Performance Measurement

What is performance measurement?
Performance measurement is the practice of collecting, analyzing and reporting information about the performance of an employee, group, organization, system or component. Measuring performance is part of performance management.

Definition

Different definitions of performance measurement are given by different academics.

Moullin defines it as the process of evaluating how well organizations are managed and the value they deliver to customers. Neelie argues that performance measurement is the process of quantifying the efficiency and effectiveness of past actions.

What does performance measurement look like?

There is no consensus on how to measure performance, nor does it have a clear definition. It is therefore up to the organization and management to determine what thsi practice will look like.

The most common frameworks or methods for this are:

• Balanced Score Card
• Key Performance Indicators (KPI)

The Balanced Scorecard is used by organizations to evaluate and manage the implementation of a strategy. Key Performance Indicators (KPIs) are used to execute the most important performance measures.

Defining exact performance measures or methods is a popular activity for academics. For example, there is a large number of studies dealing with lists of indicators for the railway infrastructure sector.

The use of this practice in business is important, but too often it goes unimplemented.

A consequence of such a measurement may be that an employee has to develop a Personal Improvement Plan (PIP) with an involved manager. This enables the employee to grow and develop, something that is ultimately good for the organization.

Benefits of performance measurement

Using a performance measurement can provide a variety of benefits, from measuring the effectiveness of a project to contributing to a culture of continuous improvement.

Systematically managing and executing performance management in general and this practice in particular means that plans can be revised midway when there’s an expectation to profit from new opportunities.

Other benefits are:

• Ensures the development of best practices and lessons learned. These can be applied to future situations.
• Increases the level of responsibility among employees.
• Benefits decision-making.
• Helps demonstrate the effectiveness of changes over time.
• Helps communicate an organization’s story.
• Develops key stakeholder relationships and a common understanding of business processes.

Performance measurement framework

A performance measurement framework identifies the indicators needed to effectively monitor and measure performance. The use of a performance measurement framework is characterized by:

• Being able to identify situations that require a specific performance approach
• It being a connection and performance analysis methodology
• Being able to specify roles and responsibilities
• It being a reporting tool for management based on a logical model

The method supports management (HRM) in:

• Monitoring and assessing results of individuals or projects
• Being able to make well-considered decisions and take timely measures
• Providing the correct relevant information to stakeholders
• Providing informational support for decision-making

Tips and tricks

The articles linked to the performance measurement tag cover the different ways performance measurement can be done and provide methods, tips and best practices. Missing something on this topic or related topics? Let us know in the comments or send an email