A performance measurement system is a comparison of actual returns against pre-specified benchmarks. Learn how a performance measurement system may benefit your department and discover tips to create your own system.
It’s often said that you can’t effectively manage what you don’t measure.
Performance measurement is a type of management system, intended to provide decision makers and management with concrete data and information on which to make sound decisions and continuously improve performance.
A good performance measurement system will facilitate collecting, analyzing, utilizing and reporting on the performance of department activities. It’s management tool that will measure the department’s results so that managers can make more informed and effective choices and decisions.
There are numerous benefits to any organization that develops and deploys an effective performance measurement system. By developing a performance measurement system, your department will be in a position to utilize concrete, objective information and data on which to make sound management decisions and report to stakeholders.
Although your department may have a strategic plan, it may not have in place a formal and objective process to systematically collect, analyze, deploy and report performance information.
A performance measurement system will also help your department to improve its ability to plan, manage and measure performance through the development and use of performance indicators and evaluation frameworks. It provides the management team with timely information on the relevance, success and cost-effectiveness of programs and activities.
Another benefit to a performance measurement system is that it can lead to a set of “best practices” that can be used internally to improve the department’s management practices and program activities. These best practices can be shared with other departments to help strengthen performance across your organization.
Know the limitations of performance measurements systems
A performance measurement system is not an exact science because accurate data may not be available to tell the whole story, or the cost of obtaining more refined information outweighs the benefits such information could provide.
For example, an organization may only be able to afford allocating a small budget to interview a sample of existing customers in an attempt to assess customer satisfaction levels. While an interview with all customers would provide more refined and complete information, it would simply be too costly to the organization. Therefore, a margin of error within the sample data must be acknowledged during the review process.
Helpful rules for developing performance metrics
- Keep the metrics simple
- Focus on desired outcomes
- Involve all department stakeholders
- Base metrics on organizational objectives and processes
- Get employees to act immediately
- Know the limitations of the measurement system
Discover the Claret Partners Advantage
Within The Claret Partners Tax Resource Roadmap, we will help you create a plan to develop your people into better resources and link this plan to a performance measurement matrix.
No matter what your business or the size, tax departments have a significant responsibility – to deliver efficient, credible tax provisions, reporting and compliance. Achieving this goal requires your data, technology, people and process be effectively integrated.
To discuss your tax provision needs, please call 416-406-3337 or contact us to request more information.