Wednesday, 6 January 2010

Starting out with performance measures

If you don’t have a culture of performance measurement and improvement in your business then starting out can be a little daunting. There are so many things you could and perhaps should measure that it can take a long time to figure it all out. Added to which performance measures need to be closely linked to your strategy, which might be in a state of transition.

There are two places you could start – either with the area of your organisation which is in most need of improvement, or with some of your existing measures.

You will get fast results by starting with the area that most needs to be improved - an important factor with any new initiative. Because it is a priority you are likely to think more carefully and get buy-in from others. Focus on the results you want to achieve, rather than the data that is available. Too often we measure what is easy, rather than what really matters. Measures can have positive or negative effects, depending on how they are used and the culture of your organisation. Think of the possible loop-holes or ways of “cheating the system” that might be encouraged by your measures. If measures are used as a way of learning how to improve performance, they will be more successful than if they are used as a means of control.

The other place you could start is with existing measures. Even if you or your organisation is relatively immature with performance measures you will certainly be measuring a number of different things – perhaps more than you realise. Make a list of everything you currently measure. Think about who uses the measure, how often, and what value it adds. What would happen if you didn’t have the measure? Would performance increase, decrease, or not be affected? Does it drive behaviours that bring you closer to your objectives? These answers will give you some insight into how effective these measures are. Then consider which measures to keep, which to ditch, and which need to be replaced with something more meaningful.

Performance measurement, like the underlying performance it seeks to improve, is a process of continuous improvement and refinement. You have to start somewhere if you want to improve performance, so make a choice and find a measure that will bring you closer to an important objective.

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