Organization Performance measures systeM
Organization Performance Measurement System
The organization performance measurement system is a subsystem of the performance management system, and provides the basis for analysis, evaluation and control of the behavior and performance of the organization. The purpose of the organization performance measurement system is to establish measurement indicators and metrics for analyzing the conditions within the organization to assess how the company is performing with respect key target measures and progress towards long term goals and objectives. Organization performance measurement system models allow a company to judge how well they are doing, and is far superior to any single performance metric. It can help management to balance the short- and long-term creation of value and the board and leadership to determine whether management's policies and strategies are on target.
Organization performance is defined in terms of a measurement system comprising a number of dimensions/perspectives, and integrates financial performance measures, functional performance measures, and assets/managed resources performance measures, etc. Since only a company's historical performance - financial and returns on capital - not its future performance - can be measured directly, the potential for future growth and returns must be inferred. Strategic measures - which indicate whether an organization is fundamentally healthy, in the sense of being able to sustain its current performance and to build profitable businesses in the future, can provide the basis for making these inferences.
Performance Measurement System Model Elements
The Organization performance measurement system encompasses three areas of a firm's outcomes: financial performance measures, operational performance measures, strategic performance measures - product market performance, and shareholder return. Measurement is critical to today's organizations, and is a fundamental requirement and an integral part of the management function of leading and controlling. The component elements of the measurement system dimensions/perspectives are the goal objects that establish targets, objectives that establish the performance measures and metrics, and the performance indicators (variables).
Types of Measures
There are numerous types of measures, including:
:
The measure of intangible asset development and/or increase in strength is modeled in the Learning and Growth perspective, output and improvements measures in the internal processes perspective, and the impact on vision and mission as outcomes in the customer value outcomes measures and the financial; outcomes measures.
Performance Measurement System Design
The performance measurement system establishes the dimensions/perspectives of a system of measures that can be grouped into two (2) categories, namely:
The planning and design of performance systems based on KPIs and measures from key results areas of an organization provide an integrated approach and focus on considering all deliverable and accountability of roles in assessing performance.
Performance System Perspectives/Dimensions
organization performance measurement system can be, by design, organized around a number of perspectives/dimensions. Each perspective defines the scope of a domain populated with information from some key results area. For example, financial results, impact on customers, how an executive leads and develops his/her people, risk, regulatory and compliance requirements. The indicators and measures defined for key results areas (KRAs) are agreed upon between the executive management and middle and line managers and is informed by operations strategy design. An example of a system of measures based on the Balance Scorecard includes the following perspectives:
These measures make it explicit that management not only must deliver good financial performance, but also must deliver on strengthening the organization's long-term business and competitive positions. The challenge of balancing the need to improving an organization's financial performance and strategic performance leads to closing the gap between actual and desired performance. Financial performance is important because without adequate financial performance an organization risks being denied the resources it needs to grow and prosper. Strategic performance measures are needed to prompt managerial efforts to strengthen a company's overall business and competitive position. Key Results Areas, in the context of strategic planning, are areas of business operations where it is profoundly important to achieve good results.
The organization performance measurement system is a subsystem of the performance management system, and provides the basis for analysis, evaluation and control of the behavior and performance of the organization. The purpose of the organization performance measurement system is to establish measurement indicators and metrics for analyzing the conditions within the organization to assess how the company is performing with respect key target measures and progress towards long term goals and objectives. Organization performance measurement system models allow a company to judge how well they are doing, and is far superior to any single performance metric. It can help management to balance the short- and long-term creation of value and the board and leadership to determine whether management's policies and strategies are on target.
Organization performance is defined in terms of a measurement system comprising a number of dimensions/perspectives, and integrates financial performance measures, functional performance measures, and assets/managed resources performance measures, etc. Since only a company's historical performance - financial and returns on capital - not its future performance - can be measured directly, the potential for future growth and returns must be inferred. Strategic measures - which indicate whether an organization is fundamentally healthy, in the sense of being able to sustain its current performance and to build profitable businesses in the future, can provide the basis for making these inferences.
Performance Measurement System Model Elements
The Organization performance measurement system encompasses three areas of a firm's outcomes: financial performance measures, operational performance measures, strategic performance measures - product market performance, and shareholder return. Measurement is critical to today's organizations, and is a fundamental requirement and an integral part of the management function of leading and controlling. The component elements of the measurement system dimensions/perspectives are the goal objects that establish targets, objectives that establish the performance measures and metrics, and the performance indicators (variables).
- Goals - These are outcome statements that define what an organization is trying to accomplish, both programmatically and organizationally. Strategic goals are usually a collection of related programs, a reflection of major actions of the organization, and provide rallying points for managers.
- Objectives - These are precise, time-based, measurable actions that support the achievement of a goal. Objectives typically must (1) be related directly to the goal; (2) be clear, concise, and understandable; (3) be stated in terms of results; (4) begin with an action verb; (5) specify a date for accomplishment; and (6) be measurable.
- Measures - These are the actual metrics used to gauge performance on objectives.
Types of Measures
There are numerous types of measures, including:
:
- Output -Oriented Measures - Output measures tell the story of what you produced or your organization's activities; they are the products, services, or facilities that result from an organization's projects or activities. Output measures do not address the value or impact of your services for your clients.
- Input-Oriented Measures - These are leading indicators - drivers - that measure the activities that are taking place, and they influence the outcome measures.
- Efficiency Measures - These are productivity or cost-effectiveness measures, defined as a ratio ofoutputs per inputs.
- Outcome Measures - Outcome measures are results-oriented measures. An outcome measure is the level of performance or achievement that occurred because of the activity or services your organization provided. Outcomes - are specific, measurable statements that let you know when you have reached your goals. Outcome statements describe specific changes in your knowledge, attitudes, skills, and behaviors you expect to occur as a result of your actions. Outcomes models of the future help to determine the value a company has created, and informs estimates of its ability to create more value in the future.
- Quality Measures - These are measures that gauge effectiveness of expectations and generally show improvement in accuracy, reliability, courtesy, competence, responsiveness, and compliance. Examples of quality measures include number of audits with no findings or within a range of accuracy.
- Impact Measures - Impact is the broader or longer-term effects of a project's or organization's outputs, and outcomes.
The measure of intangible asset development and/or increase in strength is modeled in the Learning and Growth perspective, output and improvements measures in the internal processes perspective, and the impact on vision and mission as outcomes in the customer value outcomes measures and the financial; outcomes measures.
Performance Measurement System Design
The performance measurement system establishes the dimensions/perspectives of a system of measures that can be grouped into two (2) categories, namely:
- Financial Measures - Financial category is comprised of objectives that typically relate to such financial measures as earnings growth, return on investment, borrowing power, cash flow, and shareholder returns.
- Non-Financial or Strategic Measures - This category is comprised of objective measures concerned with a company's competitiveness and long-term business position in its markets: growing faster than the industry average, overtaking key competitors on product quality or customer service or market share, achieving lower overall costs than rivals, boosting the company's reputation with customers, gaining a sustainable competitive advantage, and capturing attractive growth opportunities.
The planning and design of performance systems based on KPIs and measures from key results areas of an organization provide an integrated approach and focus on considering all deliverable and accountability of roles in assessing performance.
Performance System Perspectives/Dimensions
organization performance measurement system can be, by design, organized around a number of perspectives/dimensions. Each perspective defines the scope of a domain populated with information from some key results area. For example, financial results, impact on customers, how an executive leads and develops his/her people, risk, regulatory and compliance requirements. The indicators and measures defined for key results areas (KRAs) are agreed upon between the executive management and middle and line managers and is informed by operations strategy design. An example of a system of measures based on the Balance Scorecard includes the following perspectives:
- Financial Perspective - This dimension focuses on measures and metrics that define how the organization relates to shareholders in terms of financial performance, revenue, cost and efficiency. Financial objectives typically relate to such measures as earnings growth, return on investment, borrowing power, cash flow, and shareholder returns. The measures are expressed in terms of market share, revenue growth - cash flow, sales growth, operating income (Gross Margin, Profit Margin, etc.), return on assets, return on investment, increase in $ spent, etc.
- Customer Perspective - This dimension focuses on measures and metrics that define customers' value perception of our value proposition (products/services). Example measures in key results areas may include: percent of sales from new products, on time delivery, ranking by important customers, market share, etc. These measures are expressed in terms of the outcomes that an organization expects from its strategy. These measures are relevant to understanding how customers see the company.
- Internal Processes Perspective - This dimension focuses on measures and metrics that define the state of output from internal organizational systems such as processes, organization units, individuals, etc., in key results areas such as defined by functional areas in an organization e.g., Credit, Sales, Regulatory & Operational Risk, Marketing, Production/Operations, etc. Examples include cycle time, unit cost, yield, etc. These measures are expressed in terms of quantitative/qualitative measures of performance efficiency, and effectiveness.
- Organization Capability (Learning & Growth) Perspective - This dimension focuses on measures and metrics that define relevant factors that are indicators of health/strength of intangible assets such as human capital - people development (e.g., competencies, skills, etc.); information capital, and organization capital (e.g., leadership, corporate culture) that are required contributors to successful and effective planning, implementation and execution of a strategy. Examples may include measures of increase in competency / capability that provides competitive advantage in time to develop new generation of products, life cycle to product maturity, time to market versus competition. This dimension also allows organizations to construct measures that supplement performance measures and provide a basis for estimating the organization's ability to sustain creating and delivering value to customers in the future.
These measures make it explicit that management not only must deliver good financial performance, but also must deliver on strengthening the organization's long-term business and competitive positions. The challenge of balancing the need to improving an organization's financial performance and strategic performance leads to closing the gap between actual and desired performance. Financial performance is important because without adequate financial performance an organization risks being denied the resources it needs to grow and prosper. Strategic performance measures are needed to prompt managerial efforts to strengthen a company's overall business and competitive position. Key Results Areas, in the context of strategic planning, are areas of business operations where it is profoundly important to achieve good results.
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Strategic Measures
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Tactical Measures
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Operational Measures
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Capacity Measures
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Strategic Measures
Strategic measures are the class of results-oriented performance measures that focus the organization/company on those goals and activities that will make a difference 2, 3, or even 5 years down the road in the survival and success of the organization. Strategic measures are based on KPIs that define how well an organization is progressing toward its strategic goals. Establishing strategic measures involve setting long-term strategic direction and goals for the company.
Measuring Strategy Performance
The objectives define common areas of focus for an organization that guide management decisions and actions in order for the organization to achieve its goals. These common areas of focus includes market share, financial resources, physical resources/assets, productivity, innovation, and action planning. For an objective to be quantifiable, it must reflect an amount of something. Strategic and operational planning most often use time, dollars, percentages, and numerical counts to measure strategic goals/objectives.
Time Based Measures
Decrease the time required to produce a product or provide a service.
For example, a mortgage company might want to reduce the time required to process a loan. A residential construction company might want to reduce the time required to frame a house. A hospital might want to reduce the time an E.R. patient spends waiting to see a physician. This is the most common metric used to meet the definition of strategic objectives.
Dollar Based Measures
Decrease the cost of producing a product - goods/services; or increase the revenue generated by delivering a product or service.
For example, a mortgage company might want to decrease its loan processing costs. A construction company might want to increase the average margin on new home construction. A hospital might want to decrease average supply costs per E.R. patient.
Percentages Based Measures
Decrease or increase the rate of a process, activity,or desired outcome
Using our previous Time-based and Dollar Based measures examples, the mortgage company might want to increase its market share percentage for total loans closed. The construction company may want to decrease the percent of lumber rejected for failing to meet its internal specification requirements. The hospital might want to increase the percent of E.R. patients who pay their deductibles at the point of service.
Numerical Count Based Measures
Decrease or increase the physical count of something.
The mortgage company might want to increase the number of loans processed. The construction company might want to decrease the number of homes that don’t pass the first inspection. The hospital might want to increase the number of E.R. patients.
There are many other units of measure. You could use length (inches or feet), mass (pounds), volume (gallon), temperature (degrees), area (square feet), heat (BTU), and pressure (pounds per square inch). Each of these can quantify and measure an objective.
Strategic Performance Measurement System
Planning typically starts with a vision and mission. Managers then develop strategy for realizing the vision and mission; their success and progress in achieving the vision and mission is dependent on how well the underlying goals and objectives are achieved. A vision statement usually, describes some broad set of goals - what the organization aspires to look like in the future. Mission statements also have stated goals - what the organization aspires to be for its stakeholders.
The purpose of setting objectives is to convert managerial statements of business mission and company direction (strategic vision) into specific performance targets, something by which the organization's progress can be measured. Strategic objectives serve as yardsticks for tracking an organization's performance and progress. The objectives set must ideally embrace a time horizon that is both short-term and long-term. Short-term objectives spell out the immediate improvements and outcomes desired by management. The lead-lag relationship between strategic activities undertaken in the present and the results in the future is enormous, so monitoring the effects of the decisions made and direction set is critical to the long-term success of the organization.
Financial Perspectives
These define financial objectives.
Customer Perspective
These define the customers' value viewpoint.
Internal Processes Perspectives
These cover objectives in the following areas: Customer Service, Innovation, Operational Excellence, Regulatory Perspectives.
Learning & Growth Perspective
The objectives in this perspective focus on individual skills, culture, and organizational capacity.
The objectives define common areas of focus for an organization that guide management decisions and actions in order for the organization to achieve its goals. These common areas of focus includes market share, financial resources, physical resources/assets, productivity, innovation, and action planning. Objectives defined for these areas of focus must be prioritized; each business organization having a prioritization unique to it.
Balanced Scorecard
Balanced Scorecard (Kaplan and Norton, 1992) is an approach for linking measurements at all levels of an organization to the organization's strategy. The "scorecard" consists of four (4) perspectives: financial, customer, internal business processes, and learning and growth. It serves as a framework for choosing measures from key results areas, processes (from key performance areas), and initiatives to close strategic gaps that are aligned with organizational strategy and higher-level business goals.
Strategic measures are the class of results-oriented performance measures that focus the organization/company on those goals and activities that will make a difference 2, 3, or even 5 years down the road in the survival and success of the organization. Strategic measures are based on KPIs that define how well an organization is progressing toward its strategic goals. Establishing strategic measures involve setting long-term strategic direction and goals for the company.
Measuring Strategy Performance
The objectives define common areas of focus for an organization that guide management decisions and actions in order for the organization to achieve its goals. These common areas of focus includes market share, financial resources, physical resources/assets, productivity, innovation, and action planning. For an objective to be quantifiable, it must reflect an amount of something. Strategic and operational planning most often use time, dollars, percentages, and numerical counts to measure strategic goals/objectives.
Time Based Measures
Decrease the time required to produce a product or provide a service.
For example, a mortgage company might want to reduce the time required to process a loan. A residential construction company might want to reduce the time required to frame a house. A hospital might want to reduce the time an E.R. patient spends waiting to see a physician. This is the most common metric used to meet the definition of strategic objectives.
Dollar Based Measures
Decrease the cost of producing a product - goods/services; or increase the revenue generated by delivering a product or service.
For example, a mortgage company might want to decrease its loan processing costs. A construction company might want to increase the average margin on new home construction. A hospital might want to decrease average supply costs per E.R. patient.
Percentages Based Measures
Decrease or increase the rate of a process, activity,or desired outcome
Using our previous Time-based and Dollar Based measures examples, the mortgage company might want to increase its market share percentage for total loans closed. The construction company may want to decrease the percent of lumber rejected for failing to meet its internal specification requirements. The hospital might want to increase the percent of E.R. patients who pay their deductibles at the point of service.
Numerical Count Based Measures
Decrease or increase the physical count of something.
The mortgage company might want to increase the number of loans processed. The construction company might want to decrease the number of homes that don’t pass the first inspection. The hospital might want to increase the number of E.R. patients.
There are many other units of measure. You could use length (inches or feet), mass (pounds), volume (gallon), temperature (degrees), area (square feet), heat (BTU), and pressure (pounds per square inch). Each of these can quantify and measure an objective.
Strategic Performance Measurement System
Planning typically starts with a vision and mission. Managers then develop strategy for realizing the vision and mission; their success and progress in achieving the vision and mission is dependent on how well the underlying goals and objectives are achieved. A vision statement usually, describes some broad set of goals - what the organization aspires to look like in the future. Mission statements also have stated goals - what the organization aspires to be for its stakeholders.
The purpose of setting objectives is to convert managerial statements of business mission and company direction (strategic vision) into specific performance targets, something by which the organization's progress can be measured. Strategic objectives serve as yardsticks for tracking an organization's performance and progress. The objectives set must ideally embrace a time horizon that is both short-term and long-term. Short-term objectives spell out the immediate improvements and outcomes desired by management. The lead-lag relationship between strategic activities undertaken in the present and the results in the future is enormous, so monitoring the effects of the decisions made and direction set is critical to the long-term success of the organization.
Financial Perspectives
These define financial objectives.
- Increase Revenues
- Manage Costs
- Maintain Profitability - This typically means running a profitable operation, and increasing revenue while limiting expenses. This leads to growth in profits and cash flow. The objectives include: Increasing Annual Sales by 100%, Developing New Markets,
Finding new Products and Services to offer to customers, Reducing Unnecessary Costs, Raising Prices. - Become Market Leader
- Explore new customer segments
- Return on Assets
- Gain Market Position
- Increase Customer Conversion
- Company Sales growth/Market Sales Growth -> Must be > 1
- Diversify and Grow Revenue Streams - Enter new market in the Vending personal care services industry.
Customer Perspective
These define the customers' value viewpoint.
- Improve customer satisfaction
- Reliable Service - Open on-time per schedule, and providing fast high quality haircuts and shaves.
- Increase Share of Market - Define Product and Service Offerings, Research and Define Target Markets, Analyze Competition, Strategic Positioning - Establish Product/Service Placement and Pricing, Develop Promotion Campaign for Offerings.
- Increase Share of Wallet
- Increase in new customers
- Increase in number of returning customers
- Customer delivery time
- Ranking on Social Media
- Best Service
- Improve our service approach for new and existing customers
- Understands my Needs
Internal Processes Perspectives
These cover objectives in the following areas: Customer Service, Innovation, Operational Excellence, Regulatory Perspectives.
- Increase Web traffic
- Prospecting the right Customers/Clients - Always embrace an entrepreneurial attitude to see and seize the right opportunities - especially those previously unseen or that others don't see at all. Prospecting the right clients ensures the business not only grows, but sustains itself over time.
- Implement software project
- Increase value of projects and manage growth.
- Launch and complete special projects
- Improve Customer Service.
- Strengthening Financial Resources - Included in the growth objectives of an organization is the availability of capital resources to invest in future expansion projects. Strengthening financial resources means to build cash flow or increase assets value in order to attract investors and court creditors to fund expansion.
- Reduce Financial Waste
- Develop and Use Customer Database.
- Streamline Core Business Processes.
- Ensure Compliance - These relate to rules and policies from the City of Chicago, Chicago Department of Aviation, Airport Authority, Federal Government, Hilton Hotel that the company needs to follow, even though they might not be strategic.
- Build capacity for the future
- Increase team size
- Lower Production costs
- Decrease Defects
Learning & Growth Perspective
The objectives in this perspective focus on individual skills, culture, and organizational capacity.
- Improve internal communications
- Improve employee satisfaction
- Implement performance review and reward system
- Build culture and align across organization
- Build Customer-Intimacy and performance focus culture.
- Create employee training programs
- Decrease employee turnover/Improve employee retention - Improving the current employee retention rates reduces the amount of money and time spent on training new employees which, in turn, helps performance and profitability. For example; with a current rate of 30%, an objective to increase and maintain retention rate at 66% of the current workforce through the next year might require strategy involving increase in pay and better benefits..
- Develop leadership abilities.
- Balance employee utilization rate
- Attract and retain the right people - Business is about people, and without the right talent a business can't grow and mature.
The objectives define common areas of focus for an organization that guide management decisions and actions in order for the organization to achieve its goals. These common areas of focus includes market share, financial resources, physical resources/assets, productivity, innovation, and action planning. Objectives defined for these areas of focus must be prioritized; each business organization having a prioritization unique to it.
Balanced Scorecard
Balanced Scorecard (Kaplan and Norton, 1992) is an approach for linking measurements at all levels of an organization to the organization's strategy. The "scorecard" consists of four (4) perspectives: financial, customer, internal business processes, and learning and growth. It serves as a framework for choosing measures from key results areas, processes (from key performance areas), and initiatives to close strategic gaps that are aligned with organizational strategy and higher-level business goals.
Tactical Measures
Project performance ..
Project performance ..
Operations Performance Measures Models
The Operations Performance Measures Model is based on three key performance measurements including: throughput, inventory and operating expense (cost) measures. The Theory of Constraints (TOC) emphasizes the use of these three global operational measures rather than local measures (e.g., efficiency and utilization).
The objective of the firm, therefore, is to increase throughput and/or decrease inventory and operating expense in such a way as to increase profit, return on investment, and cash flow (more global measures). Increasing throughput and/or decreasing inventory or operating expense should lead to the accomplishment of the firm's goal: to make money now as well as in the future.
The Operations Performance Measures Model is based on three key performance measurements including: throughput, inventory and operating expense (cost) measures. The Theory of Constraints (TOC) emphasizes the use of these three global operational measures rather than local measures (e.g., efficiency and utilization).
- Throughput - This is defined as the rate at which the system generates money through sales, not through production. Goods are not considered an asset until sold.
- Inventory - This is defined as the money invested in goods that the firm intends to sell or material that the firm intends to convert into salable items.
- Operating expense - This includes all the money the firm spends converting inventory into throughput.
The objective of the firm, therefore, is to increase throughput and/or decrease inventory and operating expense in such a way as to increase profit, return on investment, and cash flow (more global measures). Increasing throughput and/or decreasing inventory or operating expense should lead to the accomplishment of the firm's goal: to make money now as well as in the future.
Organization Capacity Measures
Capacity development is both the product (change in capacity) and the change process through which individuals, organizations and societies obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time. Capacity development as a product is defined as changes in capacity over time that facilitates growth of:
Capacity development as a change process involves the establishment and implementation of strategic assets that strengthen the organization's foundation resources enabling the successful achievement of the organization's mandate goals and long-term goals.
Organizational change, and development processes are too uncertain, ambiguous, and contradictory for a standard intervention or initiative - sequence of actions - to produce a 'guaranteed' result. Typically, the outcomes or value delivered by enhanced and/or strengthened asset are causally and temporally separated from the successful development of those assets through cause-effect relations that may involve two or more stages, making it difficult for managers to fully comprehend the contribution of these assets to the strategy execution success/failure. Managers usually know how much they have invested in strategic initiatives to enhance and/or strengthen aspects of the organization and its institutions, but have little idea in the short-term how much value they have created. The lead-lag relationship between strategic activities undertaken in the present and the results in the future is enormous, so monitoring the effects of the decisions made and direction set is critical to the long-term success of the organization.
Capacity Development Measurement Factors
Most organizations continuously strive to strengthen their capacities to fulfill their mandates. A systemic approach to view the capture of results of these efforts through institutional capacity measures:
Capacity development response must embrace the inherent openness towards the environment as well as working with the complexity of human change. The uncertain, 'emergent' nature of capacity also implies that capacity development is unlikely to be linear, well planned, and predictable.
Capacity Development Organizational Measures
Organization system performance system measures allow a company to judge how well they are doing, and is far superior to any single performance metric.
These measures can help management to balance the short- and long-term creation of value and the board and leadership to determine whether management's policies and strategies are on target.
Capacity development is both the product (change in capacity) and the change process through which individuals, organizations and societies obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time. Capacity development as a product is defined as changes in capacity over time that facilitates growth of:
- the individual in knowledge, skills and experience;
- the organization and institutions;
- societies
Capacity development as a change process involves the establishment and implementation of strategic assets that strengthen the organization's foundation resources enabling the successful achievement of the organization's mandate goals and long-term goals.
Organizational change, and development processes are too uncertain, ambiguous, and contradictory for a standard intervention or initiative - sequence of actions - to produce a 'guaranteed' result. Typically, the outcomes or value delivered by enhanced and/or strengthened asset are causally and temporally separated from the successful development of those assets through cause-effect relations that may involve two or more stages, making it difficult for managers to fully comprehend the contribution of these assets to the strategy execution success/failure. Managers usually know how much they have invested in strategic initiatives to enhance and/or strengthen aspects of the organization and its institutions, but have little idea in the short-term how much value they have created. The lead-lag relationship between strategic activities undertaken in the present and the results in the future is enormous, so monitoring the effects of the decisions made and direction set is critical to the long-term success of the organization.
Capacity Development Measurement Factors
Most organizations continuously strive to strengthen their capacities to fulfill their mandates. A systemic approach to view the capture of results of these efforts through institutional capacity measures:
- Performance - Does the Institution perform more effectively and efficiently in delivering its mandate? Measures of the efficiency and effectiveness of converting inputs to outputs,
- Stability - Does it do so consistently over time? Measures of the resolution of problems and removal of barriers.
- Adaptability - Does it make the needed adjustments to change or shocks to the system? Measures the adaptation to changing realities and demands in meeting its goals and objectives.
Capacity development response must embrace the inherent openness towards the environment as well as working with the complexity of human change. The uncertain, 'emergent' nature of capacity also implies that capacity development is unlikely to be linear, well planned, and predictable.
Capacity Development Organizational Measures
Organization system performance system measures allow a company to judge how well they are doing, and is far superior to any single performance metric.
- Performance - Measures the efficiency and effectiveness of converting inputs to outputs:
- Effectiveness - The degree to which the Institution's objectives are achieved
- Efficiency - A comparison for what is produced/what has been achieved, and resources used -e.g., money, time, labor, etc.
- Stability - Measures the resolution of problems and removal of barriers:
- Institutionalization
- Risk Mitigation
- Adaptability - Measures the adaptation to changing realities and demands in meeting its goals and objectives:
- Investment of Innovation
- Continuous Improvement
These measures can help management to balance the short- and long-term creation of value and the board and leadership to determine whether management's policies and strategies are on target.
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