What is output? Output is simply a measure of the performance of assigned resources used in specific activities. The challenge is to find reliable metrics for measuring the performance of the assigned resources. Metrics must focus on reality. Too often managers focus on activities rather than the results achieved from pursuing those activities. In academia increases in enrollment, the number of new courses offered, the number and importance of the research grants, and awards for academic excellence tell us little about the contributions of the assigned resources. A more appropriate metric identifies the impact or the potential impact of the learning from those new activities on some segment of society. Likewise the addition of staff or capital investment doesn’t satisfy the requirement of a metric. It’s the results gained from that investment in staff and capital that provides the metric.
Government agencies may use a metric of increases in funding, expansion into new areas of interest, additions to staff, and number and size of projects completed. As an example, transportation departments often use the number of miles of new highways or service projects completed as one of their metrics. All this tells us is how many cubic yards of concrete have been poured and how many tons of steel have been used for reinforcement. It doesn’t tell us the impact the investment had on resolving traffic congestion. A more appropriate metric identifies the results achieved from adding those concrete ribbons. Other appropriate metrics might include improving effectiveness and efficiency of all operations, eliminating projects that no longer add value, and evaluating all processes to eliminate redundancies.
Industry has a very simple metric: net profit after taxes. But that metric will probably not apply to a typical department. The metric may include performance to budget, but is that sufficient? Probably not. It depends on the particular situation and whether the organization looks at short-or long-term performance. Remember the quality mania that took over industry in the mid-1970s? Not that those improvements in quality were not necessary; on the contrary. But some organizations began counting the number of quality circles without paying attention to the output of those quality circles. Not a very good metric. The not-for-profit world cannot use the number of donors contacted as their metric. The number of donors represents activities, not results. More appropriate metrics might include the net increase in funds received, the funds received per personal contact, or the reduction in cost per dollar received.