Performance measurement improved significantly with the advent of the balanced scorecard. Before that, no matter what an organization did, it tended to emphasize one set of measures at the expense of all others. Businesses focused on financial performance. Schools targeted test scores. Government concentrated on…I have no idea.

Each set of measures was important but just part of a bigger picture, and each a lagging indicator of performance on all of the processes that produced these results.

The balanced scorecard directs leaders’ attention to how their organization operates, and how it operates determines how it will perform. A scorecard is also a powerful tool for aligning the activities of an organization with its vision, mission, goals, and objectives. Most Baldrige Award winners rely on balanced scorecards, along with their strategic plans, to focus everyone on what the organization must do to succeed.

I recently sat in on a Webinar by Stacey Barr, a performance measurement expert, in which someone asked a basic question about how you figure out what to measure. The Baldrige Criteria put it this way: How do you select data and information for tracking daily operations and overall organizational performance?

Barr suggested asking a different question. Rather than thinking about how to measure something, start with your goals and objectives. Make sure they clearly convey what you wish to achieve. Consider words you would use to describe meeting the goals and objectives such as effective, efficient, reliable, quality, engaged, systematic, and sustainable. What does it look like when the goal or objective is being achieved? That should point you toward the key measures.

As for which measures should be in your organization’s scorecard, 2008 Baldrige Award-winner Poudre Valley Health System uses 13 questions to find the best measures:

1. What is the purpose of the measure?
2. Why was the measure chosen?
3. How was the measure chosen?
4. How should the measure be defined?
5. How often should this item be measured?
6. What is the format of the measure?
7. What are acceptable and unacceptable values for this measure?
8. Are the definition and range acceptable for all levels of the organization?
9. What sources were consulted for possible industry benchmarks?
10. Is there an industry benchmark?
11. Are there a data source and benchmark for this measure?
12. If a benchmark is not appropriate, why not?
13. Are there other factors to consider?

PVHS aligns its strategies and action plans, along with its system balanced scorecard, with six strategic objectives. It has 17 measures in its scorecard that support these objectives. To learn more about how PVHS ensures alignment—and how that alignment helps deliver world-class results—read Categories 2 and 4 in its award application summary here.

To find out more about alignment and measurement, read:

• Alignment and Integration
• Transforming Measurement
• Creating a Visual Scorecard
• 10 Steps to World Class

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