Measuring Performance

[Extract from Business Masterminds: Peter Drucker by Robert Heller.]

In this new world of the knowledge worker, new measures are also required. The old methods of accountancy, for example, were geared to an economy that is fast vanishing. You cannot measure a knowledge company by the same criteria as one producing nuts and bolts. Drucker has said that "performance will have to be defined non-financially so as to be meaningful to knowledge workers and to generate commitment from them".

In most companies, the measuring of performance is dominated by financial numbers – sales figures, cash flow, and profit – giving a limited, one-dimensional picture of progress. To obtain a clear and wide-ranging view of performance levels, always use the greatest variety of indicators possible. Think very carefully about each indicator you choose. You need to get a comprehensive and accurate picture of one’s overall performance. Ensure that all members of a team are involved in measuring performance to keep everyone focused on raising standards across the board.

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