Performance Measurement: The Basics

Why Performance Measurement?

Most organizations dedicated to social impact measure at least some of their work in response to funder requirements, but externally driven measurement does not necessarily serve internal performance assessment needs. Many organizations have data relating to a few select programs and initiatives but little understanding of their overall progress in achieving their missions. Alternatively, some organizations feel overwhelmed by a flood of potentially helpful data that they have not yet linked to management strategy and day-to-day operations.

What all organizations dedicated to social impact need is a customized, internally driven performance measurement system, which not only meets external requirements but informs management decisions that drive continuous improvement. With such information in hand, organizations can make more strategic decisions and identify opportunities for improvement.

The culture of learning that performance measurement creates within an organization has external benefits as well. The data generated by performance measurement can serve as a starting point for fostering critical conversations among board members and partners. In addition, reporting to external stakeholders, including foundations, government, and individuals, often aids organizations in securing new and returning investments.

Performance Measurement at a Glance

By drawing on the private sector’s methods of collecting data that help improve for-profit business models, nonprofit and other organizations dedicated to social impact can use performance measurement to continually assess their efficiency, sustainability, and progress toward achieving their missions.

To collect the right data and ensure that it gets put to use, we recommend the following cohesive performance measurement cycle, which can be customized to each organization’s mission and vision of success.

Performance Measurement Cycle

Measure: Designated staff members regularly collect data for a set of indicators selected to provide the organization with a clear picture of how its operations and activities measure up in relation to the mission and vision of success.
Report: Designated staff members complete and send a management dashboard − which compiles the collected data to provide a snapshot of the organization’s performance − to the organization’s management or review team on a regular basis. In many cases, individual departments or initiatives follow the same process with dashboards focused more specifically on their own areas. Organizations also demonstrate a commitment to accountability to external stakeholders by reporting highlights of their data in an annual report card.
Learn: Following a regular review schedule, an organization’s management and program-level review teams meet regularly to interpret and analyze reported data.
Improve: Based on the insights and conclusions drawn from the reported data, the review teams assign responsibilities for implementing improvements to the organization’s strategy, activities, and operations.

Getting Started

Building and using a performance measurement system is less daunting than it may seem. These are the key things to address:

Review your mission. Make sure it’s specific enough, and that all your programs and services really link to it.
Select measurement indicators tied with your organization’s strategic plan and internal goals.
- Include indicators not only for organizational health and program performance, but also for social and economic performance that give you a real sense of your organization’s outcomes and progress in meeting your vision. Example: if you’re aimed at getting high school students into college, you’ll want to track what percent of your program’s graduates enroll in college because of your work, not just the number of students you counseled. Select indicators that will drive effective behaviors.
If you’re just starting out on this, keep it simple; don’t get overwhelmed . Focus on what’s most helpful to better understand your progress in carrying out your mission. You can refine later.
Employ a variety of measurement tools, including spreadsheets and intake forms, interviews, observations, and surveys (you might want to hire an evaluation expert to help you create a meaningful survey). You might also consider what information you can learn with online tools, such as email tracking, Google analytics, Twitter and Facebook tools, etc.
It is important that your measurement system allow room for experimentation; that’s the essence of innovation. Especially in the early years, you need to have some time and freedom to test what works.
The best part: be prepared for some terrific learning opportunities for your efforts. Your data will help you more clearly see opportunities for ongoing improvement and modifications in your programs, ultimately leading to more success and an impressive “report card” that will help you keep current donors, and impress potential ones.

To learn how to build your own performance measurement system, download our How-to Guide: Building a Performance Measurement System: Using Data to Accelerate Social Impact.

Conclusion

As a tool for empowering social innovators to accelerate their social impact, performance measurement has a key role to play in the work of solving social problems. The strategic rigor made possible by performance measurement is precisely what many of those who typically fund efforts to address social problems – individuals, foundations, corporations, and government alike – have also started to seek as they look for ways to get the most out the money they invest in social impact. Ultimately, performance measurement will serve as an important part of an emerging environment in which the public, private, and nonprofit sectors work together to develop and advance successful approaches to our most pressing social problems.

Join the Conversation

If you'd like to keep up to date on how organizations are using performance measurement to improve and report on impact, please visit our Performance Measurement Discussion.