Performance measurement provides the ability for individuals or groups holding the responsibility to leading projects or managing teams to understand how the efforts are working in regard to key metrics and milestones. The ability to understand the performance of actions, teams, business units or other entities delivering upon requirements is critical in providing the information needed to make informed business decisions. There are basically two different types of performance measurements. There are result orientated performance metrics and input focused metrics. The result or output performance based measurement focuses on the outcome of the specific activity or accumulation of multiple efforts. Outcomes of these efforts include financial performance, increased market share, launch of a new product, acceptance of an idea or product or developing a competitive advantage. Activities for the result orientated performance measurements include calculating profit margins, unit productivity, sales or cost reductions. These are key metrics that are measured after activities are accomplished and measure the results.
On the other side of the performance measurement spectrum there is the measurements of inputs into the process. The areas of performance that can be measured here include quality of the process or product, reduction in lead-times, production changes to increase line rate capacity or efficiency and utilization of the tools and people to either produce more or to produce the same with less cost. These inputs are measure by activities such as measuring the cost of quality, variances between key performance indicators, ability to adapt or change to market demands, or other factors that determine the results.