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Performance Measurement Systems...

Successful performance-based management depends upon the effective use of performance measures. Organizations succeed when their business units and support functions work together to achieve a common goal and include the use of performance measures.

Establishing business strategies, defining systems and processes that contribute to those business strategies must also be included. Improved performance, at every level, is the goal.

Effective performance measures are customer driven—for both internal as well as external customers; give an accurate and comprehensive assessment of acquisitions, programs, or activities; minimize the burden of data collection; and are directly utilized by employees to improve performance.

Projects projects and processes cannot be managed unless they are measured. The “8- steps” listed below, define a measurement process that includes:

1 Translating Business Strategies Into Actions At The Operational Level

1 Selecting Projects That Have The Greatest Value

1 Developing Measurement Mechanisms

1 Measuring, Analyzing And Communicating The Results

1 Finding Ways To Improve Performance

The eight steps provide a logical sequence of tasks that can be integrated with existing management practices. The steps to develop and use performance measures effectively are:

Step 1: Link Targets & Measures Directly to Company Goals and Objectives
Step 2: Develop Performance Measures (PM) Using Balanced Scorecard Logic
Step 3: Establish Baselines for Future Performance Comparisons
Step 4: Implement PM Strategies for Greatest Value RE: Organizational Business Priorities
Step 5: Systematically Collect Data - Accuracy Is More Important Than Precision
Step 6: Analyze Results - To Improve Performance, Refine Indicators and Identify Lessons Learned
Step 7: Integrate Developments & Discoveries with Management Processes – Re-Focus Targets & Measures
Step 8: Communicate Results To Foster And Sustain Partnerships

Implementing Performance-Based Management Strategies

Performance measurement can require substantial resource investments. Organizations use more resources initially to develop a knowledge and skills base and to properly establish performance-based management methods in their organizations. As organizations learn how to develop and use performance measures, less resource allocation is necessary.

Initially, measuring performance that is linked to organizational outcomes are hard to conceptualize and recognize due to the inherent ambiguity of outcomes. Practitioners require time and experience before they can develop and use performance measures effectively. The amount of resources and time necessary to develop measures depends on the scope of the implementation project; the extent of the partnerships between the business and technical groups; quantity and quality of available data; the knowledge and skill of the developers; and the level of proactive involvement by management. The resources needed to develop and use performance measures will vary.

A change in mindset and culture is required to develop and use performance measures to dramatically improve performance. This will happen only if senior managers support and participate in the process itself.


ERP-MRP Evolution…
ERP & Hoshin Kanri…
ERP Implementations… 
Profit-Ability Improvement... (¬Click here to see definitions)
Profit-Ability Management Principles... (¬Click here to see definitions)

People, Empowerment & Profit-Ability… (¬Click here to access articles)
Hoshin Kanri & Deming's Plan-Do-Check-Act... (PDCA) Cycle…

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