Performance Measurement, Analysis & ReportingIf you can’t measure it, you can’t manage it. (Current management wisdom) Measure the meaningless and misinterpret what is measured. (Current management practice)
Measurement is important. Managers know this, yet we often do a poor job of measuring performance. The wrong things are measured, data is misinterpreted or misrepresented.
Performance measurement and analysis has two legitimate purposes:
- Improve understanding as to how well, systems and/or processes are performing.
- Provide the evidence required for people to take action that improves performance.
Everything else is window dressing.
Converge builds performance measurement, analysis and reporting systems designed to yield evidence and understanding while supporting action that improves performance. A good performance measurement system must do more than just look good (although looking good is important too). It must accurately and reliably convey performance information so that people can take effective action. That’s what Converge builds. Performance measurement that looks good in the executive suite and drives improvement across the business.
This requires more than simply defining what to measure or producing colorful graphics. It requires knowledge of data gathering and analytic techniques as well as the proper methods of interpretation and presentation of results.
Good Performance Measurement Systems
Performance measurement systems that look good and drive improvement have all of the following characteristics.
- Measure system and process performance. System and process information is information that can be used as a basis of action to improve performance. Everything else is waste. The value of information is in the actions it promotes.
- Balance demand, outcome, output and in-process measures. Exclusive focus on results or outcomes is an exercise in management through wish fulfillment. To be useful, information must show causality, mechanisms, provide explanation and reveal systemic structure.
- Focus on the critical few as opposed to the trivial many. There are far too many causes affecting performance for us to measure all of them. We need to focus on what is important, the critical few causes we can manage or manage around.
- Are explicitly linked to the purposes and objectives of the organization. Performance measurement needs to link back to the aims, purpose and objectives of the business. Everything else is nice to know information that will be safely ignored.
- Analyze and present data in context. Performance measurement always has two dimensions: proximity to target and variation. Without both, you don’t have performance measurement or analysis. Proper data analysis and presentation tools such as the control chart (pictured right) must be used. The presence of a control charts (or the related run chart) is so important, that their absence is a good indicator of poor or corrupt performance measurement system.
- Appreciates the difference between enumerative and analytic aims. Enumerative data describes conditions. Analytic data explains or predicts performance. Performance measurement and analysis demands analytic methods but most measurement and reporting systems use enumerative methods. The mismatch is fatal to sound, evidenced-based, decision making.
- Guard the integrity of the data against corruption in presentation. Sources of evidence corruption in presentations are: effects without causes, cherry-picking, overreaching, chart junk, junk charts, the rage to conclude and other forms of economisting (see Beautiful Evidence by Edward Tufte).
Converge Workshops in Performance Measurement
Performance Measurement and Analysis in Industry. Two/three-day course on using analytic methods to properly measure and analyze performance. The emphasis is on applications in manufacturing, mining and process industries.
Performance Measurement and Analysis in Services. Two/three-day course on using analytic methods to properly measure and analyze performance. The emphasis is on applications in service industries such as banking, retailing and warehousing.
Performance Measurement and Analysis in the Public Sector. Two/three-day course on using analytic methods to properly measure and analyze performance. The emphasis is on applications in the public sector including emergency services, utilities, maintenance functions, over-the-counter services, back-office functions and program evaluation.
Performance Measurement and Analysis in Healthcare. Two/three-day course on using analytic methods to properly measure and analyze performance. The emphasis is on applications in healthcare from system-wide performance measurement and evaluation to on-site graphical displays to provide real-time information to those in the front lines.