Evaluation and Control Program Introduction
An organization’s evaluation and control program is a data gathering and action initiation mechanism. This program monitors the external business environments, the internal performance of business units, processes, and individuals, and the output products and services of the organization. Once collected, data is processed to present a picture of the company’s overall performance and to trigger actions in response to conditions representing opportunities or threats.
The evaluation and control program is comprised of several component processes that monitor performance on a continuous, periodic, and event driven basis; driving action when necessary. Component processes include:
- organizational performance measurement system (continuous and periodic)
- external environmental monitoring program (continuous and periodic)
- condition reporting/corrective action program (event driven)
- self-assessments program (periodic and event driven)
- benchmarking (periodic)
Outputs from the various monitoring processes are often combined to create a richer understanding of organizational performance relative to both internal performance standards and external benchmarks. Synthesized data drives actions on a day-to-day operational basis and serves as input to the strategic planning process. When predefined thresholds are reached or exceeded, action is prompted to take advantage of opportunities or mitigate threats representing a risk to the business or its operations.
Evaluation and control program components play a key role in an organization’s learning and growth efforts. They not only identify improvement opportunities, they also identify internal and external best practices that can be used to better existing processes. This continuous growth mechanism is critical to an organization seeking to maintain and advance its position in the marketplace.
Posts in this category are dedicated to discussing the leading practices of companies successfully executing an evaluation and control program in support of strategic business planning and tactical business execution.
Sign up for our Email NewsletterEvaluation and Control Program Best Practice 1 – Data Synthesis
Evaluation control programs must be credible in order to add meaningful value to the organization. Credibility is built not only by the quality of the data collected but also by the method by which it is collected, how it is combined, and how it is interpreted to create useful information in support of decision-making.
Data synthesis or data combination should be performed in a manner that enhances the credibility of the conclusions drawn. This process is comprised of two important parts: data prioritization and data association.
Evaluation and Control Warning Flag 1 – The Illusion of Accuracy
“Measure with a micrometer, mark with a crayon, and cut with a chainsaw”
Author Unknown
Evaluation and control programs provide executives and managers with the critical information they need to make effective business decisions. However, an equally critical component of the decision-making process is the understanding that no data-set is a perfect reflection of reality. Therefore, it is important for business leaders to recognize the potential inaccuracies associated with their data in order to fully assess the risks these flaws pose to the achievement of desired outcomes.
Organizational Performance Measures Best Practice 12 – Multiple Action Thresholds
Recovery from a significant event is costly and disruptive. While an expense, mitigating and preventing activities taken to prevent the event’s occurrence are typically far less expensive. From a business perspective, the challenge becomes that of balancing the value of risk reduction with that of the mitigating and preventative activities’ cost.
A key contributor to the cost factors associated with this balanced equation is the implementation timing of risk mitigating and preventing actions. Delaying such actions defers their cost until and only if such activities are needed to reduce risk. Subsequently, the better the organization’s ability to detect and respond to performance degradation evidencing an impending event the greater the deferment related cost savings. Without this predictive capability, risk mitigating and preventing actions need to be in place at all times, heightening short-term expenses and forfeiting the opportunity to avoid these costs should the associated performance degradation never occur.
Self Assessment Program Warning Flag 3 – Conclusion Bias
Self assessments can be a powerful tool for determining the unknown drivers of performance; their effectiveness derived from the diverse knowledge and experience of the multidiscipline team and the vast amounts of information from causal evaluations, work performance observations, executive, manager, employee, and customer interviews, financial reports, independent analyst reports, performance measures, and condition reports leveraged to perform these assessments. So rich and robust are these assessments that their credibility often goes unchallenged, yet a single flaw in the self assessment’s initial execution can make this power tool for continuous improvement an instrument of disaster.
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