Practice: Setting up a Performance Measurement System |
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This is a practice for establishing a Performance Measurement System to support timely, informed decisions. |
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Purpose
A performance measurement system is used for tracking key measures important to the business. Although there may be
common performance measures across a variety of businesses, each organization must understand what is important to
measure and why.
Creating a performance measurement system is based on the analysis of an organization to determine the key or critical
decisions needing to be made. These decisions may relate to the issues of: cost avoidance, achievement of critical
goals, productivity, completion rates, etc.
A good performance measurement system cannot be hastily thrown together and expected to show desired or consistent
results. First, the business goals or key decision areas need to be identified and understood by the management team.
With the Multi-Tiered Measurement framework in mind, management must then identify the operational objectives, practice
areas and strategies necessary to be managed and measured to drive appropriate operational effectiveness improvements
that will have a direct impact on the higher order business goals.
Once management agrees on these items a measurement team will determine what quantifiable data is available to support
these key decision areas and plan their implementation. Before the performance measurement system is deployed
throughout the organization the implemented measures must be validated with the management team and possibly modified.
The measurement team will then be responsible for maintaining the performance measure system as the needs of the
management team change.
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How to read this practice
The best way to read this practice is to first familiarize yourself with its overall structure: what it is in it, and
how it is organized.
Begin by making sure that the management team and those implementing the measurement artifacts understand what the
key concepts are, such as:
Next, understand how the various participants collaborate in setting up a performance measurement system.
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The management team identifies the key decisions needing to be made and collaborates with the measurement team in
completing the measurement planning.
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The measurement team commits to implementing the measures according to the established measurement plan.
Understand how these groups collaborate when they perform the following tasks:
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Additional Information
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Hubbard, Douglas W., How to Measure Anything Finding the Value of Intangibles in Business. John Wiley
& Sons, 2007
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Spitzer, Dean R. Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational
Success. AMACOM, 2007
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Brown, Mark Graham, Keeping Score: Using the Right Metrics to Drive World-Class Performance. Productivity
Press, 1996
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McGarry, John, Card, David, Jones, Cheryl, Layman, Beth, Clark, Elizabeth, Dean, Joseph, Hall, Fred, Practical
Software Measurement: Objective Information for Decision Makers. Boston, MA: Addison-Wesley, 2002
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Relationships
Content References |
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Inputs |
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