TM

Winter 2006

Measuring Organizational Performance

Although the concepts of performance measurement and Strictly speaking, an organization’s performance goals can
performance management have existed for many years, only be achieved through its employees. An effective per-
there is increasing demand that agencies begin to trans- formance measurement and management system links
form their organizations to institutionalize these practices. individual and teamwork behaviors to the organization’s
This pressure is the result of the convergence of two forces: business strategies, goals, and values. For an organization
(1) increased demand for accountability on the part of gov- to achieve its goals, it is essential for each employee to
erning bodies, the media, and the public in general, and understand individual roles and responsibilities for goal
(2) a mounting commitment of managers and government achievement, and there must be continuous dialogue
agencies to focus on results and work more deliberately to between leaders and employees to set performance expecta-
strengthen performance.1 tions, monitor progress, and evaluate results. Together,
leadership and staff
work to plan, measure
Performance Management Model and analyze, and man-
age performance—three
PLAN PERFORMANCE essential action steps
Identify organizational strategy that are interlinked and
- Define mission and vision
- Define strategic objectives ongoing in an organiza-
- Assess context, culture, clients, tional culture that suc-
and audience
- Benchmark with other cessfully measure and
organizations to discover
alternate strategies for success
account for perform-
Define outputs and measures ance, as shown in the
- Identify outputs and outcomes
required to achieve strategy MANAGE PERFORMANCE
model at left.
- Identify critical dimensions for
Prioritize challenges
outputs and outcomes During the perform-
(time, cost, quantity, quality) Develop strategic
- Define measures of each dimen- solutions to address ance planning phase,
challenges
sion for each output and outcome the first phase of per-
Develop measurement system Integrate solutions
- Define specific measures-based
and lessons learned formance measure-
into organizational
goals
MEASURE AND ANALYZE processes
ment, the organization-
- Assign goals to organizational
units PERFORMANCE Set up and imple- al business strategy—
ment mechanisms to
- Develop data collection and
Collect data maintain successes
including its mission,
analysis process and procedures
Ensure employee readiness
Analyze and report data Modify performance vision and objectives,
measurements as
- Define and communicate specific Identify
needed
and specific outcomes
goals for each employee - Areas of success
- Ensure employees have the - Sources of success required to achieve the
required performance elements to
achieve their goals (information,
(performance elements) overall strategy—is
- Challenges
environment and tools, competen- - Sources of challenges
cies, motivation). (performance elements) 1
Poister, T.H. Measuring
- Lessons learned
Performance in Public and
- Needs for more information Nonprofit Organizations. San
Francisco, CA: John Wiley &
Sons, Inc., 2003.

Perspectives is a quarterly publication of ICF Consulting that provides our clients with insights
TM

and information drawn from the consulting engagements we pursue throughout the world.
 TM
defined. Goals and plans for how to measure achievement
must be identified In this step, outputs and measures are
defined, and requisite data collection and analysis process-
es and procedures are developed and implemented.
Additionally—and most importantly—employees come to
understand their individual roles and responsibilities with
respect to performance measurement and are given the
fundamental information, resources, competencies, and
motivation to ensure their successful execution.
In the second phase of the performance measurement
process—the measurement and analysis phase—data that
informs areas of success and challenge for the organiza-
tion are collected and analyzed. Specific elements and fac-
tors that contribute to successes or challenges along with
new and/or modified information needs and lessons
learned are identified.
Once performance data has been collected and analyzed,
it must be effectively managed. The third phase of the
process—performance management—is the phase in which
solutions to address identified challenges are developed and
implemented, along with mechanisms to ensure the contin-
uation of program or organizational successes. Additionally,
performance measurement systems and processes may be
modified as needed to ensure that information collected
through the performance measurement process is timely,
relevant, and sufficient—steps that cycle back to perform-
ance planning. Unfortunately, many agencies have not
moved beyond collecting performance data to utilizing this
data to proactively manage the agency. According to the
U.S. Government Accountability Office (GAO), federal
managers reported having more performance measures in
2003 than in 1997, but they also reported that use of per-
formance data for program management activities has essen-
tially remained unchanged.3
While there are several commonly used methodologies for
performance measurement (e.g., balanced scorecard, logic
model) within a particular human resource organization,
the specific techniques are frequently a function of a num-
ber of contextual factors—some of which are under the
control of human resource managers, and some of which
are not. Regardless of the particular methodology used,
however, success in obtaining meaningful performance data
and using this data to manage, and institutionalizing these
practices so that they become ingrained in the organization
depends on several factors. The first is the presence of a
culture of accountability within the organization—that is,
a transformation of the organizational culture to promote
understanding and support for the organizational mission,
as well as for increased accountability and enhanced deci-
sion-making. In a culture of accountability, leadership
demonstrates commitment to managing for results. In
turn, staff engages and invests in the process, which leads
to feelings of empowerment and continuity.
Before implementing a performance measurement or man-
agement system, conduct background work to see if other
pieces of your agency have implemented their own system.
You may be able to begin working with them to align goals,
and they may have lessons learned about performance man-
agement in your agency, including what features may make
the system most user-friendly in your organization. Next,
anticipate and consider the unintended consequences of
measuring performance. Reinforced behavior will be repeat-
ed, so carefully consider what behaviors should be empha-
sized (e.g., individual achievements versus team achieve-
ments). Finally, communication of performance informa-
tion among relevant stakeholders is crucial to the success
of any performance measurement or management system.
While performance measurement is beginning to become
more common, very few agencies are actively involved
in using that data to proactively manage. In other words,
performance measurement has not yet become perform-
ance management. Careful planning, consistent imple-
mentation and communication, and working towards a
culture of accountability will help move an organization
beyond performance data collection to effective perform-
ance management.
For more information on ICF Consulting’s performance
management solutions, visit www.icfconsulting.com/
performance.
3
U.S. Government Accountability Office. Managing for Results: Enhancing
Agency Use of Performance Information For Management Decision-Making
(GAO-05-927). Washington, DC., 2005.
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