Finance: Advice line - Pesh Framjee on finance and governance

Q: We are implementing a performance measurement system and we have been told we need to measure processes as well as outputs. Surely it is the outputs we need to focus on?

Much has been said in the sector about output measures and very little on process measures.

A process is a collection of activities that create an output of value.

Process measures track and report the activities of a process and help to motivate people to control the process. They are important because they monitor progress and allow organisations to react rapidly to improve and check whether the process is still in control. They are different from output measures, which track and report the results of a process.

Process measures will focus on cost, quality and time paradigms to see if a process can be done cheaper, better and quicker.

However, beware the danger of becoming obsessed with processes without considering how they add value to your organisation and what you are trying to achieve. The aim is to focus on outcomes and impact, and then on how you can improve your processes to add value. Best-in-class organisations are using performance measures to quantify how well the activities within a process work towards achieving a specified goal. This can provide early warnings of operational problems, identify areas for improvement and indicate what action needs to be taken.

The aim should be to focus on the horizontal linkages between processes and functions. This can help break down the silo mentality that is all too prevalent in our sector. In essence, process measures can drive your organisation to improve, whereas output measures keep the score.

- Pesh Framjee is head of the non profit unit at Deloitte and special advisor to the CFDG. No liability arises to the author, his firm or Third Sector.

Send your questions to pesh.framjee@haynet.com.

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