The power of performance Measurement: a computer performance model and examples from Colorado cities.

• Author: Griesemer, James R.

Performance measures not only describe what has happened; they influence what will happen, as they provide information for decision makers and affect the behavior of employees.

In the popular book Reinventing Government, authors Osborne and Gaebler describe the power of performance measurement. In their words, "Organizations that measure the results of their work. . . find that the information transforms them." Research in developing performance measurement concepts and working with local governments to implement measurement systems suggests that Osborne and Gaebler are correct. Performance measures do indeed possess considerable power to help officials make better decisions and use resources effectively. How they do this is the subject of this article.

The goal of performance measurement is to improve the quality of management and policy decisions by providing a clear picture of the activities and accomplishments of the organization. This is done by providing information about the performance characteristics of the organization, usually in the form of trend and ratio data. These data typically describe where the entity has been in terms of performance, where it is today and how it compares with other, similar organizations. If it is done correctly, such an analysis results in a detailed picture of performance, painted in graphical and statistical terms. It is this picture that helps officials to make more informed policy choices and managers to make better decisions.

The use of modern performance measurement tools allows governmental officials to manage with much higher degrees of precision than has traditionally been the case. Through the consistent use of such instruments, it is possible to monitor changes, identify potential problems and take timely corrective action. Equally important, these tools allow officials to support activities that are successful, to allocate resources based on what works well and to build public credibility by being able to demonstrate the effective use of taxpayer dollars.

A Tool for Shaping Performance

Perhaps the most surprising thing about measurement is its ability to shape the future performance of organizations. Performance measures do not simply describe what has happened; they influence what will happen, as they provide information for decision makers and affect the behavior of employees. When an organization establishes an ongoing measurement program, performance and productivity almost inevitably improve. The reasons for this have to do with organizational focus, resource allocation and achievement recognition.

Scholars have long recognized the central role that focus plays in organizational performance. High performing organizations--be they public or private--have clear goals and a strong focus. The process of establishing departmental performance measures requires that department goals be clearly identified, because one cannot measure performance until desired results have been defined. This seemingly simple act of defining results to be achieved has enormous power to focus the organization. Because measures have great power to direct activity, it is important that departmental performance measures be consistent with broad organizational goals and policy.

Performance measures not only focus the organization's activity toward defined goals, they strongly influence employee behavior. The reasons, again, are straightforward: People react to what is measured. When goals are identified and employees know the basis on which they will be measured, they perform.

For elected officials and top managers, one of the most tangible benefits of performance measurement is its ability to help in resource-allocation decisions. Without the ability to measure accomplishment, the budget process can become a no-win game of slicing a shrinking fiscal pie into ever-smaller pieces. Performance measures provide officials with new tools for evaluating resource allocation...