Understanding and using Performance Measurement Tools

Before we define Performance Measurement Tools, let's first understand what Performance Measurement is. Performance Measurement provides feedback to the manager on all aspects of the operation - resources, processes and consequences. It is the meeting point of strategy, decision making and organizational learning. The goal of performance measurement is to help optimize the interaction of these elements. Performance Measurement tools are means to that end.

A Logic Model is a Performance Measurement tool used to map the relationship between organizational activities and impacts (i.e. results). Costing (ABC/ABB/ABM) provides the link between resources and processes. By mapping resources consumed to activities conducted (which have been mapped to results achieved by way of Logic Modeling) organizations are able to establish resources to results linkages.

Quality Management Programs (e.g. TQM, Six Sigma, EFQM) are intended to improve the quality of manufacturing and service offerings. All these programs may be considered tools of Performance Measurement . For example, The Baldrige National Quality Program measures businesses in seven categories, and the EFQM in nine.

The Balanced Scorecard, like the Logic Model, is a tool that provides a method of linking organizational strategies to activities and results. The Balanced Scorecard consists of a Strategy Map and linked measures and indicators. A Strategy Map is essentially a special kind of Logic Model depicting the organization from four distinct perspectives – the financial perspective, the customer perspective, the internal process perspective, and the growth perspective.

The Performance Dashboard is a tool for organizing and providing ready access to performance information. The Dashboard is often used in Business Intelligence or Executive Information systems to allow easy monitoring of key performance indicators.

A Data Collection Strategy is an framework that supports the collection and reporting of performance information. Typically, a Data Collection Strategy should identify and document data sources, data types, data collection frequency, data reporting frequency, and other information necessary to begin actual data collection.

Note that it is critical to maintain this record; personnel change, and the person generating or collecting the data this year may not be there next year. Maintaining a record of the data collection process also helps ensure accuracy and consistency in performance reporting. This is especially important if the data is to be manipulated (i.e. subjected to a particular calculation) to support a performance measure.

See also:

Performance Measurement Best Practices

Public Sector Performance Measurement

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