PERFORMANCE MEASUREMENT

Performance Measurement

Performance Measurement

Introduction

"In this analysis, managers determine the firm's critical processes and outputs, baseline those processes, then compare the performance of each process against a standard outside the industry" (Bounds, Yorks, Adams, & Ranney 1994). Successful Performance measurement requires tailor-made solutions, not just blind copying of another organization.

Performance measurement's real role has to be seen in the context of the organization that is continuously implementing improvement. Organizations implementing the Performance measurement process are continuously looking to improve, and planning improvement. However, output performance measures are not able to help management understand why a practice is effective. This understanding is a result of personal interpretation of the process. Organizations must look to other firms for ideas to borrow from global leaders, regardless of the scope of the necessary improvement. Equally important as data collection is the actual implementation of the newly acquired business practice. The most important aspect of Performance measurement is to enable companies to employ the best business practices. This fundamental theory cannot be overstated. Global competition is growing due to the technological boom. The expansion of the Internet and digital communication has forced once domestic firms to consider foreign competitors. To remain ahead, companies are realizing they must match or exceed the business practices of the best in the world.

Performance measurement should not be considered simply a tool of management, but rather an integral part of the business strategy of a firm. When implementing Performance measurement, management must consider the overall issues of performance and process re-engineering. It should be seen as part of the management practice with an organization pursuing excellence. In addition to influencing management's practices, Performance measurement should become part of the organizational strategy. Essentially, Performance measurement affects all aspects of management, as well as the business. The goal is to establish Performance measurement as a dynamic process with full integration into the organizational structure. Commitment to the best practices eventually will become the natural way of doing things. There are five keys to successful Performance measurement: emphasis on quality, business processes, and limitations of Total Quality Management, external Performance measurement, and Performance measurement for survival.

Southwest Performance Measurement System

Southwest is eighty-five percent unionized yet has world-best management-employee relations. Unlike the adversarial relationships experienced by other airlines, Southwest is able to maintain a healthy and productive working arrangement. Southwest has flexible work rules. These work rules empower employees, resulting in higher levels of employee productivity and commitment. High employee productivity has allowed the company to carry minimal staff. Southwest maintains the same staffing level, regardless of revenues. This practice has contributed to employee feelings of job security and loyalty. "British Airways has been named a charter member of the International Airline Passenger Association's Honor Roll of Airlines among the World's Safest Airlines" (Southwest Press Office, 1999).

The company has achieved this status by employing the most highly skilled pilots in the world. Southwest has state-of-the-art training facilities across the United States. On April 6, 1998, Southwest opened its new ten million dollars flight ...