Performance management is the overarching process that deals with performance. It reflects the approach one entity has towards performance and it includes sub processes such as: strategy definition (planning / goal setting), strategy execution, training, and performance measurement.
Performance measurement is a subprocess of performance management that focuses on the identification, tracking and communication of performance results by the use of performance indicators. It deals with the evaluation of results, while performance management deals with taking action based on the results of the evaluation and ensuring the target results are achieved. Performance measures quantitatively tell us something important about our products, services and the processes that produce them. They are a tool to help us understand, manage and improve what our organizations do. So, performance measurement is a must and it is imperiously required to support the performance management system.
Benefits of measurement
Substantial benefits are realized by organizations implementing performance measurement systems. The performance measurement system is a process used for continuous learning in which feedback is used to identify achievements and to make ongoing adjustments to agreed-upon strategies or initiatives to ensure continued excellence of activities and services, and to progress for the attainment of organizations mission, vision and objectives. It also can provide a balanced and systematic attempt to asses the effectiveness of organizations operations from different points of view: financial; business performance; the clients and the employees.
The performance measurement provides the essential feedback to improve decision making in organizations at all levels: strategic, operational or individual level. As a process, performance measurement is not simply concerned with collecting data associated with a predefined performance goal or standard. Performance measurement is better thought of as an overall management system involving prevention and detection aimed at achieving conformance of the work product or service to the customer requirements. Additionally, it is also concerned with process optimization through increased efficiency and effectiveness of the process or product. These actions occur in a continuous cycle, allowing options for expansion and improvement of the work process or product as better techniques are discovered and implemented.
Why do we need to measure?
If you cannot measure an activity you cannot control. If you cannot control it, you cannot manage it; “when performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates”. Measurements therefore can be used for;