How to Develop a Strategic Performance Measurement System

One of the most complex and enormous challenges the human resources function faces is the alignment of the company's performance measurement system with its business strategic direction. While this subject has broad implications that touch the day-to-day operations of a company as well as its planning, budgeting and goal-setting processes, at the end of the day if workers have not produced enough goods or services, companies will take a hit to the bottom-line and fall sadly short of goal achievement. Developing and implementing a strategic performance measurement system will help to keep workers committed to a company's business system and goals and aware of how their jobs fit into strategic activities. Responsibility for developing a strategic performance measurement system lies with the human resources function. This article offers several tips to jumpstart the process.

Things You'll Need

• Performance Metrics
• Company Business System
• Employee Performance Management Program
• Business Strategy
• Human Resources Function
• Performance Measurement Software

Instructions

1. Link performance measurement to business planning. Tie resulting performance metrics to overall business results.

2. Design employee orientation and training programs to help workers become more knowledgeable about how their work impacts the company's bottom line.

3. Revise the existing employee performance management program. Consider including multiple-rater, 360-degree feedback and input into the performance measurement system.

4. Involve workers in the performance measurement project. Get their input on design, implementation and evaluation of performance measurement tools.

5. Develop competency models and use them as a basis for linking performance measurement with other people management processes.

6. Separate professional development from performance evaluation. De-emphasize grades and ratings and focus on helping workers to increase skill and competency levels.

Tips & Warnings

• Tackling such a complex issue will require senior leader buy-in. Do not proceed unless you first get commitment from the top leader and senior team.

• Hire a management consultant who specializes in strategic human resources management and balanced scorecard methodology.

• Investigate performance measurement software and various performance measurement tools to ease design and implementation.

Resources

• FREE SPECIAL REPORT: Strategic Human Resources Management