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STDK Home > Workbooks > Performance > Choosing Performance Measures

Choosing performance measures

Issues covered during this stage

Types of performance measure
Choosing measures

This section deals with selecting the right measures with which to assess the organisation’s performance.

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Principles

Guidance

People involved
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Types of performance measure

There are three main types of measure:

  • economy measures express the relationship between resources and inputs (the costs of inputs)

  • efficiency measures express the relationship between inputs and outputs (how well the process performs with the given inputs)

  • effectiveness measures express the relationship between outputs and outcomes (how the process contributes to business, strategic, organisational or policy goals).

  • A balanced performance framework may have to include measures of all three types.

  • Focusing on one type of measure may lead to bias or gaps in coverage, for example focusing purely on economy neglects the wider concept of value for money.

  • Effectiveness measures are often necessarily subjective. This is not a reason to exclude them; avoid a focus on outputs simply because they are easier to quantify.

Choosing measures

The performance measures you choose, at whatever level, should be:

  • focused

  • reliable

  • worthwhile

  • balanced

  • avoiding perverse incentives

  • ready for change.

  • Focused: exclude measures that are interesting but not directly relevant. Make sure everyone involved agrees that the measurements are going to be useful

  • Reliable: the information you gather must be accurate, as you will base your management decisions upon it.

  • Worthwhile: remember that measurements and analysis have resource implications - the benefit of each measure must be in proportion to the effort required to take it. Existing information sources should be considered before new ones are created.

  • Balanced: choose measures for all important areas, and at all levels - costs, output volumes, efficiency, quality, progress towards strategic aims - even if the measures have to be subjective.

  • Avoiding perverse incentives: that is, those that encourage behaviour that exists to meet a target rather than to improve. For example, measuring the quantity of letters answered but not the usefulness of the responses may not produce a better service.

  • ready for change: measures that are relevant both before and after a radical change are useful in judging its success; those that focus on temporary aspects, or those that may change, are less useful.


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