Blog: 11 Reasons why you should (re) develop your performance measures or KPIs
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In my view, Performance Measures Applied is the single most important development work our company has or will undertake for a long time.
Deborah Motto, Angliss Pacific Limited
If performance on the job is not measured,then performance improvement remains a myth. Neither manager or worker knows the real situation. It means that the company is uncompetitive.You may do your best to introduce a performance management system, a total quality approach, benchmark, empower the workforce, build teams, reward performance - but to what purpose if it wont work or be sustainable if you cant measure the output and the improvements and control variation?
Every person in an organisation is employed to deliver results (outputs) which contribute to the organisation as a whole. Effectiveness is judged by the extent to which internal and external customer demands for outputs are met.In the long run everyone is measured against whether the customers' demands and their many and varied expectations for outputs have been satisfied.
The people who place expectations for outputs are customers, consumers, or users. Customers can demand tangible and visible products like processed milk, beer or pencils, as well as intangibles like ideas, advice or services. Customers may include shareholders, the board of directors, team members, other managers, and yourself, as well as external customers. To optimise the organisation system there needs to be an emphasis on the rigorously measured demands and expectations of all stakeholders.
Most performance measurement systems fail because they do not make the crucial link between strategy and daily actions and operations. They focus attention on tactical feedback and control of short-term operations.A good performance measurement system provides a comprehensive framework that translates an organisation's vision and strategy into a coherent set of outputs, performance measures and targets.
By developing a set of outputs, measures, targets and feedback systems for the leadership team, and then cascading these down the organisation in such a way that they are localised, meaningful, understood, owned and aligned, the link between the organisation's strategic goals and the daily actions of the people doing the work can be made.
Resource allocations, annual budgets and strategic decisions can be driven by the strategy. Performance reviews can be used to monitor individual performance which in turn monitors organisational performance. Reward systems can be designed to reward organisational performance achievement. The vital link between what people are doing on a daily basis, and strategic goals can be made.
A good performance measurement system must mobilise the people in the organisation in such a way that their daily activities bring them closer and closer to strategic goal achievement. The performance measurement system must be a systematic process to implement strategy.