There are many reasons why your performance measures are not working. One main factor is a lack of understanding of the myths surrounding performance measurement , as David Parmenter explains*.
Myth #1: You can delegate a performance management project to a consulting firm
For the last fifteen years or so many organisations have entered performance measure initiatives and these have frequently been lead by consultants. Commonly a balanced scorecard approach has been adopted based around the work of Kaplan & Norton. The approach as I will argue is too complex and leads to a consultant focused approach full of very clever, freshly minted MBAs undertaking this exercise with inadequate involvement of the client’s staff. Whilst this approach has work well in some cases there have been many failures. I firmly believe in an in-house approach to this initiative supported by an external facilitator.
The balanced scorecard (BSC) has generated a billion dollar industry of consultants taking organisations on a journey going nowhere quickly. Before you make this mistake ascertain:
• How many of the consultants have worked on a BSC project that has worked well?
• Why are the consultants not questioning a methodology that is profoundly flawed in a few key areas?
• How many of the consultants have worked as a manager in your industry? In other words have got experience in ‘firing live rounds’?
• Whether you are, after the consultant’s presentation, wiser or quietly confused.
Myth #2: Your in-house project team can achieve success while continuing on with their other duties
The winning KPIs methodology clearly states “you can do this in-house”. If you cannot nobody else can. KPI projects are in-house projects run by skilled individuals who know the organisation, its success factors and who have been unburdened from the daily grind to concentrate on this important project. In other words, these staff have moved their family photographs, the picture of the 17 hand stallion, or their petite bichon frise and put them on their desk in the project office. Leaving the daily grind of fire fighting, in their sphere of operations, to their second-in-charge who has now moved into their office, on a temporary basis of course!
Myth #3: By tying KPIs to pay you will increase performance
In all types of organizations there is a tendency to believe that the way to make KPIs to work is to tie KPIs to individuals pay.
KPIs are so important to an organization that performance in this area is a given, or as Jack Welch says “ a ticket to the game”. Where KPIs are linked to pay you now have created a key political indicator which will be manipulated to enhance the probability of a larger bonus.
KPIs are a special performance tool, it is imperative that these are not included in any performance related pay discussions. KPIs are too important to be gamed by individuals and teams to maximise bonuses. Whilst KPIs will show; 24/7, daily or weekly how teams are performing, it is essential to leave the KPIs uncorrupted by performance related pay.