Evaluation and Control Program Best Practice 2 – Measure Against Excellence

In this hyper-competitive business world there are no points for second place. Companies not achieving excellence in key performance areas as defined by their chosen market often find themselves driven to irrelevancy by competitors and in danger of going out of business. Subsequently, organization leaders must know how their company performs against standards of excellence in the key areas to be able to make the investment decisions necessary to remain competitive.[wcm_restrict plans=”41266, 25542, 25653″]

Measuring performance against standards of excellence provides a clearly defined, uniformly applied reference point and does not mean the company should seek to achieve excellence in all areas. Achieving performance excellence in the several critical competitive areas as defined by the organization’s industry and market positioning is necessary. For all other performance areas, a measurement against excellence provides executives and managers with a reference to what is achievable; enabling them to more fully understand the possibilities for improvement and more likely to assess the merit of these opportunities as a way to advance the business.

Defining Performance Excellence

Identifying quantitative measures of performance excellence can be a difficult process. The following principles and sources are recommended to ensure appropriate performance references are defined.

Principles

• Identify the key areas for which performance references will be sought based on the company’s industry and market strategy
• Seek performance references from companies within multiple industries; identifying the organization’s industry performance reference separately
• Use multiple companies to determine the excellent performance standard; leveraging the performance citations of reputable evaluators to focus the assessment process
• Avoid using averages; instead identifying truly excellent performance
• Refresh each performance reference periodically; based on the area’s criticality to the business’s success

Sources

• Trade associations and industry organizations (including their publications), such as the Nuclear Energy Institute and the Electric Power Research Institute
• Functional area membership organizations and professional organizations (including their publications), such as the Project Management Institute and Society for Human Resource Management
• Publically available data, such as company statements and government reports
• Management consultants
• Onsite benchmarking of other companies

Presenting the Performance Excellence Reference

Organizational performance in key areas should be broadly and routinely communicated. These communications will take several forms including performance metrics and reports, as well as self-assessment and benchmarking reports. And while the leadership’s established performance criteria should always be prominently displayed, reference to the standard of excellence should also be included.

Presenting organizational performance against the single marketplace standard of excellence provides only a partial picture of performance. As performance data is collected from multiple benchmark organizations, an attempt should be made to show performance in a quartile framework. The performance of the company’s various business units and direct competitors can also be plotted in this quartile framework to present a complete overview of the competitive landscape.[/wcm_restrict][wcm_nonmember plans=”41266, 25542, 25653″]

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