Performance measurement

‘You cannot manage what you cannot measure’.

• All process of measuring performance requires the use of statistical modeling to determine results.

• A full scope copy of the performance of an organization can never be obtained

• some of the parameters cannot be measured directly • They must be estimated via indirect observation and as a complete set of

records never delivers an assessment without compression to key figures.

• Several performance measurement systems are in use today:• the Balanced Scorecard (Kaplan and Norton, 1993, 1996, 2001), • Performance Prism (Neely, 2002)• the Cambridge Performance Measurement Process (Neely, 1996) • These are designed for business-wide implementation;• and the approaches of the TPM Process (Jones and Schilling, 2000), 7-

step TPM Process (Zigon, 1999), and Total Measurement Development Method (TMDM) (Tarkenton Productivity Group, 2000) are specific for team-based structures.

• Although the Balanced Scorecard has become very popular, there is no single version of the model that has been universally accepted.

• The diversity and unique requirements of different enterprises suggest that no one-size-fits-all approach will ever do the job.

• The PMA presented evidence that 39% of FTSE 100 companies were actively using the scorecard

• between 40% and 60% of Fortune 1000 companies have attempted to implement the Balanced Scorecard.

• The challenge for organizations today is:• how to match and align performance measures

with business strategy, structures and corporate culture

• the type and number of measures to use • the balance between the merits and costs of

introducing these measures, • and how to deploy the measures so that the

results are used and acted upon.

Who uses Performance Measurement?

• Performance measurement is one of the

cornerstones of business excellence.• Business excellence models encourage the use of

performance measures, • but in addition and more importantly, they consider

the design of performance measurement systems to ensure that measures are aligned to strategy, and that the system is working effectively in monitoring, communicating, and driving performance.

• Examples of new frameworks are:• Kaplan and Norton’s Balanced Scorecard• Skandia’s navigator model • the Performance Prism.

• There are a number of challenges that are faced when designing an effective Performance Measurement System, these include the following:

• How to measure non-financial performance• What measures to choose and why • How to use them - what to do with the results• Who should be responsible for using the results • How and to whom, to communicate the results• The resources needed to consider the above and

design and deploy the measurement system

Federal enterprise architecture

• the Office of Management and Budget (OMB) is developing the Federal Enterprise Architecture (FEA)

• a business-based framework for government-wide improvement

• A BUSINESS-DRIVEN APPROACH: the FEA is entirely business-driven.

• Its foundation is the Business Reference Model, which describes the government’s Lines of Business and its services.

• This business-based foundation provides a common framework for improvement in a variety of key areas such as:

• Budget Allocation• Information Sharing• Performance Measurement• Budget / Performance Integration• Cross-Agency Collaboration• E-Government• Component-Based Architectures

PERFORMANCE REFERENCE MODEL (PRM)

• The PRM is a “reference model” or standardized framework to measure the performance of major IT investments and their contribution to program performance. The PRM has three main purposes:

• Help produce enhanced performance information to improve strategic and daily decision-making;

• Improve the alignment — and better articulate the contribution of — inputs to outputs and outcomes, thereby creating a clear “line of sight” to desired results; and

• Identify performance improvement opportunities that span traditional organizational structures and boundaries

• The PRM attempts to leverage the best of existing approaches to performance measurement in the public and private sectors, including:

• the Balanced Scorecard• Baldrige Criteria• Value Measurement Methodology, • program logic models, • the value chain,• the theory of constraints.

• The PRM is currently comprised of four measurement areas:

• Mission and Business Results The Mission and Business Results Measurement

Area of the PRM is intended to capture the outcomes that agencies seek to achieve.

• Customer Results The Customer Results Measurement Area of the

PRM is intended to capture how well an agency or specific process within an agency is serving its customers. This is a critical aspect of successful E-Government.

• Processes and Activities

The Processes and Activities Measurement Area is intended to capture the outputs that are the direct result of the process that an IT initiative supports

• Technology The Technology Measurement Area is

designed to capture key elements of performance that directly relate to the IT initiative. An IT initiative generally can include applications, infrastructure, or services provided in support of a process or program.

Government of western Australia

• The Department of local government has developed a Performance Measurement Framework.

• The Framework allows achievements to be measured against the three key areas of capability building:

• Local Community and Stakeholder Responsiveness;• Human Capital,• Financial Stewardship, including asset management.

• This Performance Measurement Framework serves four objectives. It enables:

• The funders of the Reform Program to gain an understanding of the achievements against the initiatives.

• Major stakeholders to consistently assess and manage the overall needs and progress of organizations within the local government sector.

• Local governments to monitor and manage progress in delivering community services and meeting community needs, as well as the business requirements to deliver such services.

• All three groups of stakeholders to use the same consistent approach to performance management and measurement across the whole sector of local government.

• The key next steps are: • Socialize the Framework and the measures with the

working groups to ensure alignment and acceptance of the Framework and to explore implementation issues.

• Build an implementation plan to implement that contains the following elements:

• Milestones and measures for the implementation plan• Communication plan that manages messages to all

stakeholders :Local governments Major state and federal government stakeholders

• Education plan and job aids

• Create a detailed support approach for organizations that need to move to the next level.

Reference list

• White house E-library• Bpir.com• IBM.com