The ability of any private or public sector organization to function effectively or even to survive without knowledge of financial performance, programs/services, client concerns, employee issues or new innovations is highly doubtful. Yet, many organizations function without effective information to reward accomplishment or to identify issues that threaten their ability to perform.
There are few holistic approaches to measuring the performance of programs and services in either of these sectors. The Balanced Scorecard1 provides an excellent conceptual overview and framework for performance measurement, but does not provide a methodology for developing, implementing and maintaining a performance measurement system (PM system). There is no performance measurement methodology that ensures a step-by-step approach, while building understanding, commitment and transferring the necessary skills to staff who must maintain it.
The leadership-driven methodology (LDM) outlines the prerequisites, approach, principles, stages, and integration strategies necessary to develop, implement and maintain a fully functioning PM system.
Performance measurement defined
Under the LDM, performance measurement is defined from four points of view:
1 Robert S. Kaplan and David P. Norton. The Balanced Scorecard, (Boston: Harvard Business Review School Press, 1996).
- A philosophy of continuous learning in which feedback is used to identify achievements and to make on-going adjustments to agreed-upon strategies/initiatives to ensure continued excellence of services (in response to on-going changes arising from internal and external environment).
- A process that begins with the development of a business plan and that includes the mission, objectives and strategies/initiatives. It is followed by the development of performance measures. This is a phased process in which one step should be completed before moving onto the next. The step-by-step approach is necessary to reduce resistance to what may be perceived as a highly threatening project and to build support for performance measurement across the organization.
- A structure in which business and operational plans are linked through a feedback process. The PM system provides the feedback necessary to improve decision making in order for the organization to progress towards the attainment of its vision, mission and objectives. This is a continuous and on-going process.
- A management system that provides a balanced/systematic attempt to assess the effectiveness of an organization's operations from multiple points of view: financial; business performance; the client and the employee. It is used to provide the feedback at all levels - strategic, tactical or operational - on how well strategies and initiatives are being carried out. This performance information provides the essential feedback to improve decision making within the organization by enabling proactive problem solving and by institutionalizing continuous improvement