Performance Measurement: Definition, Challenges, and Types

This blog post provides a comprehensive overview of performance measurement, defining it as the day-to-day evaluation of results and outcomes to produce reliable data on program efficiency and effectiveness. It explores various definitions, including the use of Key Performance Indicators (KPIs) and the balanced scorecard, and discusses the challenges companies face in aligning performance measures with business strategies and culture. The post highlights the entities that use performance measurement, common challenges such as outdated metrics and poor innovation measurement, and the requirements for designing effective performance measurement systems. It emphasizes the importance of good performance measures, outlining characteristics such as relevance, understandability, reliability, and timeliness. The blog also details major performance measure types, including input, output, process, and outcome measures, and provides insights on how to narrow down potential performance measures to those that are most impactful. It also discusses the importance of performance measurement for benchmarking and business excellence.

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Blog Writing: PERFORMANCE MEASUREMENT

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What is PERFORMANCE MEASUREMENT?
3rd August, 2019
Performance measurement is mainly regarded as the day-to-day measurement of the results as
well as outcomes, which in return produces trustworthy data on the efficiency and
effectiveness of the programs. Besides, there are some of the resources such as time of the
workers, human resources and funding that is used for conducting the activities as well as
providing the services. There are a lot of definitions with regards to the performance
measurement. However, one of the most general definition of the performance measurement
is that it is mainly connected with a kind of measurement in terms of performance there is
only little consensus about how performance measures can be used or defined. Some of the
simplest frameworks that are used by the companies for measuring the performance are the
key performance indicator and the balanced scorecard.
The performance measurement can be mainly understood via considering the definitions of
the words such as ‘measurement’ and ‘performance’ as per to the Baldrige criteria.
Measurement is mainly the numerical information that tends to quantify the output, input
along with the performance dimensions of products, processes, services as well as the entire
company. Furthermore, the measures of the performance can either be composite or even
simple. On the other hand, performance is regarded as the output results and their outcomes
that are gathered from products, processes and the services that tend to permit evaluation and
comparing relative to standards, goals, previous results and other companies. Besides,
performance can be expressed in both non-financial and financial terms. One of the main
challenges that is faced by the companies in the recent times is that how to align and match
performance measures with the strategies of the business, corporate culture, structures, the

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number and type of measures for using, and how to deploy the measures so that the outcomes
can be used.
Entities that uses performance measurement
To some extent each and every companies measures the performance. On the contrary, there
is a huge disparity among companies with regards to which of the performance measurement
are used with a lot of them focusing on the financial measures. Performance measurement
can be regarded as one of the most important elements for the excellence in the businesses.
The business excellence model always tends to encourage using the performance measures,
but additionally the design of the performance measurement systems is considered by them
for making sure that the measures are completely aligned to the strategy. There is a new
report by the Performance Measurement Association on one of the new frameworks of the
performance measurement. Interestingly, the balanced scorecard was highlighted as one of
the most popular of this specific method. Furthermore, most of the firms out of the Fortune
500 companies use this method for the performance measurement.
Common challenges with the performance measurement approach
It has been observed that there are some of the most common challenges of the performance
measurement approach. Below are some of the common features of the performance
measurement systems that are outdated such as: Failure for measuring all the factors that
tends to create some value, measuring innovation in a poor manner, dominant other backward
looking indicators or financial indicator, and immediate or concentration rather than the goals
that are for long-term. On the other hand, there are also some of the challenges faced
regarding designing the performance measurement system that is effective such as: what
measures can be choosen and why? The people responsible for using the results, how to

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measure the non-financial performance? And the resources that needs to be considered as
well as deploying the performance measurement system.
There are some of the main requirements that a company needs to consider before designing
an effective performance measurement system. Furthermore, apart from the lower level
measures that may be important for the operation of the processes, all of the measures must
be taken into account for supporting the attainment of the particular performance that the
leaders of the company identified. On the other hand, there are some of the main processes;
core competencies as well as drivers of performance that is required by the employees need
to be identified in a proper manner before the performance management that is effective can
be achieved.
Tracking record of performance measurement use
It can be said that the performance measurement is the basic towards the development and
improvement of the companies. Furthermore, the importance of performance measurement
has enhanced with the realization that needs to be successful in the long-term needs to meet
each and every needs of the stakeholders that consists of the consumers, local community
stakeholders, suppliers as well as the shareholders. The importance of the performance
measurement cannot be quantified still it is quite evident that the performance measurement
is mainly a requirement for benchmarking and the excellence of business.
The characteristics of the good performance measure
If the performance measure is excellent then they have the following quality in them:
Reliable, relevant, timely, understandable, cost-effective as well as comparable. Besides,
good performance measure has the additional below-mentioned characteristics-

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Relevant: The measures that are relevant matters to the intended audience and also
specifically relates towards the activity being measured.
Understandable- The performance measures that are clear, easy and concise are regarded as
excellent.
Reliable- The excellent performance measures have data that are free from any kind of bias,
verifiable, and also a perfect representation of what needs to be done.
Comparable- The performance measures that tends to have enough data for telling if the
performance is getting better, staying the same or if it is worsening. Furthermore, they also
tend to provide the reader with a frame of reference for telling if the present performance
exceeds or meets the performance or not.
Timely- The performance measures that have the availability of the information in a timely
basis for having value when decisions are being made.
On the other hand, the performance measures must have the following characteristics also
such as: Being feasible, significant, useful and influencing.
The major performance measure types
Input measures- It is the measure of the resources that is used by the process or activity.
Examples- The hours used by employees and dollars spent.
Output measures- the number of units of a service or product generated. Examples- The
eligibility interviews that are being conducted.
Process measures- It mainly tends to describe the business aspects such as processing time,
error rate and etcetera. Example- days for issuing a permit.

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Outcome measures- It mainly measures of the main benefits connected with the program or
the service. Example- enhancement of the air quality in some of the areas.
How to narrow down the potential performance measures?
It is quite important for narrowing the list of the performance measures an individual uses to
an important few that really mean something to the audiences that are intended. If the list is
narrowed then it requires some amount of knowledge and judgment about the consumers and
systems of a company. Failure for measuring all the factors that tends to create some value,
measuring innovation in a poor manner, dominant other backward looking indicators or
financial indicator, and immediate or concentration rather than the goals that are for long-
term.

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