What are the measures of organizational performance?
“Do more with less.” Are you tired of hearing that adage? I believe this saying can be true; however, at times, I get frustrated by the expectation that more happens with less by someone just saying it. In reality, this type of efficiency requires focus and accurate measurement. How do we know that we are actually doing more with less? How do we know that our organizational performance is better than it was last year? There are five key steps to measuring organizational performance.
Steps to effectively measure organizational performance: 1. Be clear on the direction There are many ways to measure organizational performance and determining the appropriate tool to use for your organization or department comes from first understanding “why” your department or organization exists. An organization’s vision, mission, values, and strategic plan can be helpful in understanding the purpose of the organization. Ask yourself: What is the purpose of our organization or department? What are we really trying to accomplish? Drill it down to a few words. The key to organizational performance is to first be crystal clear on where you are trying to go.
2. Set SMART goals Once you know where you are going, it’s time to set some goals to strive to achieve in order to meet the purpose of the organization. At some point in your career, you probably learned about SMART goals, so this is a quick reminder. Goals should be set to assure they meet these five basic criteria: Specific Measurable Actionable Relevant Timely 3. Determine what is critical to measure. For each of these SMART goals, be clear you have a measure available to assess performance or create a meaningful measure for this purpose. Without these critical measures, you will have no idea if you are better off this year than you were last year or whether those “improvements” you made actually improved performance. Also, don’t make the big mistake to over-measure. Many organizations spend loads of time measuring everything possible. All the employee’s efforts and leadership’s time is spent trying to understand all the measurement instead of working on improving the baseline performance. Measure the critical determinants to get to the desired destination and nothing else.
4. Implement changes and measure outcomes. Once you know where you are going, have SMART goals to get you there, and clearly know how to measure this performance, it is time to determine what you need to do to achieve these goals. This is the fun part! What are the changes you can make (measuring as you go) to improve performance in the organization – to achieve that ultimate organizational purpose and direction? When the appropriate measurement components are in place, you can move quickly with finding changes that work because you can assess the performance each step of the way (via the measurement tools) and make rapid adjustments to the changes to improve performance.
5. Ensure everything that is measured ties back to the overarching organizational goals. Adjust measures as needed. Just because a measure worked for you last year, does not mean it is the right measure or goal this year. Measures should be looked at regularly and adjusted as appropriate. As the direction of the organization and the goals change, the measures should also. As the organizational performance improves, some measures may become obsolete and others become important. Continue to use a critical eye to ensure that the goals, and therefore measures, tie to the overall purpose of the organization. When they don’t, throw them out and start fresh. What not to do:
What are the three frequently used organizational performance measures?Graphic rating scales, management by objectives and forced ranking are three methods used to measure employee performance.
Are commonly used in measuring organizational performance?Financial measures of performance relate to organizational effectiveness and profits. Examples include financial ratios such as return on assets, return on equity, and return on investment. Other common financial measures include profits and stock price.
What are the 4 performance measures?It does so by defining and tracking performance measures across four perspectives: Financial, Customer, Internal Business Process, and Learning and Growth.
|
