Performance Management

by Peter Parkes

Common questions

  1. What is the purpose of measures?
  2. Do I need explicit measures, as people already seem to know what to do?
  3. How do we link key metrics to strategic objectives?
  4. How many measures should I have/what should I measure?
  5. Things I have been told to measure don’t make sense.
  6. Should I involve the team?
  7. How do I measure success?
  8. What are Management Information Systems?
  9. What are good ways to present results?
  10. How often should I change measures?

 

1. What is the purpose of measures?

Measures have several purposes:

  • They can be used to show that we are doing our job to agreed standards. These may be formally contained in a SLA (Service Level Agreement).
  • They can be used to Benchmark us against other parts of the organisation, peers or competitors. This is especially important if we contract services in or out, or need to demonstrate Best Value against competing services.
  • They are most useful when they chart our continuous improvement and highlight any sticky points.
  • They can also be used to give the illusion that we are in control.

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2. Do I need explicit measures, as people already seem to know what to do?

Performance and Quality got a boost in the 1980s when British and International Standards were introduced which effectively said ‘say what you do, and do what you say’: your procedures/instruction should be explicit and you should be able to evidence that all your staff follow them. This exercise revealed that many people were only aware of parts of business processes and interpreted them differently, resulting in output of varying quality and efficiency.

Once we have moved forward with this problem by writing things down and ensuring that people are trained to follow instructions, we then run the risk of getting into a rut, encapsulated in the well-known expression ‘if you do what you did before, then you will get what you got before’. If your intention is to improve and not be left behind by competitors, you need to apply measures to show that your team is moving forward to agreed targets.

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3. How do we link key metrics to strategic objectives?

It is important that all the parts of an organisation are pulling in the same direction. One way of doing this is to have a corporate strategy and flow this down into the organisation via targets and measures. There are several tools to help us do this, including the Balanced Scorecard and EFQM excellence model.

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4. How many measures should I have/what should I measure?

We should not overwhelm ourselves with data just because we can measure it. As with driving a car, we have numerous performance and safety systems, but normally get by with a dashboard containing a handful of Key Performance Indicators. Should we need to take action, we can usually rely on a greater number of Performance Indicators to give us a richer picture of what is happening, or apply these diagnostically when we know what we are looking for.

There is a great temptation to measure outputs such as sales and profits to see how we are doing. This is like driving a car with a rear view mirror, in that it only tells us what has already happened. We have no control over the past. We should at least consider adding in some input measures, in other words measures of resources we are investing to ensure desirable outcomes. This subtle change in view helps the organisation move from reactive to proactive.

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5. Things I have been told to measure don’t make sense.

Measures should flow from the organisation’s strategy, but this is not always visible at lower levels of the organisation, and sometimes the link gets broken. Can you relate your measures back to the organisation’s overall objectives? If not, ask your management for clarification, as otherwise the measures are not likely to help either of you, even if they are somehow met.

Sometimes measures are applied to the wrong group; in other words, you can measure at that point, but what you do doesn’t really affect the outcome. One way of checking for practicality is to apply a set of criteria known as SMART (Specific, Measurable, Achievable, Realistic, and Time-based).

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6. Should I involve the team?

Figure out who the stakeholders are, and then involve them. If the performance management system, measures and targets are clearly planned to empower people to do their jobs better, then there should be no credible resistance to change (though people may still have a moan). Of course, you are also much more likely to get sensible measures if you pick the brains of the people who carry out the process for a living.

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7. How do I measure success?

Success is relative, so we need targets and success criteria. The first thing to do is benchmark – that is, find out where we are now. Then we need to think about our target, which usually means benchmarking against peers or competitors. Finally, we need to ensure that our targets are SMART (Specific, Measurable, Achievable, Realistic, and Time-based).

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8. What are Management Information Systems?

A Management Information System (MIS) is the database and reporting function for performance management. It is often IT based but, like most systems and processes, it need not be. This term is being overtaken by the term Business Intelligence (BI), as software houses introduce more functionality.

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9. What are good ways to present results?

We can be easily overcome by the amount of data available across an organisation. We have to bear in mind the requirements of the recipient, the preferred learning styles of different recipients, and the need to concentrate on trends rather than on absolutes. One popular way of improving reception of management information is through graphs or pictorial indicators. You can even configure these to look like a car dashboard (which indicates key information about our driving process, such as road speed, engine speed, and the status of key safety and performance systems).

The introduction of computer databases means that this type of dashboard can now be configured, drawn together, and viewed in simple Microsoft products such as Excel (don’t worry, it doesn’t look like Excel when the ‘techies’ have had a day with it). Thus, nowadays, these dashboards often display current data, or at least can be updated using a refresh key. This feature is incorporated into most commercial Management Information and Business Intelligence Systems.

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10. How often should I change measures?

If they are not working, then change them (but make sure you use the process described here).

There are many reasons why we need to change what we measure with time, so it is essential that we schedule in at least periodic reviews. Since measures should cascade from strategy, this review should follow the annual refresh of the organisational strategy and business plan.

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