The 9 Levels of Performance Measurement Maturityby Stacey Barr |
Performance measurement is like anything else – it takes time for an organisation to master it. How far on the journey to measurement mastery is your organisation?
An extensive collection of performance measures and automated KPI dashboards shouldn’t be confused as mastery in performance measurement. Those are just outputs.
Organisations that have mastered performance measurement demonstrate that the right things are being improved, with regularity and with leverage, and in ways that result in the organisation better fulfilling its mission and reaching its vision.
But how can an organisation demonstrate this mastery?
How would we measure mastery in performance measurement?
The simplest measure I can think of is the percentage of people in the organisation who are regularly making measurable improvements in the performance results that are strategically important or mission-critical. This measure could be called the Performance Excellence Score.
But, the Performance Excellence Score isn’t quick and easy to measure, because the data is bespoke and needs effort to collect on a regular basis. And in truth, it’s unlikely that a single measure alone can be evidence of a multi-dimensional construct such as mastery.
Until I develop a good proxy measure for performance measurement mastery, I suggest we take a qualitative approach.
How to qualitatively assess your organisation’s performance measurement maturity
The nature of an assessment that is qualitative is that it won’t be based on numbers. Not even rating scales. It’s based on descriptions of observable
The checklists below are the main observable artefacts that describe each level of performance measurement maturity. Use them to see where your organisation currently sits, and the next best thing you can do to move it along.
Level 1 is Appreciation.
Organisations at the Appreciation Level essentially have the wrong idea of what the purpose of measuring performance really is. You’ll notice:
- There might be a few measures of performance, but mostly they are traditional financial measures.
- If there are any non-financial measures, they are in personal performance agreements.
- Measurable performance improvement is uncommon.
The priority to move up from the Appreciation Level is to give people reasons to appreciate the real value of measuring performance. And that means reframing its role away from judgement and toward learning and continuous improvement.
Level 2 is Engagement.
Here, at the Engagement Level, organisations have pockets of growing interest in measuring performance in a more meaningful way. You’ll notice:
- A few teams are attempting to measure and improve their results.
- There are a few non-financial measures, but most are simple activity measures.
- Often, goals seem too hard to measure meaningfully.
The priority to move up from the Engagement Level is to give people quick and easy ways to meaningfully measure just a few useful things. This will help to nurture and broaden the engagement in measuring for improvement.
Level 3 is Commitment.
Organisations at the Commitment Level have the first signs of a culture that can accept performance measurement as an important management process. You’ll notice:
- Some teams are measuring their impact on mission-critical and strategically important performance results.
- A few “quick win” performance improvements are generating interest among other areas.
- While performance measurement is happening a bit more, it still feels like a struggle and an extra burden on top of the “real” work.
The priority to move up from the Commitment Level is to deepen and broaden the commitment to good measurement practice, further across the organisation. This means teaching more people how to have similar successes with performance improvement.
Level 4 is Purpose.
Organisations at the Purpose Level have made almost a complete turnaround from measurement being seen as a rod for people’s backs to measurement as a tool in everyone’s hands. You’ll notice:
- The purpose of performance measurement as a driver of continuous improvement is understood more widely, and more teams are measuring to improve performance.
- More people accept that performance measurement is part of good management and part of their “real” work.
- More performance measures are being developed and used, but there is still a silo mentality that keeps the approach to measurement ad hoc.
The priority to move up from the Purpose Level is to start working across organisational boundaries, or silos. Share case studies of measurement successes to inspire and guide people, and put a lot of emphasis on aligning their measures with the strategic direction.
The Appreciation, Engagement, Commitment and Purpose Levels of maturity are about CULTURE. The development of a performance culture is nurtured through quick wins to raise awareness of what good performance measurement is really all about, and basic guidance in how to develop good measures. A reasonably strong performance culture is an essential foundation to lay before worrying about the technical side of measuring.
Level 5 is Alignment.
Organisations at the Alignment Level have come to believe that the whole is more than the sum of its parts. You’ll notice:
- A cross-section of people throughout the organisation are setting up performance measures that align to strategy.
- More teams are setting their targets in the context of strategic targets.
- There’s more talk about strategic alignment, but there is still a lot of confusion about how to get it.
The priority to move up from the Alignment Level is create an organisation-wide strategic and measurement framework, so everyone’s working in the same system. It’s now time to develop a corporate-wide approach to performance measurement, test it, and get it ready to roll out.
Level 6 is Capability.
At the Capability Level, a critical mass of people in the organisation are aware that
performance measurement is a skill that doesn’t come naturally, and requires training. You’ll notice:
- Most of the organisation is creating and using performance measures that align to strategy.
- Many teams are showing sustained performance improvements and achieving targets without unintended consequences.
- Some of the bigger struggles with performance measurement persist, and more people are asking for training.
The priority to move up from the Capability Level is to systematically train people in how to use your corporate performance measurement framework. Identify measurement champions, and let them lead Measures Teams across the organisation to learn and implement that framework.
Level 7 is Integration.
The Integration Level is where organisations have an organisation-wide approach to measuring performance that works, but still feels too separate from other management processes. You’ll notice:
- The alignment of performance measures to strategy and to business processes is strong.
- Improvement in process performance routinely leads to improvement in mission-critical or strategically important results.
- Performance measurement still feels like extra work, and often requires rework on the strategic and business goals, and extra work in data collection and reporting.
The priority to move up from the Integration Level is to embed your performance measurement framework into business planning, strategy execution and performance reporting. Formalise this as a documented management process.
The Alignment, Capability and Integration Levels of maturity are about FRAMEWORKS. A deliberate organisation-wide performance measurement approach is designed, tested and standardised. With a unified approach, it’s easier to deploy and to improve.
Level 8 is Evolution.
Organisations at the Evolution Level have measurement systems that improve organisational performance, but want to improve the performance of the measurement system itself. You’ll notice:
- Performance measurement is a natural part of everyone’s job.
- The majority of teams are consistently reaching or exceeding targets in mission-critical or strategically important areas.
- The return on investment in measurement might be positive, but there is still some rework or redundancy or other inefficiency in the measurement approach.
The priority to move up from the Evolution Level, to a very high-performing organisation, is to set up the systems and routines to continually monitor how the performance measurement framework is working, improving its performance like any other formal business process.
Level 9 is Acceleration.
Organisations that have a keen focus on ramping up their measurement approach so they can reach stretch targets, faster and with fewer resources, are at the Acceleration Level. You’ll notice:
- Performance measurement is as natural a part of doing business as financial management.
- Performance measurement is managed as a formal business process that is, itself, routinely measured and improved to better achieve performance targets.
- The organisation’s performance is best practice.
This is performance excellence. This is a high-performance organisation.
The Evolution and Acceleration Levels of maturity are about SYSTEMS. There are well designed and implemented systems for formally managing and continually improving the performance measurement process, so it creates even more leverage to improve organisational performance.
Where is your organisation on the 9 Levels of Performance Measurement Maturity?
Start a discussion with your leaders and colleagues about which observable
artefacts, listed in the 9 levels above, best describe the state of performance measurement in your organisation right now.
What’s the next best thing for you to do, to make measurement work better? How and when will you do it?
Performance measurement is like anything else – it takes time for an organisation to master it.
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