Introducing Performance Measurement and Management

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(bright music) Welcome to introducing performance measurement and management. In these lessons, you'll learn about performance measurement and performance management, how to identify and develop performance metrics, develop and implement performance strategies for both individuals and organizations, and relate performance measurement to management. Organizations continuously measure and manage their performance to remain competitive. Performance measurement and management go hand in hand because you need data to decide how to manage a situation and you get data after making measurements. Employees also play a significant role in the performance of any organization. Therefore it's important to measure and manage the performance of both individuals and the organization. There are a few reasons why organizations measure and manage performance. They do it to track current performance and identify areas of improvement or areas of strengths. For example, if they're facing declining customer loyalty, they can measure to see where they can improve. Look at current and past performance data and use it to predict future trends. Test certain strategies like planning a new marketing strategy and measuring the customer response to check its success rate. Compare themselves against their competitors and the industry benchmarks to retain their competitive edge. And evaluate their employees' contribution to the organizational goals and reward them accordingly. Professor Andy Neely from Cambridge University defined performance measurement as, "The process of quantifying the efficiency "and effectiveness of action." In the past, performance measurement systems focused mainly on the financial component. However, it's important to consider a balanced approach of a multidimensional set of performance measures such as financial and non-financial, internal and external aspects, and both the current situation and the potential future situation. Such an approach can help provide a more complete picture of how the organization is doing. Performance measurement isn't just a process of collecting data. It's important to consider it within the framework of performance management. Using this framework, performance measurement can include planning and measurement stages. You can identify performance metrics for individuals, teams, or organizations, and measure that data. You can then complete the performance management process by analyzing the measured data and taking action. The data can tell you how well individuals, teams, or organizations are performing and how close they are to the target performance metrics. You can identify critical areas that need immediate attention, such as performance gaps, and address those first. It's important that performance measurement and management go hand in hand, because you can't manage what you can't measure. The aim of performance management is to improve the performance of individuals and teams and performance measurement provides the necessary information to do that.