Top Ten Reasons for a Performance Measurement System

1. It improves the bottom line by reducing process cost and improving productivity and mission effectiveness.
2. A performance measurement system such as the Balanced Scorecard allows an agency to align its strategic activities to the strategic plan. It permits — often for the first time — real deployment and implementation of the strategy on a continuous basis. With it, an agency can get feedback needed to guide the planning efforts. Without it, an agency is ‘flying blind’.
3. Measurement of process efficiency provides a rational basis for selecting what business process improvements to make first.
4. It allows managers to identify best practices in an organization and expand their usage elsewhere.
5. The visibility provided by a measurement system supports better and faster budget decisions and control of processes in the organization. This means it can reduce risk.
6. Visibility provides accountability and incentives based on real data, not anecdotes and subjective judgements. This serves for reinforcement and the motivation that comes from competition.
7. It permits benchmarking of process performance against outside organizations.
8. Collection of process cost data for many past projects allows us to learn how to estimate costs more accurately for future projects.
9. If you are in a US Federal agency, it’s the law. The Government Performance and Results Act of 1993 requires a strategic plan, and a method of measuring the performance of strategic initiatives.
10. It can raise you agency’s Baldrige score, which can serve to increase its long-term chances of survival.

©1998 Paul Arveson