Performance metrics

Performance metrics

Performance metrics are measures of an organization's activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [Mark Graham Brown, "Using the Right Metrics to Drive World-class Performance"] . While traditionally many metrics are financed based, inwardly focusing on the performance of the organization, metrics may also focus on the performance against customer requirements and value. [ [ Value based performance metrics] ]

Developing performance metrics usually follows a process of:

#Establishing critical processes/customer requirements,
#Developing measures,
#Establishing targets which the results can be scored against.

A criticism of performance metrics is that when the value of information is computed using mathematical methods, it shows that even performance metrics professionals choose measures that have little value. This is referred to as the "measurement inversion". [Douglas Hubbard, "The IT Measurement Inversion", "CIO Magazine", 1999] [Douglas Hubbard, "How to Measure Anything: Finding the Value of Intangibles in Business". John Wiley & Sons, 2007] For example, metrics seem to emphasize what organizations find immediately measurable — even if those are low value — and tend to ignore high value measurements simply because they seem harder to measure (whether they are or not).

To correct for the measurement inversion other methods, like applied information economics, introduce the "value of information analysis" step in the process so that metrics focus on high-value measures. Organizations where this has been applied find that they define completely different metrics than they otherwise would have and, often, fewer metrics. [US Government Study on AIE [] ]

There are a variety of ways in which organizations may react to results [Andy D. Neely, "Business Performance Measurement: Theory and Practice"] . This may be to trigger specific activity relating to performance (i.e., an improvement plan) or to use the data merely for statistical information. Often closely tied in with outputs, performance metrics should usually encourage improvement, effectiveness and appropriate levels of control.

Performance metrics are often linked in with corporate strategy [Mark Graham Brown, "How to Interpret the Baldrige Criteria for Performance Excellence" ] and are often derived in order to measure performance against a critical success factor.


Further reading

* [ University of California Approach to developing performance metrics]

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Aviation System Performance Metrics — (ASPM) is an FAA database of the National Airspace System, a part of FAA Operations Performance Data. Data Description ASPM data fall into two categories, airport data and individual flight data. Airport data give airport capacity and throughput… …   Wikipedia

  • metrics — UK US /ˈmetrɪks/ noun [plural] ► a set of numbers that give information about a particular process or activity: »Do you have any metrics on the rate of usage for the service? »Performance metrics need to align marketing activity with corporate… …   Financial and business terms

  • Performance intelligence — refers to technologies that utilize standard Business Intelligence techniques on performance related IT metrics. Traditionally the performance metrics are loaded into a set of tables that resemble the table structure of a data warehouse. Analysis …   Wikipedia

  • Metrics Reference Model — The Metrics Reference Model (MRM) is the reference model created by the Consortium for Advanced Management International (CAM I) to be a single reference library of performance metrics. This library is useful for accelerating to development of… …   Wikipedia

  • Performance Supervision System — A Performance Supervision System (PSS) is a software system used to improve the performance of a process plant. Typical process plants include oil refineries, paper mills, and chemical plants.The PSS gathers real time data from the process… …   Wikipedia

  • Performance engineering — Within systems engineering, performance engineering encompasses the set of roles, skills, activities, practices, tools, and deliverables applied at every phase of the Systems Development Lifecycle which ensures that a solution will be designed,… …   Wikipedia

  • Performance Application Programming Interface — In computer science, Performance Application Programming Interface (PAPI) is a portable interface (in the form of a library) to hardware performance counters on modern microprocessors. It is being widely used to collect low level performance… …   Wikipedia

  • Performance measurement — with a process is the complement to process execution. Based on measured performance, the feedback control loop may be closed. The metrics to assess performance is set according to a determined econometric model. The expected best result is… …   Wikipedia

  • Performance audit — refers to an examination of a program, function, operation or the management systems and procedures of a governmental or non profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of… …   Wikipedia

  • Metrics — A metric is a standard unit of measure, such as meter or gram, or more generally, part of a system of parameters, or systems of measurement, or a set of ways of quantitatively and periodically measuring, assessing, controlling or selecting a… …   Wikipedia