Summary of Key Points and Terminology – Chapter 8
are simply representations of facts that come from some type of
is the act of quantifying the performance
dimensions of products, services, processes, and other business activities.
Measures and indicators
refer to the numerical information that results from
is data in context of a business or organization.
Organizations need performance measures to drive strategies and organizational
change, to manage resources, and to operate processes effectively and
continuously improve. Data and information support control, diagnosis, and
planning at the three levels of quality. Benefits include better knowledge of
product and service quality, worker feedback, a basis for reward and recognition,
means of assessing progress, and reduced costs through better planning.
consists of four perspectives: financial, internal,
customer, and innovation and learning perspectives.
A good balanced scorecard
and links them through logical
The Baldrige criteria provides a slightly different view of a balanced scorecard,
and focuses on six categories of performance measurement and indicator
outcomes: product, customer, financial and market, workforce, process
effectiveness, and leadership.
Although many specific measures and indicators
can be defined in each category, the ones an organization chooses should be tied
to those factors that make it competitive in its industry.
The purposes of a performance measurement system include providing a
perspective of the past, present, and future; identifying trends and progress;
facilitating understanding of cause-and-effect relationships; providing direction
and support for continuous improvement; and allowing performance comparison
Many organizations make two fundamental mistakes: (1) not measuring key
characteristics critical to company performance or customer behavior, and (2)