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Performance Management Measuring

Good Measurement Makes a Difference in Organizational Performance

Measurement plays a crucial role in translating business strategy into results. Industry leaders in today's business world use balanced measurement systems to track customer and employee satisfaction as well as financial performance and operating efficiency.

The Metrus Group

The Metrus Group of Somerville, New Jersey, studied the value of using strategic measures. Its research defined a "measurement-managed" organization as one where senior management is in agreement on measurable criteria for determining strategic success and where managers update and review semiannual performance measures in significant performance areas. By comparing measurement-managed and non-measurement-managed organizations, the study indicates the value of measurement and provides valuable information for Government organizations as well.

ItemMeasurement
Managed
Non-Measurement
Managed
Success in Last Major Change Effort 97% 55%
3-Year Positive Return on Investment 80% 45%
Perceived as Industry Leader 74% 44%

Barriers to Measurement

If strategic measurement is so effective, why don't more organizations do it? Barriers often exist that make successful measurement difficult, including:

  • Top management cannot come to a consensus on strategic goals.
  • The organization does not allow sufficient involvement of those who will use the measurement system in its design.
  • Pre-existing habits, systems, and culture are incompatible with measurement and the organization is unwilling to change.
  • Organizations get trapped into measuring what is easy rather than what needs to be measured.

Requirements for Successful Measurement Systems

Developing successful measurement systems is a lengthy but rewarding process. Lessons learned by organizations with effective, balanced measurement systems include:

  • Design the measurement system with a clear, agreed-upon strategy.
  • The leadership team must be involved in and support the measurement process.
  • Keep it simple - develop measures that everyone can understand.
  • Communicate the results of the measures in order to reinforce the strategy.
  • Link the measurement system to teams and individuals so that they have a clear line of sight to organizational goals.
  • Make the measurement system the centerpiece of the management review process.
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