Introduction to Performance Measurement

13 Jan

“You cannot manage what you cannot measure”. Anon

“Performance measurement is the process of collecting, analyzing and/or reporting information regarding the performance of an individual, group, organization, system or component” [1]. “Performance measurement is how organizations, public and private, measure the quality of their activities and services” [2].  It can be made up of examining strategies and actions to determine whether outputs and results are reflecting what was set out to be achieved. Traditionally, organisations measured performance through financial performance only. However, this type of performance measurement cannot process performance which is seen by the customer. In today’s world, performance is generally measured by the improvements see by the customer as well as by the results delivered to other stakeholders, such as the shareholders. [3]

In order to determine whether or not progress is being made, it needs to be measurable. If one cannot measure their progress, they cannot know if they are making any. In order to be well informed, one must measure their progress regularly using performance measures. Performance measures are tools which are used to help organisations to operate, improve and interpret their business.

Performance measurements should:

  • Recognise good performance
  • Identify high performers
  • Provide feedback
  • Provide evidence to determine if strategy is working
  • Provide a common language for communication
  • Recognise if goals are being met
  • Show if customers are satisfied
  • Determine if and where improvements are necessary
  • Drive improvement

Most performance measures can be grouped into one of the following six general categories- a) effectiveness, b) efficiency, c) quality, d) timeliness, e) productivity and f) safety [4]. A performance measure is composed of a number and a unit of measure. the number explains the quantity and the unit gives that number a meaning.  A performance measure is also always bound to a target or a goal. ideally, they should be expressed in units of measurement that are the most meaningful to those who must use them or make decisions based on those measures whether that be in single dimensional units like hours, meters, or in multidimensional units such as ratios. Kelvin explained it best when he stated that “When you can measure what you are speaking about and express it in numbers, you know something about it” [5].

[1]- Wikipedia

[2]- http://www.ehow.com/about_5162691_definition-performance-measurement.html

[3]- http://www.businessballs.com/dtiresources/performance_measurement_management.pdf

[4]- http://www.orau.gov/pbm/documents/overview/wapm.html

[5]- http://www.businessballs.com/dtiresources/performance_measurement_management.pdf

Advertisements

One Response to “Introduction to Performance Measurement”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: