ATTRIBUTES TO GOOD PERFORMANCE MEASUREMENT SYSTEM

Good performance measures allow for comparisons to be made to enable performance

improvements:

a) They reflect on the overall organizational goals and strategies.

b) They are relevant.
c) They allow easier communication of the strategy and help people understand the
definition of organizational success.
d) They don’t measure individual performance; instead they look at processes and activities.
e) They are results-focused and not action-focused.
f) They are supported by a team of influencers (senior management).
g) They are predictive in nature, indicating what drives business value.
h) They are tracked and monitored frequently, not once or twice.
i) They are not copied from outsiders. They are specific to your own organization and
industry.
j) They inform an organization’s decision-making process.
k) They are owned by someone who is accountable for their outcome.
l) They are few in number, not focusing on many outcomes at once.

PERFORMANCE ANALYSIS

Performance measurement is an important cornerstone for any organization and can help ensure
that:

1. Best practices in the organization are identified and expanded.

2. Processes are benchmarked against the performance of outside organizations.
3. Resources are used efficiently and effectively, and
4. Strategic activities are aligned to the strategic plan.

Performance measurement needs to involve both senior management who understand the long-
range goals of the organization, and front line staff who know the kinds of measures needed for
thoughtful decision making. Although there is no “perfect set” of measures, organizations should
experiment with a “starter” set of metrics and evolve these measures over time. The biggest
challenges in measurement are not in the collection and analysis of data, but in interpretation of
results and making decisions based on the information. Education is an essential part of all
measurement. Knowing what to measure, how to measure, how to use measurement and how to
link these measures to other knowledge of organizational performance are critical to the
successful use of performance measurement. Provide training to the teams in how to do this and
set up a process for reporting, reviewing and improving.
NON-PROFIT/ASSOCIATION CONSIDERATIONS

According to Paul Arveson, in his article Translating Performance Metrics from the Private to
the Public sector (1999)1, there are differences in the application of performance management
systems from the private sector to the public sector.

METRICS

A metric is a meaningful measurement taken over a period of time that communicates vital
information about a process or activity, leading to fact-based decisions. Metrics are usually
specialized by the subject area. In business, they are sometimes referred to as key performance
improvement, effectiveness, efficiency and appropriate levels of internal controls.

Characteristics of a good metric

1. Drives appropriate action.

2. Meaningful to the customer (member, donor, etc.).
3. Simple, understandable, logical and repeatable.
4. Clearly defined.
5. Data that’s economical to collect.
6. Shows how organizational goals and objectives are being met.

BALANCED SCORECARD

The balanced scorecard is a strategic planning and management system that is usually
extensively in business and industry, government and nonprofit organizations worldwide to align
business activities to the vision and strategy of the organization to improve internal and external
communications and monitor organization performance against strategic goals. It was originated
by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance
measurement framework that added strategic non-financial performance measures to traditional
financial metrics to give managers and executives a more ‘balanced’ view of organizational
performance.

The balanced scorecard has evolved from its early use as a simple performance measurement
framework to a full strategic planning and management system. The “new” balanced scorecard
transforms an organization’s strategic plan from an attractive but passive document into the
“marking orders” for the organization on a daily basis. It provides a framework that not only
provides performance measurements, but helps planners identify what should be done and
measured. It enables executives to truly execute their strategies.

This new approach to strategic management was first detailed in a series of articles and books by
Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous
management approaches, the balanced scorecard approach provides a clear prescription as to
what companies should measure in order to ‘balance’ the financial perspective.
CONCEPT OF BALANCED SCORE CARD

Balanced scorecard is an analysis technique designed to translate an organization’s mission

statement and overall business strategy into specific, quantifiable goals and to monitor the
organization’s performance in terms of achieving these goals.

Developed by Robert Kaplan and David Norton in 1992, the balanced scorecard methodology is
a comprehensive approach that analyzes an organization’s overall performance in four ways,
based on the idea that assessing performance through financial returns only provides information
about how well the organization did prior to the assessment, so that future performance can be
predicted and proper actions taken to create the desired future.

MEANING OF BALANCED SCORECARD

Balanced scorecard is a performance metric used in strategic management to identify and

improve various internal functions of a business and their resulting external outcomes. It is used
to measure and provide feedback to organizations.