Performance is an umbrella term of concepts used for quantifying the efficiency and effectiveness of systems (including activities, processes and employees). Efficiency in this context is the ratio between the actual resource usages of the system against the theoretical minimum; i.e., it is an indicator of whether operations are being carried out the proper way. Effectiveness measures the system’s ability to reach its objective.
A number of performance measures are used to evaluate the efficiency and effectiveness. Cost is the fundamental metric but many non-cost metrics are used. Examples are manufacturing related metrics such as reliability, quality, speed and flexibility. Employee related metrics include reliability, knowledge, skills, thoroughness, attention to details, ability to produce consistently and effectively.