The operations of an institution can be viewed from three perspectives: (1) the "actual operating measurement" such as income and expenditures of a cost center at a point in time; (2) the "criterion" which reflects the established policy for a time period; and (3) the "efficiency level" wherein a balance between input and output is defined. Criterion is normally established with the development of the budget which establishes the desired levels of spending and production for a specific time period. The budget can be, and is, amended as conditions require; however, with each set of amendments a new criterion is established. The different perspectives are not always discrete nor is the hierarchical order the same for different organizational units or over time. In most systems, there is a strong tendency to mask the divergence of the perspectives over a planning time cycle. Growth, on the other hand, is largely controlled by the financial ability to absorb growth unless there is a funding formula encouraging growth. Production is too often considered at the actual level rather than considering the actual production in relation to the criterion or efficiency level. The planning cycle will start from a base in actual information. Qualitative outcome objectives are then produced and measures of effectiveness must be developed for them; the real danger for the monitoring processes is the paucity of effectiveness measures in instructional and service areas. Without them it is easy to slip into a mode of monitoring on efficiency alone. (Author/MB)