Mentor’s Message: Why Measure Organizational Performance?
In an age of intensifying competition and rapid change, organizations must constantly seek to enhance their performance: their ability to generate important business results such as increased shareholder value, greater customer loyalty, more responsive and efficient business processes, and better productivity and alignment of their employees to strategic objectives. But you can’t manage what you don’t measure. How can executives determine whether the company is creating the conditions for greater shareholder value unless they track changes in their critical performance metrics over time?
As a manager, you play a vital role in measuring performance in your organization. For example, you might assess your unit’s contributions to the company’s profitability, productivity, customer loyalty, innovation, and other key performance indicators defined by executives. You will want to learn how to select and track performance measures for your unit. This book explains how performance measurement works, how to take a systematic approach to it, and how to avoid common mistakes.
Robert S. Kaplan is Baker Foundation Professor at the Harvard Business School and Chairman of the Practice Leadership Committee of Palladium, Executing Strategy. Kaplan’s research, teaching, and consulting focus on linking cost and performance management systems to strategy implementation and operational excellence. He has been a codeveloper of both activitybased costing and the Balanced Scorecard. He has authored or coauthored fourteen books, eighteen Harvard Business Review articles, and more than one hundred twenty other papers.
His books on performance measurement, coauthored with David Norton, include The Execution Premium; Alignment; Strategy Maps: Converting Intangible Assets into Tangible Outcomes (named as one of the top ten business books of 2004 by Strategy & Business and amazon.com); The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (named by Cap Gemini Ernst & Young as the best international business book for year 2000); and The Balanced Scorecard: Translating Strategy into Action, which has been translated into twenty-two languages and has won the 2001 Wildman Medal from the American Accounting Association for its impact on the practice of accounting.