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A New Approach to Performance Measurement and Goal Setting

To support their continuous improvement programs, we developed and implemented a performance-measurement and goal-setting system for the six regional water utility operating companies that are all managed by one holding company. The performance-measurement and goal-setting stages both have two sample-based methodological components: (1) estimation of past and future cumulative distribution functions (c.d.f.s) of the key performance metric for a population of operating companies in the industry, and (2) regression analysis of the same metric for comparing period-to-period changes (both past and projected) in the performance of individual operating companies. This system has allowed the holding company to better evaluate and plan for its own performance in relation to that of its peers and to establish credible, individualized goals for its six regional companies based on estimates of their inherent capability.