System Element: Measurement / Rewards

The measurement of performance is a critical concept within an Organization. The performance against plans provides feedback on how well the Organization is achieving its objectives. Accurate and timely feedback is critical in decision making to keep the Organization on track to achieve objectives.

Measurements are built into the following areas:

• Individual objectives and goals
• Process objectives and goals
• Team or organization unit objectives and goals
• Organisation wide objectives and goals

Each of these areas require specific measurement processes to capture the performance. As the Organization, establishes measurement processes and the accuracy improves, dynamic models of the organisation can help predict the improvements tue to changes and investments.

Finally, the measurements can be used for rewarding individual and team performance.

Measurements are against the planned and agreed performance targets for an individual, team or organization.

The following references are useful sources of help for the measurement systems:

The sections below are based on the reference : Competitive Engineering

Value Description

• Purpose of the value
• Description of the value

Scale

• Units of measure
• Range of measurement (start and end values).

Meter

• The way a value is measured (process for measurement)
• Frequency of measurement

Targets

• minimum
• maximum
• goal
• stretch
• wish

The following principles apply to measurement and rewards

• Each process provides the mechanisms for measuring performance
• Measurements require consistent definitions of the scale, meter and frequency of the measurement
• Shannon's sampling theorem applies to measurements. (too low a frequency of sampling may mask underlying issues).
• Rewards must be based upon a consistent measurement process.
• The reporting hierarchy must not mask the individual performance of a team.

Each process includes a set of measurement specifications to ensure that critical values / variables are measured in a consistent way.

Once measurements are reliable, a dynamic model can be prepared to predict performance from both current and future. These are generally established at higher levels of maturity where the basic capabilities for the organisation have been implemented, managed and stabilized.

Rewards for performance against the plan should be based upon accurate measurements of performance. Performance management processes are used to assess performance and establish rewards for the achieved performance.

In general, performance management is the same at all levels of the organsiation.

Performance rewards for teams are also based upon performance of a team plan. The reward mechanisms for this type of reward may be outside of the normal performance management processes.

Organization System Description

Capabilities, Organizational Structure, Measurements / Reward, Plan

Team Model