Humans are competitive beings. Case in point: the Ironman Triathlon. The Ironman consists of three events in this order: a 2.4-mile (3.86 km) swim, a 112-mile (180.25 km) bicycle ride, and a 26.2-mile (42.2 km) run. For some, the competition is with themselves—besting their last performance, or perhaps just finishing within the allotted time. For others, it’s about being first. Their performance measure is that they complete the course in one minute or one second or one-tenth of a second faster than a rival. Measuring what you do is how you tell if you are the best at what you do.
It’s the same for businesses.
An effective performance measurement system is a communication tool that consistently guides employees toward the actions that help an organization meet its goals. It begins with setting the goals and also includes creation and application of policies and procedures, performance measures and standards, as well as data collection and interpretation. These elements must then be both integrated and aligned for the system to guide the organization toward the desired outcomes.
Performance measures are a key element of the performance measurement system, and there are several ways that they can be categorized. Selecting measures that are appropriate for the situation, individuals, or organizations being measured and the desired outcomes is an important part of the effective system.
How do you improve your cycling time in an Ironman? You could change equipment. If you do it’s likely you’ll change your performance targets. You’ll set new time and distance goals and improve your cardiovascular training. The course Performance Measurement Basics explores how to identify performance measures and standards for a business and the components of effective performance measurement systems to identify means to increase the likelihood that the measurement system will lead the organization to the desired outcomes.