Contextual References

StrategyDriven Organizational Performance Measures Best Practice ArticleAll performance is relative and performance measures without contextual references are largely meaningless. Such measures provide a performance count without a value indicator. Without this indicator, managers cannot know what, if any, action is required.[wcm_restrict plans=”41734, 25542, 25653″]

Contextual References

There are several types of contextual references that help reveal performance value; providing managers with the added information dimension necessary for identifying the need for follow-up action. Contextual references include:

1. Internally defined performance goals
2. Internally and externally derived benchmarks
3. Measurement normalization:

  • Number performed/achieved divided by the total available
  • Number performed/achieved per unit of work available
  • Number performed/achieved per unit of time

The number of contextual references is directly related to the amount of data available to inform management decisions. Well-defined performance measures contain three or more contextual references (typically references 1, 2, and one from 3).

Adding Contextual References to Performance Measures

Incorporating contextual references into performance metrics is relatively straight forward. Once defined, references 1 and 2 are superimposed on the metric itself. Reference 3 requires an additional data point be added to the metric calculation, one that is relatively stable over time. Note that the first two parts of reference 3 can be easily incorporated into the metric calculation and the third part derived from the time-based nature of the metric itself (often the x-axis) or by adding a time-based trend line anchored on a secondary y-axis (often located on the right side of the chart). If more than one ‘like’ parametric category is being measured, these can be presented as a stacked bar chart so to allow for the addition of the time-based contextual reference.[/wcm_restrict][wcm_nonmember plans=”41734, 25542, 25653″]

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About the Author

Nathan Ives, StrategyDriven Principal is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.