What Is Performance Measurement?

Performance Measurement is a critical Strategic Management function. As Peter Drucker famously said, "If you can't measure it, you can't improve it."

More specifically, Performance Measurement is the process of setting goals and expectations for employees; and of providing feedback, support, and recognition to help them meet or exceed these expectations. Effective Performance Measurement can help organizations to improve the performance and productivity of their employees, and to create a positive and engaged workforce.

There are numerous established, effective Performance Measurement frameworks available on Flevy, such as the Balanced Scorecard (BSC), Objectives & Key Results (OKR), and the Baldrige Performance Excellence Framework. In general, there are several key principles that are essential for Performance Measurement:

• Clear goals and expectations: Performance Measurement starts with setting clear, measurable, and attainable goals and expectations for employees. By defining the specific outcomes and behaviors that are expected of employees, organizations can provide employees with a clear understanding of what they need to do to be successful.

• Regular feedback and communication: Performance Measurement also involves providing employees with regular and ongoing feedback and communication. This can include both positive feedback and recognition for good performance, as well as constructive feedback and guidance for areas where improvement is needed. By providing regular and ongoing feedback, organizations can help employees to understand how they are doing, and can support them in continuously improving their performance.

• Support and development: Effective Performance Measurement involves providing employees with the support and development they need to be successful. This can include providing employees with the tools, resources, and training they need to perform their jobs effectively. We can also include providing opportunities for employees to learn and grow through new experiences and challenges. By providing support and development, organizations can help employees to improve their skills and capabilities—and can support their long-term growth and success.

• Alignment with organizational goals: Individual employee goals and expectations must align with the overall goals and objectives of the organization. By aligning individual and organizational goals, organizations can ensure that the work of individual employees is contributing to the success of the organization as a whole. This can help organizations to achieve their goals more effectively and efficiently.