4 Myths of Performance Measurement
The development of a strategic performance measurement system is a critical process for the overall success of any organization. There are, however, a few myths about the development of performance measures that are often discussed and mistaken as “guiding principles”.
Here are four guidelines that often espoused, but in my experience could become catastrophic landmines if not properly understood.
What is measured is what gets done.
I hear this a lot, especially by other consultants trying to sell managers on why performance measurement is so critical to operational and strategic success. It must be one of the most common myths about the benefit of a strong performance measurement system is that it will direct staff to focus energy on the important activities. And, by calling it a 'myth', this will also likely be the most contentious statement in this blog entry.
In order to keep performance measures at a manageable amount, organizations should define and implement the critical few measures that will provide the best barometer for their operation. However, by focusing only on those one to three key measures of activity, management and staff can develop a myopic view of their operation. Those key measures may also establish an indirect incentive for staff to adjust work practices in order to show operational improvement. For instance, if you set a goal to reduce the number of purchase requisitions processed, don’t be surprised when the materiel management staff delay purchases in order to “double up” requisitions. This will reduce the number of purchase requisitions. Goal achieved . . . Right? Perhaps, but what is the potential impact on their clients who do not receive requested goods in a timely fashion?
Just do it!
Although many practioners recommend that the best approach is to jump right in and establish a series of measures – then, over time once the practice of collecting and reviewing performance data becomes more engrained in the day-to-day business practices, go back and re-evaluate the measures.
Unfortunately, an effective performance measurement system can’t just be implemented.
A successful performance measurement system is built on a solid strategic-level cause and effect model, often depicted by a logic model and/or a strategy map. And it is supported by an organization-wide education regarding its purpose and intent. An organization doing anything less creates a measurement framework that does not have the necessary foundation it requires to be successful.
Further, the implementation of a performance measurement system is really an organizational change initiative. As such, if the staff is not informed of the intended role of the new system, it will often be met with fear and cyncism. This is one of the key reasons that many, if not most, measurement systems survive for 6 to 12 months - then wither on the vine, failing to fully provide the performance information senior managers need to support their strategic and operational decision making.
A performance measurement system is an ideal way to rank and rate the performance of individuals.
Ranking and rating staff is not the intent of performance measurement.
The focus of performance measurement is on the performance of the organization, not on the individuals within the organization. When a measurement system is used for ranking and rating co-workers, it causes more detrimental effects than positives outcomes. It will destroy teamwork, eliminate sharing and collaborating around innovative ideas, and foster antagonism.
Similarly, we should also make a distinction between performance management and performance measurement. The historical and narrow view of performance management was on the improvement of the individual staff within an organization. However, the more common perspective and definition of performance management is the alignment and integration of performance information across all business perspectives – planning, resources, operations and projects, and risk – and consolidating the performance information to drive informed decision making on all aspects of the enterprise. Performance measurement is a performance management tool to support the collection and analysis of performance information.
We can simply ‘copy and paste’ their performance measurement system.
“Company ‘X’ has a proven and successful performance measurement system - we will simply copy their framework and implement here in our organization.”
If you are in search of the magical silver bullet, be prepared for frustration - and probably failure.
That is not an appropriate approach to introducing an effective performance measurement system. Successful performance measurement systems are tailored to the causal output-outcome relationship for the organization. As such, the system has to be constructed from within, and be customized for the context and culture of your organziation.
Getting the Most from your Performance Measurement System
It may sound counter-intuitive and counter-productive, but a successful measurement system should really raise more questions than it answers.
Appropriate performance measures supply us with detailed information about the performance of the organization, about the linkages and causal relationships between outputs and outcomes, and contribute to learning opportunities about your organization and your operational environment. Through this learning, we build our knowledge of the organization. From this knowledge we revise our theories -- which leads to more questions about how we may further improve the performance of the organization.
Has your organization fallen victim to any of these performance measurement myths? Does your performance measurement system successfully contribute to the growth of organizational knowledge? Are senior managers using, or even looking for, performance information to support decision-making? Is performance information being used to support organizational reviews and change initiatives such as Strategic Operational Review? Is performance information being used to guide continuous improvement opportunities?