The Different Types of Performance Measurement Systems
Performance measurement systems are frameworks or business models to evaluate performance that is measurable against a specific set of criteria of excellence. Every business measures performance, which is the outcome of their efforts to use business strategy and processes to achieve goals. Using benchmarks in measurement systems as a reference, personnel can aspire to achieve or surpass them. Performance measures are used for annual reviews, promotions, bonuses and awards.
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Kaplan and Norton's Balanced Scorecard
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Robert Kaplan and David Norton introduced the Balanced Scorecard in the Harvard Business Review in 1992. Kaplan and Norton suggested adding financial performance, customer knowledge, internal business processes, learning and growth to the existing key performance measures businesses were already using. The concept took hold and companies everywhere began to implement the Balanced Scorecard criteria to measure performance.
Total Quality Management
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Total Quality Management aims to surpass stakeholder, shareholder, employee and customer expectations using a process of continuous improvement. All parties are expected to contribute for the best interest of everyone. TQM was adopted from the Japanese whose culture and philosophy were consistent with the concepts. In western culture, TQM was not implemented as smoothly due to cultural differences.
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Baldrige Criteria for Performance Excellence
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The National Institute of Science and Technology, along with the American Society for Quality, use the seven categories of excellence in the Baldrige framework to identify candidates for business excellence and quality awards. The criteria for the US Malcolm Baldrige National Quality Award are strategic planning, leadership, customer focus and market focus, workforce focus, process management, business results and analysis, knowledge management and measurement.
European Foundation for Quality Management
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European Foundation for Quality Management is Europe's version of a framework used to assess performance for business excellence and quality awards. The nine criteria for EFQM are leadership, partnerships and resources, people, policy and strategy, customer results, people results, key performance results, society results and processes.
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References
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