What is the first step in effective performance measurement?

The first step in effective performance measurement is identifying and measuring input. Inputs are the resources utilized to produce outputs, such as raw materials, labor, and capital. By first assessing the inputs, organizations can understand the context in which their operations take place. This foundational step allows for an accurate evaluation of how effectively resources are being utilized to contribute to overall performance.

In performance measurement frameworks, the evaluation process often follows the assessment of inputs. After inputs are identified, the resulting outputs are examined to determine their effectiveness and efficiency. However, if the inputs themselves are not properly analyzed, it can lead to flawed conclusions about performance, making it critical to address inputs first. Understanding input allows for a more comprehensive overview of the operational process and establishes a basis for further analysis and improvement activities.