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Performance Management

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Performance Management

What is it and how can it help me?

This tool gives you an overview of performance management and the tools that you can use in conjunction with it.


When does it work best?

Creating a comprehensive performance management outline helps organisations in the NHS to achieve improvement by: 

  • Identifying areas of best practice
  • Focusing on continuous improvement
  • Delivering improved outcomes
  • Taking action to improve health services
  • Ensuring that organisational activities are linked to overall strategy

How to use it

This is an overview of performance management. For further information on how to use the tools in this review, see the more detailed descriptions.


As the NHS has become more sophisticated, we increasingly use business systems to measure and evaluate performance as a matter of course. Performance indicators are now commonly used to examine and compare performance across NHS organisations. These indicators focus on areas such as length of stay, costs per episode of patient care and number of staff employed. Many assess efficiency within the service, whilst others examine clinical performance.


In general, performance management is about establishing a formal, regular, rigorous system of data collection and usage to indicate trends and measure the performance of NHS services.


Performance monitoring should: 

  • Help to define performance targets / goals across the key aspects of service delivery, including management of resources (personnel, infrastructure), customer service and financial viability
  • Provide a comprehensive picture of the organisation's progress towards achieving its performance targets / goals
  • Provide an early indication of emerging issues / cost pressures that may require remedial action
  • Indicate where there is potential to improve the cost effectiveness of services through comparison with other organisations 

Performance management enables organisations to articulate their business strategy, align their business to that strategy, identify their key performance indicators (KPIs) and track progress, delivering the information to decision-makers.


As an organisation, you need to define your strategy and communicate it effectively to staff so there is a clear link between the strategic objectives and every work group within your hospital.


As part of the NHS, you should take an holistic view of patient services to ensure that the following are in place: 

  • A structured approach to focusing on strategic and annual performance objectives
  • Mechanisms for accurately reporting organisational performance
  • Ways of ensuring accountability for results
  • Ways of ensuring that responsibility for performance improvement is shared
  • Ways of addressing quality and safety issues as well as those of activity and cost 

Balanced scorecards

The balanced scorecard plays a key role within performance management, enabling you to clarify your organisation's vision and strategy, translating them into tangible objectives and measures. Balanced scorecards allow you to measure and monitor performance and assign Key Performance Indicators (KPIs), giving you the ability to track and optimise performance based on those indicators. KPIs are measured using multiple interdependent perspectives, not just traditional methods of performance rating, such as financial data alone. They help organisations focus on more than just the ‘bottom line'. This approach helps ensure that customer service, employee satisfaction and sales and marketing are weighted appropriately. 


Key performance indicators

Key performance indicators (KPIs) help you define and measure progress towards organisational goals. As the primary means of communicating performance across the organisation, KPIs should focus on a range of areas. Once an organisation has analysed its mission, identified all its stakeholders and defined its goals, KPIs offer a way of measuring progress toward these goals.


Further performance measures such as, length of stay (see delivering quality and value - productivity and efficiency) mortality rates, readmission rates and day case rates can be analysed. For example the length of stay for a particular procedure, may be different from the national benchmark. Therefore this may highlight where a process can be investigated and changed.


As well as looking at your Trust's rates, it is also a good idea to look at peers and national performance. These figures are available at HES online and also from your Strategic Health Authority.


Performance measures record sheet
A tool for understanding the purpose of measuring a particular aspect of performance, this helps you define what
performance measures are needed and which objectives they relate to. It can help to identify the key performance measures.


Four column matrix
Most performance management takes a top-down approach. The organisation dictates the objectives and every work group fits around these. However, you can also ensure strategic objectives are linked with every work group by taking a bottom-up approach.


The four column matrix tool helps teams and projects link their objective to the organisational objectives for maximum impact and senior buy in. By measuring the correct information, you are ensuring maximum impact on the organisation as a whole. In a sense, this is a communication tool rather than a measurement tool. You may find that it also helps you refine some of the measures for improvement. For example, by reducing DNAs rates by 50 per cent, we anticipate that our potential throughput would be 315 patients. We anticipate that this would reduce waiting times by eleven days at the end of the financial year. This would contribute to a large percent of the hospital's ambition of making sure that no patient waits longer than reducing waiting times for treatment.


What next?

You should use performance monitoring in all aspects of redesigning services and understanding how an organisation is performing.


Other useful tools and techniques on this website:


Balanced scorecard
Delivering quality and value - productivity and efficiency

Performance measures sheet
Four column matrix


Additional resources

Performance management at the crossroads in the NHS

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