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Establishing a performance measurement system.

Article Excerpt
[check] This checklist provides guidance on establishing a performance measurement system for an organisation or department. The primary purpose of performance measurement is to measure how well an organisation or department is accomplishing its mission, goals or objectives. Measuring performance is a requisite in any continuous improvement programme. The information gained from performance measures may be used to establish a programme to benchmark against competitors, other organisations or previous results.

Definition

A performance measurement system provides an organised means of defining, collecting, analysing, and making decisions regarding all performance measures within a process or activity.

A performance indicator is a level against which the management of any activity can be assessed. Measurement against the indicator enables managers to assess how efficiently, effectively and cost-effectively the operation is performing.

Performance measures provide a quantitative answer to whether you are reaching or exceeding the indicator set. They require the collection of raw data and conversion through a formula into a numerical unit.

For example a target may have been set to reduce the number of customer complaints from 10% of total sales to 5% (the indicator). A formula to see whether this has been achieved would look like this:

total number of complaints x 100 = % of complaints total number of sales

Advantages of measuring performance

Measuring performance enables an organisation to:

* understand its current position

* determine whether improvements have actually taken place

* ascertain where improvements need...

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