Performance measures

Many boards struggle to set performance expectations and this leads to many organisational and executive performance problems.

Poorly expressed expectations will almost certainly foster poor performance measures. There are two main elements in establishing performance expectations:

    • desired outcomes: results to be achieved; and
    • planned actions: ways in which results will be achieved.

The board’s job is to specify what the organisation is to achieve. The chief executive determines the actions required.

Defining how achievements are measured can be difficult, even with well-expressed expectations. Ideally, the chief executive should design the performance measures. The board can help by challenging the chief executive to think through how they will show the board its expectations have been met.

Some common errors

Boards and executive teams regularly fall into similar traps when writing performance expectations and measures. These occur when there is:

    1. Reliance on feelings. Assessment should be based on demonstrated evidence or emotions.
    2. Misuse of adjectives. When words like ‘appropriate’ and ‘excellent’ are used to outline performance expectations (e.g. “facilitate an appropriate relationship with the XYZ organisation”), it consigns assessment to subjectivity. Completing a sentence like “We will know that the relationship with XYZ is appropriate when...” helps clarify exactly what the board wants.
    3. Misuse of verbs like ‘promote’, ‘coordinate’, ‘facilitate’, etc. directs attention to the action instead of the intended outcome. This sees the related performance measures focusing on activity levels. ‘Busyness’ is no substitute for effectiveness.
    4. Comparative words like ‘increase’, ‘improve’, ‘more’, should be avoided unless a baseline or reference point is included. For example, “achieve a 15% increase in funding” should be “achieve a 15% increase in funding compared to the 2003/04 base year”.
    5. Failure to be exact. It is even better to be more specific: for example, “achieve a 15% increase in funding from non-governmental sources compared to the 2003/04 base year”.
    6. An unreasonable expectation. A typical example is the “ensure the Government increases funding to the organisation” line. The organisation has no control over the Government so cannot expect this to eventuate.