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Monday, October 23, 2006

Best Ways To Measure Performance

Fortune Magazine recently published a "Secrets of Greatness" article: "Are today's CEOs batting a thousand?" in which it revealed the "best ways" to measure executive performance.

Some interesting observations:

  • Comparing corporate performance to baseball. One obvious problem is that with corporations only team statistics are readily available, not individual ones. But the most important difference: Baseball performance statistics, once they're recorded, don't change. Corporate performance statistics are nothing more than tentative indicators in a game in progress."
  • Creating lasting value for shareholders. In the process, the quest for shareholder value became focused on - and eventually distorted by - short-term measures.
  • A new approach is emerging. One that seeks to balance the pressures of the stock market - which still figures heavily in CEO compensation - with the recognition that long-term success is often built upon less tangible factors like employee motivation and customer satisfaction.
  • Then there's the "balanced scorecard." A template for supplementing financial measures with other metrics that was dreamed up in the early 1990s by Harvard Business School professor Robert Kaplan and management consultant David Norton and is now very much in vogue.
BOTTOMLINE: A convergence of best practices is underway that will combine the leading thoughts of strategy, planning, organization, execution, measurement and learning - and it will transform the way business gets done. It's called strategy-driven execution.

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