Performance Measurement

Performance measurement is a management discipline that focuses on quantifying the resources consumed and results achieved from a business process or operation. The objective is to create the highest possible value for the lowest possible cost and risk.

Often, this leads to the exact opposite outcome:

  • Performance measurement becomes an end in itself consuming inordinate amount of resources and taking away focus from results
  • Incorrect measurement leads to wrong decisions
  • Accurate measurement leads to wrong decisions

Performance measurement's promise is not realized because managers often:

  • Pick the wrong measures or metrics
  • Focus on the short term
  • Rely on financial measures
  • Measure what is not measurable or does not lend itself to traditional metrics
  • Prefer quantitative over qualitative measures

See Also