The Terminology of Organizational Performance Measurement
[Excerpted from Managing with Measures: How to Use Performance Measurement to Manage for Results and Document Success by Robert I. Wise, forthcoming]
© 2009, SystemWise Consulting, LLC
To perform is to carry through to completion. A performance period has three phases:
- It begins with intention—the desire to achieve a result
- It engages in action—the means to achieve the desired result
- It concludes with an outcome—which may or may not be the desired result
This definition applies to both individual and organizational performance.
An organization’s performance involves identifying outcomes that it wants to achieve, creating plans to achieve those outcomes, carrying out those plans, and determining whether the outcomes were achieved. Success is achieving the planned outcomes.
Organizational Performance Measure
A performance measure is a defined method for observing an attribute of organizational performance. The defined method specifies what, when, and how data will be collected about a specific attribute of performance selected for the purpose of evaluating performance. Interpreting performance data involves comparing the observed performance at one point in time with a performance criterion such as a performance goal, a performance target, a performance standard, or a prior performance period.
Organizational Performance Metric, Organizational Performance Indicator
These terms are synonyms for “organizational performance measure.”
A performance attribute is a single aspect, characteristic, or dimension of performance that has been selected to indicate performance for the purpose of evaluating performance. A single performance measure is used to observe and monitor a single performance attribute. Some commonly used categories of performance attributes include effectiveness, efficiency, productivity, timeliness, quality, and financial.
A performance criterion is a specific level of performance that is used to evaluate how well the organization is performing on a specific performance attribute.
A performance expectation is a manager’s stated performance criterion that specifies a desired level of performance to be achieved by the organization. A manager’s expectation can be in the form of a goal to improve performance, a performance target to be achieved, or a performance standard to be maintained. A performance expectation is a criterion for evaluating performance.
A baseline is the level of performance measured at the beginning of a period of performance or in a prior period. A baseline is used to evaluate subsequent performance to determine whether organizational performance changed over time.
A performance target is a performance criterion stated in quantitative terms. To set a realistic performance target, three things are necessary:
- a defined performance measure,
- a performance baseline,
- an assessment of the capability of the organization to achieve the performance target.
A performance standard is a defined level of performance that represents performance excellence. Performance standards are often developed and promoted by membership groups in industries and professions as a means of encouraging a high level of performance throughout the industry or profession. However, a single organization can establish its own performance standards as a means of ensuring consistently high performance.
A performance benchmark is a measured level of performance in one organization–sometimes an organization that is “best in class”—that is used by another organization for the purpose of comparison. Benchmarking is a way for two organizations to analyze and improve performance by sharing data on comparable organizational performance with each other