Performance Excellence Process
Baldrige Workshops
Global Insights Archive
Performance Measurement and Analysis:
New Thinking for Better Results
by Craig A. Anderson
June 2005

New: Click here to see slides from a recent presentation on Key
Performance Indicators at the Indonesian Supreme Audit Board

mundane activity that does not add value to the real work of the organization. We
mundane activity that does not add value to the real work of the organization. We
would like to ask for a couple of minutes of your time to start changing that
perception. Why? Because performance matters. Outcomes matter. Results
matter. As leaders and managers we have an obligation to help our organizations
perform at their highest possible level. Without a systematic and intelligent
approach to measurement and analysis, this level of performance cannot be
achieved.
achieved.


What is wrong with performance measurement (and by direct extension,
performance management) as practiced by too many organizations today? Well,
where do we begin? First, measures are often results oriented. Sounds good, but
results by definition reflect what you did in the past; they do not tell you how to
achieve results tomorrow. The late Dr. Deming used to refer to this as “driving
forward by using the rear view mirror”.

Targets are popular. In the US Federal Government, for example, the executive
and legislative branches appear at times to be in a race as to who can create the
most esoteric “performance management” measurement systems. The result?
Outputs that do not matter (but are measurable) are measured by indicators that
do not inform to satisfy external requirements that do not make sense.

Measures are random. As we know from our work with Baldrige Performance
Excellence, there are no short cuts to high performance; only hard work,
systematically applied, can raise the performance bar. The problem with many
measurement approaches is that they tend to be random activities, measuring bits
of performance data here and there, but not capturing the essence of the
systematic approach.

Measures lack context. There is no need to state again how profoundly the world is
changing. Our company uses an excellent free internet telephone service, Skype,
(
http://www.skype.com) to conduct meetings between our project locations around
the world. Literally for free. MIT has over 1,100 of its courses on the internet for
free, for use by anyone, anywhere in the world (
http://ocw.mit.edu). Indonesia,
where we have been working recently, has quietly established in the last ten years
a thriving democracy of 240 million citizens (85% Muslim) with a rapidly growing
economy and a vision to compete and win in the economic competition of the 21st
century.

The point is, measures need a context, a comparative base, to be truly meaningful.
Trend data helps; you can at least compare your current state to your past; but true
context means comparing yourself to best of breed performers, outside your
industry, even outside your country. And there will be competitors outside of your
country; that is guaranteed.

So, where do we go from here? The short answer is grab the Baldrige Criteria for
Performance Excellence (
http://www.baldrige.nist.gov/Business_Criteria.htm) and
study Category 4, Measurement, Analysis, and Knowledge Management
(especially the Category and Item Descriptions on pp. 38-40).

As you will see in the Criteria (field tested by real managers in real organizations
for twenty years), there are several keys to effective performance measurement
and analysis:

1. Define your strategic goals and objectives first (include your customers and
stakeholders in this process).

2. Have employees who really know your organization break down the goals and
objectives into a set of action strategies for each Baldrige Category.

3. Keep your senior leadership involved at every step of the way.

4. Stick to the Categories; trust the Baldrige system to work  for you as it has for
so many other excellent organizations.

5. Task your Category Teams to develop a first set of performance measures for
each Category.

6. Task your Category 4 Team to roll up the Category measures into one set of
organizational measures.

7. Work with senior leadership to embed the measurement system into the normal
management systems of the organization.

8. Stay focused on the purpose of what you are doing: improvement and
innovation.

We hope these ideas help you assess your own approach to performance
measurement and analysis. Keep balanced, personally and organizationally, and
maintain a holistic and optimistic view of your organization and its potential.