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Five Benefits of a Good
Measurement System |
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A good performance measurement system
will help you achieve success in five ways1:
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establish your current position
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communicate direction
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stimulate action in the most important areas for your business
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facilitate learning
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influence behavior
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Business Process
Thinking Check List
13 Questions
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Two Elements of a
Contemporary Measurement System
By
Michael Hammer |
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Formal,
structured and quantified model of enterprise.
It recognizes that modern business are
complex systems, connects a company
overarching objectives with its controllable dimensions and enables
managers to mobilize a company's
resources and
capabilities to ensure that it achieves its
paramount goals. It shows managers both what they ought to
measure and what they ought to do with the measures.
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Process to improve enterprise performance.
It contains a deliberate
process for using measurement data to
improve enterprise performance, a structured and focused program
that uses measurement information to identify the causes of
inadequate performance and then does something about them.
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Improvement-focused Measurement System |
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has
improvement-oriented measures
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provides no data without a rationale and
purpose
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ensures that people know why things are
being measured
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ensures that people know
what to do about the measures
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Measures Used to Manage the
Performance of a Business2 |
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Strategic
Measures:
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market attractiveness (industry
structure, growth, concentration,
innovation, customer power, logistical
complexity), and
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competitive strength (relative market share, relative
quality,
intellectual property, customer
coverage)
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Organizational
Measures:
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Operational
Measures:
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Successful Measurement System
Provides: |
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Feedback
that tells you whether you are – or aren't – doing the right things,
and doing them well
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Motivation that will spur you on
to improve your performance
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Incentive for you and your team to
'do it better'
But for all this to happen you must make
sure that you measure:
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the right things
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at the right time, and
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in the right place
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The GE Leadership Effectiveness Survey
(LES)
Ranking Scale:
Significant Development Needed
1 2 3 4
5
Outstanding Strength
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25 Lessons from Jack Welch |
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Why Measure Performance?
The basic purpose of any measurement system is
to provide
feedback,
relative to your goals, that increases your chances of achieving these goals
efficiently and effectively. Measurement gains true value when used as the
basis for timely decisions.
Measurement Is Not an
Essence, but Improvement
The purpose of measuring is not to know how
your business is performing but to enable it to perform better. The ultimate
aim of implementing a performance measurement system is to improve the
performance of your organization. If you can get your performance
measurement right, the data you generate will tell you where you are, how
you are doing, and where you are going.
18 Leadership Lessons
from Colin Powell
17 Indisputable Laws of Teamwork
29 Obstacles To Innovation
Modern Systems Approach
You must master your
systems thinking skills as
measurement today must be neither and end nor an activity in itself but a
part of an integrated system for enhancing business performance. "A
contemporary approach to measurement recognizes that
modern business are complex systems, for
which intuition no longer suffices. Today any action that a manager takes
can have myriad and unpredictable consequences throughout the organization.
Therefore measurement must be based on a careful through-through analysis of
the business, one that links the objectives of the business to the things
over which managers and front-line personnel have control. Only then can the
recognition of a problematic measure lead to the right actions that will
correct it and to improved performance of the business a whole," writes
Michael Hammer.
Balanced Business System
Transforming the
Traditional Functional Mindset
Traditional functional way of thinking "stands
in the way of executives understanding and improving the flow of
cross-functional activities which
create enduring value for customers and
shareholders. It encourages a
distorted view of performance measurement and executive
rewards, shifting focus away from meaningful measures such as the
timeliness and quality of services provided to customers, and towards less
significant measures around functional departmental performance."...
More
Balanced Scorecard
The Balanced Scorecard is a framework for
designing a set of measures for activities chosen by you as being the key
drivers of your business. By having four distinct perspectives (financial,
customer, internal process and innovation and learning) it promotes a more
holistic view of the business...
More
Results-based Leadership
Case in Point
GE:
Trotter Scorecard
Many
GE
business units employ a tool called the Trotter Matrix to check on their
use of best practices. The scorecard was developed by Lloyd Trotter, who ran
the Electrical Distribution and Controls side at GE. He listed six desirable
attributes for each of his plants and then scored each attribute...
More
Economic Value Added (EVA)
Economic Value Added (EVA), or
economic rent,
is a widely recognized tool that is used to measure the efficiency with
which a company has used its resources. In other words, EVA is the
difference between return achieved on resources invested and the cost of
resources. Higher the EVA, better the level of resource unitization...
More
360-Degree Assessment
The 360-degree assessments are commonly used in
corporations in management and leadership development programs. In
360-degree assessment, the participant completes a self-assessment and also
collects
feedback
from supervisors, peers, subordinates and customers (or sometimes
vendors)...
More
Measuring Cleaner
Production
Measuring cleaner production (CP) is of
critical importance. You must use appropriate indicators, which are
generally applicable, yet specifically measurable, and address both the
productivity and environmental aspects of your system in an integrated
fashion. The indicators should enable not only estimation of the
CP of a product or process and its comparison with other equivalents,
but also improvement of the existing process or product and the development
of new products.
Life
Cycle Assessment (LCA) and Total Cost Assessment (TCA) are two types of
CP indicators that help managers understand the practical implications of GP
and make right decisions...
More
13 Tips for
Transitioning Your Company To a Lean Enterprise
Performance Management...
Effective Performance Measurement System: Key
Features...
Manager's Diagnostic Toolkit...
Measure-Management Companies...
Evaluating Corporate Performance: New Metrics...
Two Questions You Should
Ask Yourself...
Measuring
Productivity...
Six Sigma Tells You...
Measuring
Coach's
Effectiveness...
Benchmarking...
360 Evaluation and Feedback...
Enterprise Performance Management (EPM)...
Process Thinking...
Systems Thinking...
Case in Point
Intel
Corp...
Case in Point
Quality
Measures at General Electric (GE)...
Case in Point
Dell Computer Corporation...
Case in Point
Silicon Valley Firms...
Case in Point
IDEO...
Jokes
Robert Burn's Hog-Weighing Method...
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