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Business excellence models like EFQM, Baldrige and ABEF put priority on proper performance measurement. But how exactly do KPIs integrate with them?

Hearding cats is a breeze in comparison to managing an organisation to be successful. Organisations are complex organisms with countless interactive parts, all subject to the constant forces of change.

But that doesn’t mean there isn’t a way to handle the complexity of organisational success. For a few decades now there has been a framework that helps us handle this complexity. Actually, there are a few frameworks, but they are built on the same underlying structure and principles. Some of the more well-known frameworks are:

• Baldrige Excellence Framework
• European Framework for Quality Management, or EFQM
• Australian Business Excellence Framework, or ABEF (I was an Evaluator for this in its earlier years)

All of these Business Excellence Frameworks bring together the important dimensions of organisational success. They give structure and focus to the things that matter for managing change, improving performance, and striving for excellence.

Naturally, performance measurement must be a part of these frameworks. And it is, but it plays two very specific roles:

1. KPIs are part of what excellent organisations do.
2. KPIs are part of the evaluation of organisational excellence.

KPIs are part of what excellent organisations do.

The Business Excellence Frameworks almost entirely agree that organisational excellence is the consequence of deliberately mastering these specific dimensions:

• Leadership and Culture – setting the values, creating the conditions for creativity, innovation and change
• Purpose and Strategy – setting a clear direction for the organisation
• Stakeholder Engagement – including customers, employees, shareholders, partners, suppliers, and society
• Measurement, Analysis and Knowledge – the use of data to inform decision-making, continuous improvement, and transformation
• Operations – specifically how the organisation creates, sells, and delivers value
• Results – including stakeholder perceptions, strategic and financial performance, and operational performance

The importance of KPIs and performance measurement in organisational excellence is strong enough to often be named as a dimension on its own: ‘Measurement, Analysis and Knowledge’. And measurement also plays a vital role in the ‘Results’ dimension, in the form of KPIs that are evidence of the overall success and sustainability of the organisation.

But performance measures and KPIs are not only a part of what an excellent organisation does; they are also required as evidence of how well the entire business excellence framework is being used within that organisation.

KPIs are part of the evaluation of organisational excellence.

In any Business Excellence Framework, there is also a review cycle in addition to the dimensions listed above. The review cycle helps an organisation to look critically at how it approaches, deploys, assesses and improves all those business excellence dimensions. For example:

• ADRA – Approach, Deployment, Learning and Integration – used by the Baldrige Excellence Framework
• RADAR – Results, Approach, Deploy, Assess and Refine – used by the EFQM
• ADRI – Approach, Deployment, Results, and Improvement – used by ABEF

Within these review cycles, measurement is used as objective evidence to inform the steps referred to as Learning, Assess, and Results.

How PuMP, as a KPI approach, integrates with EFQM, ABEF and Baldrige…

Let’s focus specifically on the ‘Measurement, Analysis and Knowledge’ dimension of those Business Excellence Models. It is, after all, the most relevant to us. And we’ll use the ADRI review cycle to show how the PuMP performance measurement approach would integrate with any of the EFQM, ABEF or Baldrige frameworks. It would go a bit like this:

Dimension: Measurement, Analysis and Knowledge

• Approach: We use PuMP as the methodology to decide what we measure, how we measure it, and what analysis to prioritise. [There will likely be other methodologies used for analysis and knowledge management too.]
• Deployment: We manage a PuMP Community of Practice for those with the training, and they lead Measures Teams across the entire organisation to develop performance measures that align to our strategic direction.
• Results: We have 65% of our business units with performance measures developed with PuMP. On average, those performance measures have reduced reporting costs by 60% and increased the targets we have reached from 12% to 26%. The time to develop new performance measures is still more than 3 months for most teams.
• Improvement: We are now developing a short PuMP introduction program for managers and staff that have not had full training, so they find it easier to work with their PuMP champions and to give formal time allocation to measurement in general.

Notice how we both need an approach to measurement, and need to apply measurement to how we evaluate all the approaches we use to pursue business excellence. It can take a moment to get our head around these two roles and the subtle difference between them. But it does show just how integrated measurement is in frameworks such as EFQM, Baldrige and ABEF.

The ultimate outcome of good performance measurement is organisational excellence. It’s only natural, therefore, that your performance measurement approach integrates with your organisation’s model of excellence. Does your organisation have a deliberate approach for both?

Measurement is integral to business excellence. Does your organisation have an approach to both?
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