Performance measurement is the process of collecting, analyzing and reporting information regarding the performance of an individual, group, organization, system or component. One of the most important aspects to be considered in relation to performance measurement process is that the performance measures work qualitatively to provide the useful information about products, processes and services that are produced in a business. Hence, implementing performance measures is a great way to understand and manage and improve what a a business organization does.
The measurement of performance is a continuous process which involves checking the performance against the standards that have been fixed tobe followed. It leads to compare the actual performance with the established standards. A manager needs to supervise, observe and control the activities of his subordinates while he is involved in studying various summaries or reports, so that he may manage the work in an effective manner getting the things accomplished in a desirable manner. It requires the manager to constantly check the performance in order to take corrective actions in case of deviations ensuring that such deviations do not occur gain. Thus the Performance measurement is an ongoing, continuous improvement operation.
As stated above, the process of performance measurement leads to compare the actual performance with the standards. This in turn helps managers to understand the extent at which the performance is getting deviated from the expected ones. This way determining whether performance matches standards entails evaluating the differences and take necessary actions to improve the performance. However, while analyzing deviations, it is important to consider that some deviations in performance can be expected and so controlling by exception is useful in this way. It is therefore important that a manager should concentrate on exceptional deviations instead of
The importance of performance measurement system lies in the fact that it not only improves the performance, but also the productivity of a business entity by reducing costs. It is a good way to align the activities with the plans being established. It provides necessary feedback that the activities may be guided accordingly by allowing managers to implement best practices. It may thus be said that performance measurement process is a great way to understand, manage and improve the overall functioning state of a business organization. If done effectively and efficiently, it drives success in business definitely.
K. A. Fareed (Fareed Siddiqui)
Writer, Trainer, Author, blogger, Software Developer
BBA, MBA-Finance, MPhil-Financial Management, (PhD-Management)
Post Graduate Diploma in Computer Applications and Programming
Level 1 - Leadership and Management ILM – UK
Individual Member of Institute of Management Consultants of India
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