Building on success [performance management system]

Sustaining and improving the performance of a newly transformed operating system relies on more than the measurement of key indicators. It requires performance management systems that make use of the information they collect to take timely action before problems occur. To establish an appropriate performance management system, organizations need to decide how value should be measured at the top level of the organization and to choose performance indicators and targets that cascade from these top level metrics down to the shop floor. The right indicators include primary measures that effectively describe the system´s performance and secondary measures that can act as a predictor for forthcoming problems or an aid to the diagnosis of root causes. They also include measures of performance over timescales, maintaining the organization´s health so that short term profit is not achieved at the expense of future success. With a well-designed, effectively operated performance measurement system, companies can ensure that improvements achieved during the initial phase of an operational transformation are maintained and enhanced over the long term.