Why Measure Performance and How to Get Started
Like most organizations, you probably dedicate significant time and resources to planning – strategic planning, operational planning, business planning, program planning, project planning, even planning for meetings.
How do you know if your operational performance is contributing to the achievement of the goals and objectives set out in the plans? Are you on track? Are you heading down the wrong path?
Performance Management or Performance Measurement?
First, we need to make a distinction between performance managem
ent and performance measurement. Many people automatically associate performance management with the improvement of the individual staff within an organization.
However, the more common perspective and definition of performance management is the alignment and integration of performance information across all business perspectives – planning, resources, operations and projects, and risk – and consolidating the performance information to drive informed decision making on all aspects of the enterprise.
So what we’re talking about here is not the HR version of performance management, rather it’s the holistic, firm-wide evaluation of outcomes:
Performance measurement is a performance management tool to support the collection and analysis of performance information.
The focus of performance measurement is on the performance of the organization, not on the individuals within the organization – ranking and rating staff is not the intent of performance measurement.
Clear as Mud
It may sound counter-intuitive and counter-productive, but a successful measurement system should really raise more questions than it answers.
Appropriate performance measures supply us with detailed information about the performance of the organization, about the linkages and causal relationships between outputs and outcomes. They contribute to learning opportunities about your organization and your operational environment.
Through this learning, we build our knowledge of the organization. From this knowledge we revise our theories -- which leads to more questions about how we can further improve.
Why Should You Implement Performance Measurement?
Senior managers need information to support their strategic and operational decision-making, and good performance measurement systems:
- Give early indications of trouble and provide possible courses of action.
- Ensure that the direction, efforts, and results of an organization are in alignment.
- Provide information to support planning, monitoring and reporting within an organization as well as reporting to stakeholders outside the organization.
- Ensure that employees know what is important to management - “what gets measured gets done”.
- Identify areas for improvement - “what gets measured gets improved”.
- Help justify the need for resources - “what gets measured gets funded”.
The overall processes associated with the measurement of performance also help answer the following questions about programs and initiatives:
- Why does the program exist?
- What does the program want to accomplish through its activities?
- How is the program going to deliver its services?
- How will program management and other stakeholders know how well the program is doing?
- What changes do program management make to improve the delivery of program services?
How to Get Started
Many practitioners recommend that the best approach is to jump right in and establish a series of measures – then, re-evaluate the measures after data collection and evaluation have become engrained in the day-to-day functions of the group.
Unfortunately, an effective performance measurement system can’t just be thrown together.
A successful system is built on a solid strategic-level cause-and-effect model, often depicted by a logic model and/or a strategy map. It is supported by an organization-wide education program regarding its purpose and intent.
An organization doing anything less creates a measurement framework that does not have the necessary foundation required for long-term success.
And quite frankly, the implementation of a performance measurement system is just one more change initiative. And like any change initiative, there are ways to improve the likelihood of a successful outcome. Just as there are ways to enhance the likelihood of failure.
Performance measurement is most effectively implemented when championed by a cross-functional team comprised of subject matter experts and managers drawn from across the program. Having a performance measurement team in place is critical to ensuring the initiative obtains the necessary legitimacy at all levels to be a success.
It all sounds easy – set goals, identify key performance indicators (KPI’s), determine data sources, analyze the data, and make changes along the way to re-align performance with the goals and objectives.
But a shocking number of organizations struggle to establish a clearly defined set of performance measures and indictors – and even more lose their way trying to operationalize an effective performance measurement framework.
Does this sound like a familiar story to you? Did your organization succeed in identifying the best KPI’s the first time? Were there any change management efforts attached to the program? Let us know in the comments!
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