Where does one who is charged with developing performance measures start? First, a strategist is really a specialized facilitator, so it is important to understand that the strategist should not develop metrics without the input of those responsible for achieving the metrics.
Once you have those people in the room, start with the strategy: what is the mission of the organization and what are its goals? In other words, where is the organization going? This “where are we going” is your first input into developing measures. Often, the organization will be trying to improve something but sometimes it is about maintaining an already excellent position.
Next, is there a specific date by which the organization should arrive at its destination? If not explicitly stated, a strategist should assume some measure of success will be demonstrated by the end of the strategic plan’s date.
Now you have the “where are we going” and “by when should we get there.” That is the easy part. The harder part about performance measures involves answering this question: “how can we prove to ourselves and others that we have achieved our goals?” There are four types of performance measures to consider.
| Performance Measure Type | Description | Examples |
| Input | A measure of resources used by an activity or process. Some inputs relate to workload. Others relate to the number of resources used in a process. | Applications received Dollars spent Staff hours used |
| Output | The number of units of a product or service produced or delivered. | Interviews conducted Widgets made Children immunized Number of non-compliant products replaced |
| Process | Describes aspects of the business process, such as completion rate, processing time, backlog, error rates, and so on. | Number of days to respond to customer inquiry Percentage of defective items produced |
| Outcome | Measures of ultimate benefits associated with a program or service. Also known as results. | Reduction in deaths Improvement in air quality Improvement in test scores Increased customer satisfaction |
As strategists, we work with our clients (internal or external) to guide them through the process of developing performance metrics. They should be quantifiable, meaning they can be counted more than once or measured using numbers. Here are some questions to ask:
- How can we prove success using data?
- Is the data available or easily accessible?
- If not, will it be easy to create or would it require a significant amount of additional labor to gather?
- Do we own the data and have control over it?
- How often is the data calculated?
- Does that time fit within the strategic planning cycle?
If any of these questions indicate that the data is not available or easy to collect, consider brainstorming a different performance measure. There are some strategic goals that do not lend themselves to measurement. If that is the case, document that finding and identify related data that would help management best understand what is being done to accomplish the organization’s strategy.
This post is modified from the August 2024 publication of the Strategic Edge.