Performance measures and learning LO12065

JC Howell (
Sun, 19 Jan 1997 10:26:49 +0000

Replying to LO12035 --


I will have to ponder the full scope of what you have asked for before a
final reply or suggestion. However, I will go ahead and make this initial

There is a BIG difference between performance indicators, performance
measures, and activity measures. I have often seen this diffeence ignored
and the three mixed liberally.

I have, in the past, differentiated between the three in the following

Performance indicators - based on organizational performance and
includes areas of interest such as financial performance, customer
satisfaction,sales performance, etc.

Performance measures - lower level of attention looking at HOW the
above were achieved. Includes things like average times to
respond to service calls, percent of forecast budget actually
used, percentage of total raw materials used (scrap rate), etc.
Performance measures for one level of a large organization may
actually be performaince indicators for a lower level. This is
where most quality leasures and indicators actually belong.

Activity measures - lowest level of measurement looking at the
individual and what s/he does. These include such measures as the
number of errors within a typical memo (compared to typing speed
and some index of average number of errors for the same time),
time and motion studies, amount of scrap material for a particular
workstation, etc. Activity measures are typically only good for
evaluating a single individual's performance.

Performance indicators look at how effectively the organization is
achieving its purpose for being. Performance meaures look more (but not
totally) at how efficiently the organization is conducting its business.
Activity measures look at how efficiently the individual is performing the
specific job.

I offer this because I have watched managers try to run their
organization, and even their business, based on activity measures. When
things don't work out, they end up scrapping the idea of a measurement
system and try shooting from the hip. This usually just makes things
worse. Fixing that situation is not easy or pretty. It is best to avoid
that situation altogether, if you can.

Anyway, these are just a few thoughts.


Clyde Howell

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