The performance measurement concept took flight in 1996 when two Harvard professors, Drs. Robert S. Kaplan and David P. Norton, published The Balanced Scorecard. Their book described the underlying concept and detailed a framework that balanced out financial indicators by adding metrics for internal processes, learning, growth and customers. Initially, executives were slow to accept this strange new concept. Today, however, performance measurement is seen as something all entities must do to achieve their objectives.
Performance measurement begins when the leaders of an organization determine their strategic focus.
Usually derived from the mission or vision statement, the strategic focus directly relates to the areas that management deem essential to sustain and grow the business or, in the case of governments, to provide its services. By explicitly communicating these ideas throughout the organization, employees are able to prioritize their daily activities to help meet those goals. All departments and operational processes within an organization have an impact on its ultimate success or failure. It is through this alignment that an organization can accurately determine if performance is meeting targeted expectations. This determination is made by quantifying the critical processes occurring within each area or department and then placing them within a hierarchical structure that eventually rolls up under the strategic focus areas they affect.