Performance Measurement is a Process, Not an Eventby Stacey Barr |
Performance measurement is not a dashboard, brainstorming session, consultant engagement, or project. It is a core business process.
Performance measurement is not what most people might 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
If we reduce performance measurement to things like these, we’ll never get the true benefits from it. Ad hoc is never the way to excellence. As management guru W. Edwards Deming is so often quoted as saying, we really don’t know what we’re doing unless we can describe it as a process.
Performance measurement is a process.
When we describe performance measurement as a process, we can realistically strive for great KPIs for several reasons:
- No essential steps are left out of our KPI creation.
- Everyone can understand what to do to create KPIs and how exactly to do it.
- We have a consistent approach that can give consistency to the quality of our KPIs.
- There is less rework and redundancy in KPI creation efforts, which saves resources.
- We can tweak and improve the process, to get better and better at creating and using KPIs.
Can you describe your approach to performance measurement as a process? And how much detail can you describe? Generically, the process of measuring performance will include steps like these, in this order:
- engage people in the need to measure
- understand the results we’re trying to measure to monitor
- choose the best measures for those results
- define how we’ll calculate each measure
- get the data we need to calculate the measures
- analyse the data and produce our measure values
- graph and report our measures to highlight signals of performance changes
- interpret these signals to prioritise which measures to respond to
- and use this information to take meaningful action to improve organisational performance.
Specifically, PuMP is an example of how steps like these are formalised into a logical, practical, comprehensive performance measurement process.
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. It’s this: every organisation, just like every organism, has a renewal process.
Performance measurement is a renewal process.
The renewal process seeks out faults, weaknesses, or wear and tear in the parts that make up the organism. Then it repairs, strengthens, or regenerates those parts. 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, including strategic planning, cascading the strategic plan, and operational planning
- the monitoring process to provide continual feedback about gaps between the current state and the goal, at all levels of the organisation
- and the improvement process to close the gaps, which includes strategy execution and any other change initiatives
Performance measurement is the feedback loop that weaves these three parts together. Let’s look at each of these parts 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. We call these ‘performance gaps’.
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. Measurement quantifies the performance gaps.
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 connects planning to monitoring to 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.
That’s why we never begin the engagement of colleagues with education about how to measure performance, or diving right in to look for better measures. It doesn’t work.
Rather, we 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. [tweet this]
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