Effective performance measurement is not difficult; what is difficult is creating a positive measurement and reporting culture in a organisation. The culture can be moulded with the right systems in place. So what are the steps to creating an effective performance measurement and reporting system?
Step 1 Define what it is you do
What exactly is the purpose of your department / organisation. What are the inputs, processes, outputs and importantly what are the outcomes. What drives you, what objectives are you aligned to. Are you customer focussed or are you internally (financially) focussed? Be honest about why you exist. By defining why you exist you can understand what to measure.
Step 2 Understand what you need to measure. These are your KPI’s
This sounds simple! Too many organisations get this wrong though. You need to define the few things, that when done right will assure success. No more than five and no less than three – they should measure:
1) Effectiveness – Does the outcome match the objective?
2) Quality – Does the output meet the specifications / customer requirements?
3) Efficiency – Was the process completed in schedule and within budget?
This will give you a balanced view of your performance both technical (output) and effectiveness (outcome). It’s is important that those accountable for the measure can influence the results. It’s no good holding someone accountable for the output of a production cell when the operators do not report to them as they have limited influence over the result.
Step 3 Spread the word
If you’re expecting others in the department or organisation to report on their performance it’s important they understand why they are reporting. Tell everyone what happens to the data, how it assists with decision making. In essence you are engaging your team so they understand where they fit into the bigger picture.
Follow these simple steps and you can have an effective performance measurement system. Remember what Peter Drucker said “What gets measured gets managed”.