Performance Measurement: Key Terms Overview

Written by Max | Edited by Rory Hart
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    Businesspeople in a work meeting analysing their business' performance

    Performance Measurement: Essential Key Terms Overview

    © Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC. Adapted from Field Guide to Consulting and Organizational Development

    Suggested Pre-Reading

    Overview of Performance Management Process for any Application

    Key terms include

    The following basic terms will be described more fully later (through use of an example) in the library in the upcoming subsections Performance Planning, Performance Appraisal and Development Planning The terms are in an order of a small to larger context of use within performance management.

    Domain

    The domain is the focus of the performance management effort, e.g., the entire organization, a process, subsystem or an employee. A subsystem could be, e.g., departments, programs (implementing new policies and procedures to ensure a safe workplace; or, for a nonprofit, ongoing delivery of services to a community), projects (automating the billing process, moving to a new building, etc.), or teams or groups organized to accomplish a result for an internal or external customer. A process produces a product or service for internal or external customers, and usually cuts across multiple subsystems. Examples of processes are market research to identify customer needs, product design, product development, budget development, customer service, financial planning and management, program development, etc. The final domain is that of employee performance management. The term domain is not widespread across performance management literature.

    Results

    These are usually the final and specific outputs desired from the domain. Results are expressed in terms of cost, quality, quantity or time.

    Measures

    Measures provide specific information used to assess the extent of accomplishment of results. Measurements are typically expressed in terms of time, quantity, quality or cost. Results are a form
    of measure.

    Indicators

    Indicators are also measures. They indicate progress (or lack of) toward a result. For example, some indicators of an employee’s progress toward achieving preferred results might be some measure of an employee’s learning (usually expressed in terms of areas of knowledge or specific skills) and productivity (usually measured in terms of some number of outputs per time interval). (Note that learning and productivity alone do not guarantee accomplishment of performance results.)

    Preferred Goals

    These are usually overall accomplishments desired by a domain. The level of specificity of goals depends on the nature and needs of the domain. Typically, the more specific the goals, the clearer the understanding of goals by the members in the domain.

    Preferred Results

    The performance management process often includes translating preferred goals in terms of results, which themselves are described in terms of quantity, quality, timeliness or cost.

    Aligning Results

    Performance management puts strong focus on ensuring that all parts of the domain are working as efficiently and effectively as possible toward achieving preferred results. Therefore, the results of all the parts of the should be aligned with the overall preferred results. Aligning results often includes answering questions such as “Does the domain’s preferred results contribute to achieving the overall domain’s preferred results? How? Is there anything else that the domain could be doing to contribute more directly?”

    Weighting Results

    Weighting results refers to prioritizing the domain’s preferred results, often expressed in terms of a ranking (such as 1, 2, 3, etc.), percentage-time-spent, etc.

    Standards

    These specify how well a preferred result should be achieved by the domain. For example, “meets expectations” or “exceeds expectations”.

    Performance Plan

    The plan usually includes at least the domain’s preferred results, how the results tie back to the preferred results, weighting of results, how results will be measured and what standards are used to evaluate results.

    Ongoing Observation, Measurements and Feedback

    These activities include observing the domain’s activities in terms of progress toward preferred results, comparing progress to the preferred performance standards and then providing ongoing feedback (useful, understood and timely information to improve performance) to the domain.

    Performance Appraisal (or Review)

    In its most basic form, performance appraisal (or review) activities include documenting achieved results (hopefully, by also including use of examples to clarify documentation) and indicating if standards were met or not. The appraisal usually includes some form of a development plan to address insufficient performance.

    Rewards

    The performance review process usually adds information about rewarding the domain if performance had met or exceeded standards. Rewards can take many forms, e.g., merit increases, promotions, certificates of appreciation and letters of commendation.

    Performance Gap

    This represents the difference in actual performance shown as compared to the desired standard of performance. For example, in employee performance management efforts, this performance gap is often described in terms of needed knowledge and skills which become training and development goals for the employee.

    Performance Development Plan

    Typically, this plan conveys how the conclusion was made that there was inadequate
    performance, what actions are to be taken and by whom and when, when performance
    will be reviewed again and how.

    Learn More in the Library’s Blogs Related to Performance Management

    In addition to the articles on this current page, see the following blogs which have posts related to Performance Management. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog.

    Also consider

    For the Category of Performance Management:

    To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

    Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.


    Max