Performance Measurement is a Process, Not an EventDecember 31, 2019 by Stacey Barr
Performance measurement is not a brainstorming session or consultant engagement or project. It is a core business process.
Performance measurement is not what most people seem to think it is. It most definitely isn’t an ad hoc assemblage of one or more of the following typical actions people take to get their KPIs or metrics or measures:
- a brainstorming session to fill the KPI column in the strategic plan
- a subscription to a KPI mega library or industry database
- a dashboard filled with graphs of whatever data is easy to get
Performance measurement is a process.
Measuring performance is a series of steps in which we:
- engage people in the need to measure
- choose what to measure
- define how we’ll calculate our measures
- get the data
- analyse the data to produce our performance measure values
- graph and report our measures to highlight signals of performance changes
- interpret these signals
- and use this information to take meaningful action to improve organisational performance.
But performance measurement is not a stand-alone process. It is a part of something bigger, something paramount not only to the improvement of organisational performance but to the organisation’s very survival.
Every organisation, just like every organism, has a renewal process.
The renewal process seeks out faults, weaknesses, or wear and tear and then repairs, strengthens, or regenerates itself. In living organisms, this renewal process usually responds to environmental factors such as a change in season or climate, physical demands, competition, threat, opportunity, or simply the passage of time. In the simplest terms, the renewal process has three parts:
- the organism sets a goal for itself, such as running fast enough to catch prey
- the organism’s systems assess the gap between its current capability and the goal, using continual feedback about how well the organism performs relative to the goal (for example, the level of muscle fatigue or soreness, cardiovascular fatigue, how often it catches prey, or how much energy it needs to expend in order to catch prey)
- the organism’s systems close the gap between its current capability and the goal (for example, by increasing the size of muscle fibres, increasing the rate at which the lungs absorb oxygen, or modifying the strategies it uses to stalk the prey)
The renewal processes in our businesses and organisations are similar to those of living organisms. Without renewal, living organisms and organisations alike break down steadily and become less and less capable of surviving, let alone fulfilling their purpose.
An organisation’s renewal process has three parts, just like the renewal process of a living organism:
- the planning process to set goals
- the performance measurement process to provide continual feedback about gaps between current capability and the goal
- and the improvement process to close the gaps
Let’s look at each of these parts of the process in more detail.
The performance measurement process starts in the planning process.
For any organisation, the planning process involves setting the direction that the organisation is going to take. A planning process usually involves scanning the environment for trends or forces that are acting upon the organisation, understanding the needs or expectations of the organisation’s stakeholders, clarifying the organisation’s purpose, formulating a vision for the future, and looking at what capability the organisation currently has relative to what it needs to have to fulfil its mission and realise its vision.
The planning process defines the gaps between where performance is and where it should be.
Aside from giving us the means to monitor the size of performance gaps over time, measurement makes tangible the difference between where the organisation is now and its qualitatively articulated goals and objectives; that is, measurement makes tangible the gaps between ‘as-is’ and ‘to-be’ performance.
When strategy is made more tangible through performance measures, something magical happens to everyone’s understanding. Cynicism is replaced by curiosity, complacency by commitment, and mediocrity by a passion to lift the bar.
The performance measurement process ends in the improvement process.
In the improvement process, decisions are made and actions are taken regarding how resources will be applied to effect change. The change might be to acquire new equipment or infrastructure, new skills or knowledge, new practices or policies, or more people.
The purpose of the improvement process is to close the gaps between as-is and to-be performance.
The role of performance measures in the improvement process is to focus attention on what most needs improving and to guide the improvement efforts by testing which actions are causing as-is performance to move closer to to-be performance and which aren’t.
The performance measurement process itself is the feedback loop between planning and improving.
Just like in any renewal process, measuring performance is the communication link between planning and improvement so that strategy can be implemented. The performance measurement process provides vital information about the organisation’s current levels of performance in relation to the direction defined in the planning process.
That information is then captured, analysed, and communicated, so it can inform the improvement process. Another way to say it is that the performance measurement process monitors the size of the gaps between as-is and to-be performance.
To be the best feedback loops they can be, performance measurement processes need to be deliberately designed to produce meaningful performance measures. This won’t happen serendipitously or by continuing to do the same things we’ve always done to measure performance.
Failing to understand this is why so many performance measurement efforts fail.
One of the very common reasons that performance measurement processes break down is that people just don’t have the big-picture perspective of why we measure performance. Don’t begin your engagement of colleagues with education about how to measure performance, or diving right in to look for better measures. It won’t work.
Rather, begin engaging colleagues with a discussion of how performance measurement is a process that aligns what we do to what we want to create from what we do. Some questions to prompt this discussion include:
- What are all the steps we take to find KPIs, measures or metrics?
- Do we have performance problems our measures aren’t helping us solve?
- How well is measurement linked into our planning?
- How well is measurement linked into our improvement or strategy execution?
- How well is our planning linked with our improvement or strategy execution?
Who in your organisation understands what performance measurement is truly about? Don’t you think everyone should?
Performance measurement is a process; not an event. It’s the feedback loop between planning and improving; not a workshop or app.
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