Methodology:PerformanceMeasurementOverviewPerformanceMeasurementisaprocessthathelpscompaniesgobeyondfinancialdatatounderstandwhatisreallygoingonwithintheorganization.Itengineersgenuineandlastingchange-thekindpeoplehavetriedtoachievethroughtraditionalcostmanagement,totalqualitymanagement,andreengineeringprograms.ArthurAndersendevelopedaPerformanceMeasurementprocessthathelpscompaniesmeasureandbalancequality,timeandcost--theprimaryelementscompaniesmustmanagetoengineerchange,staycompetitive,andimplementalong-termstrategyforcontinuousimprovement.Thisprocessinvolvesobtainingregularfeedbackfromtheorganization’sstakeholders,settinggoalslinkedtostakeholderwants,settingperformancemeasureslinkedtothosegoals,providinginformationtoappropriatepeople,takingcorrectiveactionwhenperformanceisofftarget,andresettinggoalsinresponsetocontinuouslychangingstakeholderexpectations.Theperformancemeasurementprocess,accordingtoArthurAndersen,shouldbeimplementedwithallmajorcompanyinitiatives,includingreengineering.Whenreengineeringorganizations,seniorexecutivesshouldreviewtheirexistingperformancemeasurementsystemforcurrentrelevance.Asaresult,executivesshouldfocusonthecompany’scriticalprocessesandkeyactivities,determinewhatcanbesimplified,eliminatedorreengineered,anddevelopperformancemeasuresforthesereengineeredprocesses.Ultimately,havingagoodperformancemeasurementsystemhelpsexecutivesdevelopthecontexttodetermineiftheircostmanagement,totalqualitymanagement,andreengineeringeffortsaresuccessful,andprovidesthemtheinformationtheyneedtocontinuouslymonitoroperationsandengineerchange.ThePerformanceMeasurementprocessexaminesanentirecompanyfromthreelevels--organization,processesandpeople--toidentifytheappropriateperformancemeasuresandtargetsthatindicatehowwellthecompany’sgoalsarebeingmet.Inaddition,PerformanceMeasurementevaluateshowwellacompany’sstrategyisdeployedanddeterminesifprocessescanbeimprovedtoachievethecompany’sgoals.Thebenefitsthatacompanycanobtainthroughaneffectiveperformancemeasurementsystemare:-Fullydeployedstrategy.-Increasedcustomercommitmentandloyalty.-Improved/reengineeredprocesses.-Increasedemployeecommitmentandloyalty.-Reducedcosts.TheintentofPerformanceMeasurementis"QuantumPerformance,"theoptimallevelofachievementacompanycanreach,intermsoftheorganization’svalueandservicetoitsstakeholders(i.e.,thosepeoplewhohaveavestedinterestinthecompanysuchasemployees,shareholdersandcustomers)-Employeesarecriticalindevelopingandimplementingaperformancemeasurementsystem;commitmentfromallemployeesisnecessaryforsuccessfulandlastingchange.Toooften,employeesdon’tunderstandhowtheirworksupportsthecompany’sstrategy,nordotheyhaveasayinhowtheyaremeasured.Agoodperformancemeasurementsysteminvolvesemployeesfromalllevelsinidentifyingthecompany’sgoalsandbuildinginresponsibilityandaccountabilityinallareas.Themoreinvolvedpeopleareindeterminingwhatmeasureswillbeusedtojudgetheirperformance,themoretheywillbecommittedtobeingjudgedbythosemeasures.ThefoundationofArthurAndersen’sPerformanceMeasurementpracticeisbasedontheconcepts,toolsandtechniquesdiscussedinthebook,VitalSigns.Theobjectivesofaperformancemeasurementengagementareto:-Articulatethestrategythroughalignedorganizationalstructures,processes,andsystems.-Developandintegrateorganizationalandprocessperformancemeasuresthroughoutthecompany.-Optimizeperformancebyalign...
