.

Performance Measurement is addressed in detail in Step Five of the Nine Steps to Success® methodology. In this step, Performance Measures are developed for each of the Strategic Objectives. Leading and lagging measures are identified, expected targets and thresholds are established, and baseline and benchmarking data is developed. The focus on Strategic Objectives, which should articulate exactly what the organization is trying to accomplish, is the key to identifying truly strategic measurements.

Strategic performance measures monitor the implementation and effectiveness of an organization's strategies, determine the gap between actual and targeted performance and determine organization effectiveness and operational efficiency. •Good Performance Measures:

    * Provide a way to see if our strategy is working    * Focus employees' attention on what matters most to success    * Allow measurement of accomplishments, not just of the work that is performed    * Provide a common language for communication    * Are explicitly defined in terms of owner, unit of measure, collection frequency, data quality, expected value(targets), and thresholds    * Are valid, to ensure measurement of the right things    * Are verifiable, to ensure data collection accuracy 

[edit] Practice

Several performance measurement systems are in use today, and each has its own group of supporters. For example, the Balanced Scorecard (Kaplan and Norton, 1993, 1996, 2001), Performance Prism (Neely, 2002), and the Cambridge Performance Measurement Process (Neely, 1996) are designed for business-wide implementation; and the approaches of the TPM Process (Jones and Schilling, 2000), 7-step TPM Process (Zigon, 1999), and Total Measurement Development Method (TMDM) (Tarkenton Productivity Group, 2000) are specific for team-based structures. With continued research efforts and the test of time, the best-of-breed theories that help organizations structure and implement its performance measurement system should emerge.

Although the Balanced Scorecard has become very popular, there is no single version of the model that has been universally accepted. The diversity and unique requirements of different enterprises suggest that no one-size-fits-all approach will ever do the job. Gamble, Strickland and Thompson (2007, p.31) list ten financial objectives and nine strategic objectives involved with a balanced scorecard.

[edit] References

[edit] Further reading

• Gamble, J., Strickland, A., Thompson, A. (2007). Crafting & Executing Strategy. (15th Ed.) New York, McGraw-Hill
• Simon Briscoe. 2005. The trouble with targets. OECD Observer, no. No. 246-247.
• Kaplan, Robert S. and David P. Norton; "Putting the Balanced Scorecard to Work", Harvard Business Review, Sep/Oct 1993.
• Hutton, C.R.; Performance Measures Briefing Paper.
• Ittner, Christopher D. and David F. Larcker, "Coming up Short on Nonfinancial Performance Measurement", Harvard Business Review, November 2003.
• Kaplan, Robert S. and Norton, David P; "The Balanced Scorecard: Measures That Drive Performance", Harvard Business Review, Jan/Feb 1992.
• Kaplan, Robert S. and Norton, David P; "Using the Balanced Scorecard as a Strategic Management System", Harvard Business Review, Jan/Feb 1996.
• Kirby, Julia, "Towards a Theory of High Performance", Harvard Business Review, Jul/Aug 2005.
• Mendibil, Kepa and Macbryde Jillian; "Designing effective team-based performance measurement systems: an integrated approach", Centre for Strategic Manufacturing, University of Strathclyde, James Weir Building, March 2005.
• Meyer, Christopher, "How the Right Measures Help Teams Excel", Harvard Business Review, May/June 1994.
• National Partnership for Reinventing Government, USA; Balancing Measures: Best Practices in Performance Management, August 1999.
• Rohm, Howard; Overview of the Balanced Scorecard, US Foundation for Performance Measurement, June 2000.
• Schacter, Mark. 2002. Not a Tool Kit. Practitioner's Guide to Measuring the Performance of Public Programs. Institute On Governance. http://schacterconsulting.com/docs/toolkit.pdf.
• Schacter, Mark. 2008. When Performance Targets Miss the Mark. The Globe and Mail, March 31. http://schacterconsulting.com/documents/targets.pdf.
• Van de Walle, Steven and Roberts, Alasdair, "Publishing Performance Information: An Illusion of Control?" PERFORMANCE INFORMATION IN THE PUBLIC SECTOR: HOW IT IS USED, Van Dooren, W., Van de Walle, S., eds., Houndmills: Palgrave, pp. 211-226, 2008.
• Bacon, Carl, "Practical Portfolio Performance Measurement and Attribution" September 2004, 240 pages

[edit] External links

• Performance Measurement
• Measuring the Performance of Public Programs
• Risk-adjusted Performance Measures