Best Practices for Measurement
- In the first place, it has to be considered that the performance measurement process has a significant cost, particularly when taking into account the network of indicators required to maintain a complex system in operation. Thus, it may be expected that the benefit is at least equal to the investment if not superior in terms of results derived from the organization's decision making process.
- In order that a measurement system is effective, it has to be understood, accepted and assimilated by the employees at all levels of the organization, it has to be desired and there should not be any fear of consequences or punishment derived from its results, employees shall feel they are "owners" relying on the trust of the board of directors by means of empowerment for self-management.
- Limit the number of indicators and organize them by families or perspectives, taking care to stratify them by levels through Affinity Diagrams. Have an infinity of indicators available (in occasions, there are hundreds of them) is almost as detrimental as not having any at all. Some authors recommend to start at zero when implementing the Balanced Scorecard for the first time. Avoid the temptation generating a false security that the more indicators you have the better the decision making process will be
- Link the indicators to the organization's regulations (Vision, Mission, values), to its operation philosophy, quality policy, credos, critical success factors (CSF), its critical processes, customer and supplier expectations, competitiveness, culture, strengths and weaknesses, opportunities and threats (SWOT).
- Balance the indicators regarding their temporality: past, present and future, short and long-term scope, perspectives, internal and external influence, financial and non-financial dimensions, regarding its preventive and corrective properties and its quantitative and qualitative nature.
- Use the indicator system in the decision making processes by means of evaluation, planning and follow-up sessions, taking advantage of the information systems with drill down type poll practices in order to discover the root causes of a potential problem, in advance.
- Complement the indicator system with stratified goals associated to challenging objectives and compensation systems that are neither pernicious nor manipulable, timely, dimensioned and limited. In order a goal to be effective, it has to be desired, meditated, negotiated and consented. The trivial goals are as bad as the unreachable goals. Avoid the absurd game of the wolf and the sheep, create an atmosphere of artificial intimidation only contributes to loosing the credibility in the system, such as "You pretend to pay me and I pretend to work." Given the difficulty represented by establishing appropriate goals, it is necessary to resort to external referential comparison elements and run pilot tests in the organization in order that, by means of several repetitions, realistic and representative values may be obtained collaboratively.