How We Serve You : White Papers
From the Boardroom to the Shop Floor and Back:
A Framework for Achieving Organizational Alignment
Performance Measures
The famous quote, “You cannot manage what you cannot measure,” is often used to emphasize the need to select and use the right measurements. Performance measures can be defined as the quantitative means for evaluating the products and services in a system. Organizations need to know their progress towards an outlined strategy. Performance measures, when clearly selected provide the means for articulating the vision in a form that everyone can understand.
The selection of measures by senior management begins by:
- A review of the vision, mission and values of the company
- The strategy that outlines how the vision will be achieved.
- Defining the current situation of the organization –its strengths and weaknesses
- The relationships with the customers
- Internal technical capabilities and constraints
Performance measures should relate both to the current situation and to the overall direction of the company. This will give mangers the ability to chart a course and monitor the company’s progress. The measures selected should also be broad enough to provide information on the overall health of the company. Data should be collected in a form that allows the evaluation of performance in small time increments. If this is not done, the measures will all be lagging indicators, which can only provide a historic perspective on organizational performance.
A useful tool for capturing organizational measures and evaluating the linkage to strategic objectives is the standard deployment matrix. Figure 1 shows how the matrix is structured. The column entitled “what” outlines the major strategic initiatives, and the section entitled “how” identifies the measures that will be used by the plant management. The section on “how much” outlines the method that will be used to measure the areas identified. Figure 2 is an example of how a facility used this tool to link some strategic objectives to the measures that were used by the plant. The use of this matrix is often valuable as it assists top management, in clarifying for themselves and the rest of the organization, the major drivers that will be used to ensure that strategic initiatives are achieved.
