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PERFORMANCE MEASUREMENT IS A HOT topic that is of vital interest to commercial companies whose performance is ultimately measured in the marketplace. On the government side, President Clinton signed into law a requirement for all federal agencies to write strategic plans, set goals for progress, and measure performance against those goals.(1)
With all of this interest, performance measurement should be a finely honed tool that is ready for immediate use, but it is not. Although the literature abounds with performance management theory, the practice remains a mystery, with little detail about exactly what to measure.
Working with the U.S. Army Materiel Command, Pacific Northwest Laboratory has developed a performance measurement model that addresses this situation. While the model does not offer a direct, universal answer to what should be measured, it helps find the answer by using a rational process. This model might be particularly useful for areas of government activities that seek improvement but lack the influence of a commercial profit-and-loss statement.
Why measure?
Measurement is the language of progress. It provides a sense of where we are and, more important, where we are going. Measurement can guide steady advancement toward established goals and identify shortfalls or stagnation. To achieve these ends, it is important to measure the right things for the right reasons. Measurement becomes a waste of time with little or no organizational value when an organization measures items that have no influence on organizational success. The result is a bean-counting approach that focuses on irrelevant details.
Measurement is also a powerful behavioral tool. It communicates to the work force what is important to the organization and becomes a primary determinant of what gets done. The downside is that workers might perceive measurement as a threat; disregard organizational goals, customers, products, and services; and focus on obtaining favorable measurements.
Measuring and counting
Measuring is different from counting, as summarized in Figure 1. (Figure 1 omitted) Performance measurement counting is necessary, but not sufficient. It can be viewed as a subset of measuring. Determining status (counting) is necessary for locating end points: beginning states and goal states. Measuring is necessary for determining the path and progress between the two. Organizational performance measurement must be structured to meet both requirements.
Measurement is hierarchical
Within...