DESIGNING THE PERFORMANCE MEASUREMENT SYSTEM

A firm’s performance measures should:

• Be simple and easy to use.

• Have a clear purpose.

• Provide fast feedback.

• Cover all the appropriate elements (internal, external, financial and nonfinancial).

• Relate to performance improvement, not just monitoring.

• Reinforce the firm’s strategy.

• Relate to both long-term and short-term objectives of the organization.

• Match the firm’s organization culture.

• Not conflict with one another.

• Be integrated both horizontally and vertically in the corporate structure.

• Be consistent with the firm’s existing recognition and reward system.

• Focus on what is important to customers.

• Focus on what the competition is doing.

• Lead to identification and elimination of waste.

• Help accelerate organizational learning.

• Help build a consensus for change when customer expectations shift or strategies and priorities call for the organization to behave differently.

• Evaluate groups not individuals for performance to schedule.

• Establish specific numeric standards for most goals.

• Be available for constant review.