Determining What To Measure...
Identify the Functions that Need to be Measured and Identify the Indicators that Best Reflect Performance.
In the measurement development process, it is crucial to be mindful of the ultimate purposes for which measures are employed: information management for the company; policy information for/from top management, and oversight companies or agencies (if applicable); and significant outcome information for/from customers. Measures should focus on company objectives, strategies, and key processes. Each measure should be central to the success of the process that is measured.
The following questions can help companies focus on the ultimate use for measures:
What are the most direct effects of each strategy on your company’s Internal and External Customers?
What information does management need to track movement toward key goals and objectives?
What performance measures best reflect the expenditures of the company’s budget?
Do these performance measures clearly relate to the company’s mission, objectives, strategies and goals?
It is important to remember that performance measures are not designed to report every activity of the company. Only key objectives, processes, and activities should be measured and reported. Other measures may be developed and used internally by company management. Certain measures are designed to indicate how well the process or service is meeting expected results (outcome). For example, a program with the primary goal of reducing customer returns might focus an outcome measure on only those returns due to function defects, or if looking at product improvement, gather customer feedback as to what was expected and what was received, etc. The measure might include regional preferences, if the key features desired vary by region, etc. Other measures are designed for monitoring efficient use of resources (efficiency), and for monitoring budget drivers such as product cost & Return on Investsment (output).