True for both people and systems, feedback is essential to learning, evaluation, and adjustment. Performance Measurement is the feedback system for business. It is the key for effective execution because it provides quantifiable status and feedback to improve performance, reduces ambiguity, and drives accountability. Used broadly and consistently across the company, it creates alignment across functional areas and people in your company… and alignment is important for implementing your strategic plan and achieving and sustaining your vision.
Performance Measurement is the feedback system for business.
Despite this, a survey of businesses found 52% never or rarely developed and used performance measures to evaluate the success or failure of business processes and drive execution.
At Supply Velocity we want the Performance Measurement Process to be simple and easy to implement. Our philosophy is that “few measures in the hands of the many is more powerful than many measures in the hands of the few.” Our process follows the Balanced Scorecard methodology, but reduces the allowable number of measures to less than 10, so the effort of measuring is less than the benefit.
Performance Measurement Examples:
- Operational Excellence
- Sales growth
- Customer Success
- On-time delivery
- Employee Satisfaction
- % of sales from products designed in the last three years
- Operational Excellence
A clear mission, a few key metrics, performance targets that set clear expectations and action plans to improve, are part of a Performance Measurement Scorecard. When properly used as a monthly/weekly management tool, you will be able to ensure every department is aligned and improving per the objectives of the strategic plan.
Implementing Performance Measurement will help companies that are profitable to be that much better. For companies that are struggling, the transformation is simple, rapid and dramatic. Companies considering new organizational structures or compensation plans can leverage Performance Measurement to build from.
Benefits of Performance Measurement:
- Turn Strategic Planning into Strategy Implementation
- Create Performance Scorecards that flow from the Strategy
- Build an organizational structure and compensation plans that are linked to specific Performance Measures and drive desirable behaviors
- Move strategy beyond top management to all associates
- Create focus for all associates