Performance metrics should be constructed to encourage performance improvement,
effectiveness, efficiency, and appropriate levels of internal controls. They
should incorporate "best practices" related to the performance being measured
and cost/risk/benefit analysis, where appropriate. Performance measurement is
an important cornerstone of the contracts between the University of California
and the Department of Energy for the operation of the laboratories. This
section discusses the principles and concepts used in developing effective
performance metrics for these contracts.
The Department of Energy has promulgated a set of Total Quality Management
guidelines that indicate that performance metrics should lead to a quantitative
assessment of gains in:
- Customer satisfaction
- Organizational performance
- Workforce excellence
The key elements of the performance metrics to meet these guidelines should
address the following key elements:
- Alignment with organizational mission
- Quality of product
- Timely delivery
- Cost reduction and/or avoidance
- Cycle time reduction
- Customer satisfaction
- Meeting DOE requirements
- Meeting commitments
The first step in developing performance metrics is to involve the people who
are responsible for the work to be measured because they are the most
knowledgeable about the work. Once these people are identified and involved,
it is necessary to:
- Identify critical work processes and customer requirements.
- Identify critical results desired and align them to customer requirements.
- Develop measurements for the critical work processes or critical results.
- Establish performance goals, standards, or benchmarks.
The establishment of performance goals can best be specified when they are
defined within three primary levels:
- Objectives: Broad, general areas of review. These generally reflect
the end goals based on the mission of a function.
- Criteria: Specific areas of accomplishment that satisfy major
divisions of responsibility within a function.
- Measures: Metrics designed to drive improvement and characterize
progress made under each criteria. These are specific quantifiable goals based
on individual expected work outputs.
The SMART test is frequently used to provide a quick reference to
determine the quality of a particular performance metric:
- S = Specific: clear and focused to avoid misinterpretation. Should
include measure assumptions and definitions and be easily interpreted.
- M = Measurable: can be quantified and compared to other data. It
should allow for meaningful statistical analysis. Avoid "yes/no" measures
except in limited cases, such as start-up or systems-in-place situations.
- A = Attainable: achievable, reasonable, and credible under conditions
expected.
- R = Realistic: fits into the organization's constraints and is
cost-effective.
- T= Timely: doable within the time frame given.
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