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Broad Communication

StrategyDriven Organizational Performance Measures ArticleA performance metrics system is, in part, a communications mechanism conveying the organization’s performance against stated goals and in doing so reinforces leadership’s commitment to stated behaviors and results. To effectively achieve these objectives, performance measurement system communications must reach their intended audience. Too often, the organization’s metrics remain largely unobserved; residing on desktop computer dashboards or in binders tucked away in filing cabinets. Broad, direct, routine communication of performance measurement system’s output to those affecting the results is therefore necessary to achieve the reinforcement desired.[wcm_restrict plans=”41640, 25542, 25653″]

Broadly communicating organizational performance measure outcomes to the workforce at large can occur in many ways. The following list presents several mechanisms proven successful at numerous organizations in routinely conveying and reinforcing the organizational performance measures message:

  • Prominent Postings – Prominently posting of department or workgroup measures in common areas such as at main entryways, outside manager and supervisor offices, and in break rooms, such that affected individuals can’t help but see the performance measures during ingress and egress
  • Department Meetings, Pre/Post Shift Briefings – Reviewing one or more relevant measures including actions that can be taken to improve performance during routine staff meetings
  • Management Review Meetings (MRM), Management Roundtables – Senior manager meetings focused on reviewing performance measurement system output (see StrategyDriven article, Organizational Performance Measures Best Practice – Map Performance Measure Ownership); holding accountable those individual managers whose decisions and actions affect metric output. These interactions included best practice sharing and corrective action discussions targeting improvement of measured performance
  • Board of Directors and Senior Leadership Team Briefings – Corporate, division/business unit level performance reviews aimed at maintaining accountability among executives, directors, and senior managers
  • All Hands Meetings – Senior executive communication of the organization’s goals, achievements, and opportunities to improve strongly reinforces leadership’s resolve to the achievement of the company’s goals in a manner consistent with its values
  • Individual Performance Review Meetings – One-on-one discussions between individual’s affecting performance measure outcomes and his/her immediate supervisor focusing both successful performance and opportunities for improvement (see StrategyDriven article Talent Management – The Difference Between Personal Goals and Organizational Performance Measures)

Note that posting updates and most review meetings (department meetings, pre/post shift briefings, management review meetings, management roundtables, and senior leadership team briefings) typically occur at a frequency consistent with the update frequency of the performance measures themselves and take place at some brief interval after the updates occur so to ensure timeliness of behavioral reinforcement and follow-up actions.

Final Thought…

No one individual should have his/her performance metrics shared publicly. Such results should be confined to confidential conversation between the individual and his/her supervisor. When instances occur where an individual’s performance may be singly represented within a performance metric, that metric should be eliminated from public display or combined with the next higher group’s performance to create a broader based average performance set.[/wcm_restrict][wcm_nonmember plans=”41640, 25542, 25653″]


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About the Author

Nathan Ives, StrategyDriven Principal 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.

Diverse Measurement Mechanisms

Diverse Measurement MechanismsOrganizational performance measure output informs management decisions and drives workforce behaviors. As errant data may result in misdirected effort and highly adverse outcomes, it is extremely important that performance measure output be as accurate as possible.[wcm_restrict plans=”41624, 25542, 25653″]

Performance measurement errors evolve from a number of deliberate (see StrategyDriven article, Organizational Performance Measures Warning Flag – Data Source Manipulation) and unintended causes. One unintended cause of performance measure error is corrupted source data collection resulting from:

  • Installed instrument or measurement tool calibration errors
  • Individual misperception of the conditions being measured
  • Individual misinterpretation of the data collection standards or procedures
  • Variations in the understanding and interpretation of data collection standards or procedures between individuals measuring the same performance condition for different workgroups
  • Differences in the underlying assumptions used by external groups providing source data for internal performance measures

Using diverse measurement mechanisms helps eliminate unintended source data collection errors. Philosophically, this approached minimizes variation in the underlying performance measure source data by providing mechanical and personnel checks and balances. Application of multiple measurement mechanisms varies by the method of source data collection and may include:

Instrument or Tool Based Data Collection

  • Pre-data collection calibration checks
  • Instrument/tool rotation
  • Use of multiple, redundant instrumentation/tools

Personnel Based Data Collection

  • Individual rotations
  • Employment of self checking practices (see StrategyDriven articles Human Performance Management Best Practice – Self Checking, Demonstrative Self Checking, and Verbalized Self Checking)
  • Use of peer checkers (see StrategyDriven articles Human Performance Management – Peer Checking and Qualify, Verify, and Validate)
  • Use of diverse data sources (see StrategyDriven article, Organizational Performance Measures Best Practice – Diverse Indicators)
  • Validation assessment of performance measurement outputs against management experience
  • Management peer group evaluation of performance measurement accuracy on a periodic basis

Final Thought…

Use of diverse measurement mechanisms is not to suggest the implementation of a shadow performance measurement system. Rather, leaders should evaluate their organizational performance measures to determine the criticality of each and employ one or more of the diverse measurement mechanisms commensurate with each measure’s importance. Those measures potentially driving costly adverse actions should be considered for periodic validation commensurate with its frequency of use.[/wcm_restrict][wcm_nonmember plans=”41624, 25542, 25653″]


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About the Author

Nathan Ives, StrategyDriven Principal 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.

Annual Alignment Review

Alignment of the key performance indicator systemJust as a well-developed organizational performance measurement system helps align an organization to the efficient achievement of its goals, a misaligned performance measurement system diverts focus and resources toward non-value-adding activities. Over time, existing projects finish and new initiatives begin; requiring performance measures within the system be changed. While these alterations are intended to support continued, effective business operation, they are often performed without a holistic view of the system and may have unintended adverse impacts. Therefore, it is prudent to conduct a holistic performance measurement system evaluation with frequency that is regular enough to minimize the damage misalignment can cause without being so frequent as to become overly burdensome.[wcm_restrict plans=”41608, 25542, 25653″]

Annual organizational performance measurement system assessments are well aligned with the typical business planning cycle, the conclusion of many projects, introduction of new initiatives, and reassessment of business operations. Thus, these assessments are most beneficial when conducted a few months after the business plan has been approved and new initiatives started because it is within this timeframe that the most significant changes to the system occur.

Performing and Organizational Performance Measurement System Evaluation

When performing the annual performance measurement system assessment, it is prudent to include the following activities at a minimum:

  • Review the system in holistic fashion, including all metrics, reports, and dashboards from the corporate to the workgroup level
  • Evaluate corporate level performance measures for their direct relationship to and complete representation of the organization’s mission goals
  • Assess sequentially lower performance measures for their alignment and correlation to superior, subordinate, and shared measures
  • Evaluate the assignment each performance measure; ensuring association with the executive, manager, supervisor, or employee who most significantly impacts or controls the measured performance outcomes
  • Verify that individuals identified in Step 4 have personal performance goals driving accountability for the attainment of measured performance outcomes
  • Assess the alignment of the units of measure between metrics, particularly those new or changed metrics and their vertically and horizontally related measures
  • Validate the relevance of individual performance measure goals and performance measures given changes resulting from added measures and altered performance targets

If further streamlining of the performance measurement system assessment is needed, reviewers can examine the system on a by exception basis; meaning they evaluate the system impacts of only those newly added or altered performance measures. This method assumes the collection of measures remaining unchanged since the previous assessment remains well aligned. If this method is employed, StrategyDriven recommends a holistic assessment of all measures be performed on a 3 – 5 year basis.

Final Thought…

During the performance of the annual performance measurement system assessment, the assessment team should seek to identify shadow performance measures maintained outside the formal system. These measures represent either an unnecessary burden because of their lack of mission goal related performance measurement or relevant monitoring of organizational performance that should be incorporated into the formal system. Shadow measures are frequently born of a one-off issue to ensure corrective actions are effective and are then unintentionally maintained over extended periods of time. Incorporating this type of review into an assessment can help save an organization from unnecessarily expending significant resources to maintain low-value-adding metrics.[/wcm_restrict][wcm_nonmember plans=”41608, 25542, 25653″]


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System Development

Organizational performance measures work together to illustrate a complex picture of performance; cascading up and down the organization and horizontally across it. Subsequently, it is important that the characteristics of performance measures within the system be well aligned to enable multi-indicator information development and data flow. (See Organizational Performance Measures Best Practice – Common Construction Characteristics and the StrategyDriven whitepaper Organizational Performance Measures – Construction.) Developing performance measures as a system rather than a collage of individually constructed indicators is the most effective way of achieving this alignment.

Organizational performance measures constructed in a standalone environment, given common units of measure and type, may appear to be part of a seamless and fully integrated system. However, when conceived individually, these measures often serve a singular purpose; typically to monitor one-dimensional performance of a given business process, system, or workgroup. Subsequently, the siloed development of performance indicators does not benefit from a multidimensional perspective that would otherwise infuse a system of collectively developed performance measures; measures that together reveal a complete and complex picture of performance. Instead, what evolves is a set of segmented measures that are fractured in their alignment because of the restrictions placed on the underlying drivers of their development. When used together, these individually developed measures tend to harbor information gaps and foster less than fully accurate conclusions to be drawn when compared with system developed performance measures. Therefore, to avoid these deficiencies, performance measures should be developed collectively as a system. Furthermore, the interrelated use of various measures to determine complex performance should be documented in order to facilitate the completeness of the system’s development and to provide a basis for assessment should a give performance measure be altered in the future.


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Predefined Action Thresholds

The value of organizational performance measures isn’t simply that they inform leaders and individual contributors of past and present state performance; rather, the power of performance measures comes from the actions they drive to improve future results. Therefore, organizational performance measures are most effective when they indicate when specific actions should take place. Predefined thresholds accomplish this objective.[wcm_restrict plans=”41571, 25542, 25653″]

Predefined action thresholds identify the circumstances when one or more specific actions should be taken to either mitigate and avoid adverse outcomes or seize upon an opportunity to realize beneficial outcomes. By predefining action points, organizations gain the following advantages:

  • consistent and predictable results derived from clearly defined and broadly communicated and routinely practiced actions and action implementation points
  • enhanced action and threshold point decision-making because of an unrushed process that incorporates the broadest possible knowledge and experience base and thorough solution evaluation
  • reduced costs as early deviation response thresholds enable small adjustments to achieve significant long-term impacts minimizing the need for delayed implementation of more costly actions in response to greater deviations in an attempt to achieve the same outcome
  • enablement of redundant risk and opportunity responses as early responses to action conditions allows for an increased number of ‘check and adjust’ opportunities if needed

Defining Action Thresholds

In principle, action thresholds should be defined such that there is enough time to both implement the response actions and realize their impact so to ensure adverse outcome avoidance or benefit realization. When establishing the threshold, one must consider both the performance value difference between the desired outcome and the threshold point and the maximum rate of change of the monitored parameter. Taken together, these establish the minimum amount of time allotted for the response actions to be implemented and their impact to be realized.

(Performance Value Difference between the Desired Outcome and the Threshold) / (Maximum Rate of Parameter Change) = Minimum Amount of Time to Implement Response Actions and Realize Their Impact

Note that if more time is needed to implement the response actions and realize their impact then the threshold must be lowered (making the difference between the performance value of the desired outcome and threshold greater) and/or the parameter monitored more frequently such that its expected rate of change is lower.[/wcm_restrict][wcm_nonmember plans=”41571, 25542, 25653″]


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Additional Information

Additional information regarding the organizational performance measure thresholds can be found in the StrategyDriven whitepaper series Organizational Performance Measures.