Archive for the ‘Performance Measure Frameworks’ Category

Performance measurement is a process, not an event. It’s a series of specific activities for creating, implementing and using performance measures, and it’s not just a brainstorming session on the tail-end of your business planning workshop. If you don’t take each step in the process deliberately, there’s little wonder your performance measures or KPIs just aren’t measuring up.

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You depend on the quality of data and information to provide a stable foundation for your decision making. Decision making often involves responding to something, so you need your data to validly describe what you are responding to so that you choose the right responses.

Whether your data is quantitative (based on numbers) or qualitative (based on perceptions), it’s integrity depends on 5 widely recognised qualities.

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In the first part of this three part series, I posed the first challenge that I face with the Balanced Scorecard: it is hard to cascade meaningfully. And in part two was the second challenge: the Balanced Scorecard perspectives are too limiting.

The third thing I don’t like about it is this:

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In the first part of this three part series, I posed the first challenge that I face with the Balanced Scorecard: it is hard to cascade meaningfully.

The second thing I don’t like about it is this:

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We have to applaud the Balanced Scorecard for the evolution it triggered in organisational performance measurement and strategy execution. But no model is without its limitations.

Certainly, on account of the Balanced Scorecard, we’re now seeing the measurement of non-financial results rather than just the financial, and we’re seeing strategies laid out in logical and cause-effect linked plans designed for execution rather than shelving.

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How to find the right measures is the most asked question in the field of performance measurement. And it’s little wonder, because the more meaningful measures track outcomes which tend to be less tangible than the traditional things we’ve measured, like how many widgets we produced.

How do you translate results so intangible as employee morale or service quality or corporate image into solid, robust measures?

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As practitioners in the Land of Performance Measurement, we have our own version of Dorothy’s ‘Lions and tigers and bears’ in the Land of Oz.

We have activities, outputs and outcomes. Creatures that seem so much more frightening than they truly are, and mostly because we don’t really understand whether and how we are supposed to measure them.

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Imagine that you’re the manager of a department in a railway that rails sugar from the mill to the port. Your department takes orders from the mill for trains when they’re needed, to come and load up with sugar at the silos, and chug them along the tracks to dump the sugar at the port for export.

And you’ve just had a call from the manager at the sugar mill: “Where are those *%$# trains we ordered?! We’ve had to shut down production AGAIN because the silos are full. You know how much that costs us! When are you guys going to get your train problem sorted?!”

It’s not too far from the truth.

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