Introduction to Performance Measurement!

Introduction to performance measurement

Most of us have already heard one the often-quoted typical statements concerning performance measurement: “If you can’t recognize success, you can’t learn from it; if you can’t recognize failure, you can’t correct it, or:”If you can’t measure it, you can neither manage it nor improve it.” Performance measurement has always been and will be essential and of a great importance for national companies as well as for those operating internationally. Historically, the traditional or "Anglo-Saxon” way of measuring performance was to just concentrate on the financial data and performance be this, a positive one - success reached by generating profits - or a negative one such as failure through liquidation (DTI 2007). The next step was to interpret the numbers, evaluate them and finally derive adequate actions in order to improve or keep the pre-defined standard. However, focusing just on financial data of a firm, cost structures and accounting information seems to be insufficient and imprecise as it provides little support in regard of judging or measuring the whole quality of a company. Moreover, quality also contains aspects e.g. process performance and improvements noticed by customers or other stakeholders which are incapable of measurement in the traditional way - namely expressed by numbers (Martinez 2001). Therefore during the last decades it became more and more important for firms to measure the “right” things and identify the aspects which really matter. It is relatively simple to take a look at costs and other basic financial indicators but it is more difficult to not only check these standard key indicators but adapting those relating to real business-side goals. With the help of these measurements of really important aspects – financial and also non-financial ones - the company can change and improve in fields that need improvement. Moreover the measurement results are the basis for short and long-term planning and...