Core Performance Measures
Core performance measures are a unique subset of ongoing indicators within the organization’s performance measurement system. Differing from key performance indicators or KPIs that monitor the few critical drivers of organizational performance, core performance measures provide an ongoing comparative basis between products, services, business units, and individuals. These measures act as an embedded grid, aligning and focusing the organization’s actions to the accomplishment of its mission. This group of measures also aids decision-making, especially when evaluating competing alternatives.
Core performance measures form an aligning grid throughout the organization because they are shared by like entities both vertically and horizontally within the organization’s structure. Vertical cascading focuses the measures and the performance they drive on achieving the organization’s mission while horizontal sharing aligns performance and promotes best practice sharing.
Core performance measures enhance an organization’s ongoing evaluation and decision-making processes by providing comparative information regarding products, services, business units, and individuals. Shared measures are of a common design; enabling broad application and uniform interpretation. These indicators are often enhanced by thresholds that trigger action when performance reaches a predefined value. A core performance measure, one for each of several like entities, is frequently plotted on a single graph and routinely updated to provide comparative trending information in support of the organization’s decision-making processes.
Additional Information
Additional information regarding core performance measures can be found in the StrategyDriven whitepaper series Organizational Performance Measures.
About the Author
Nathan Ives is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.
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For any strategic analysis to be effective, it must be done with an open, honest assessment of the facts. Organizations acting with integrity without excuses seek to identify and eliminate instances where fact-based assessment conclusions are diluted by unrelated factors or opinion-based influences. This mitigation often seeks to justify action perceived as desirable when the fact-based evidence would suggest another course. Justification is frequently based on business factors that are not specifically value related or biases lacking a relevant performance basis.[wcm_restrict plans=”25541, 25542, 25653″]
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The benefits of vertically cascaded and horizontally shared performance measures are maximized when the related measures share a common set of characteristics. Common construction of vertically cascaded measures enables easy roll-up of lower tiered measures to create higher tiered benchmarks. Horizontally shared measures having similar construction characteristics are more readily comparable, thus enhancing the evaluation and decision-making processes.
Well-constructed performance measurement systems provide a means of comparison between various products, services, and business units by ensuring relevant measures are horizontally shared across the organization.
Performance measurement systems should be anchored on the single measure of organizational success (defined by the organization’s mission) and vertically cascaded down through the organization Each successive measurement tier becomes more specific than its predecessor with the lowest tier describing individual contributor behaviors and resulting outcomes.