Myth #4: You Can Delegate a Performance Management Project to a Consulting Firm
Performance measurement is failing around the world because management are not aware of the “unintended consequence” of the performance measures they have picked. As mentioned already all measures have a dark side. There is a possibility that the actions the measures cause may send performance in the wrong direction.
One of the characteristics of a KPI is that this “dark side”, this unintended consequence is very minor and thus they have the holistic property of sending performance in the right direction.
Every measure that is to be used needs to be:
- Discussed with the relevant staff “if we measure this what will you do?”
- Piloted before it is rolled out
- Abandoned if its dark side creates too much adverse action
Myth 5: Most Measures Lead to Better Performance
Whilst it may appear logical that most measures lead to better performance in fact, it is quite often the reverse. In order to get measures to work in the right direction requires one to be a bit of an amateur psychologist. You have to second guess the behavior of the staff being measured. In his book Transforming Performance Measurement,i Dean Spitzer fires a broadside across the boughs of many of us who, one quiet afternoon, proceeded to dream up a new measure or two
Myth 6: Performance Measures Are Mainly Used to Help Manage Implementation of Strategic Initiatives
The traditional balanced scorecard approach uses performance measures to monitor the implementation of the strategic initiatives and measures are typically cascaded down from an organization measures such as ‘return on capital Employed’.
While this looks logical it leads to mayhem. The cascading of measures, has led to a myriad of balanced scorecard applications with hundreds of measures in some form of matrix helping the organization to go, I believe, nowhere quickly.
Performance measures are not on this planet to monitor the implement strategies. The main purpose of performance measures is to ensure staff spend their working hours focused primarily on the organization’s critical success factors.
Exhibit 1 shows the difference in the two approaches. Winning KPI methodology states that you derive the measures from the critical success factors. Deriving your measures from your strategic initiatives will create a large number of unimportant measures, largely ignoring the important daily “business as usual” issues.
Many strategic initiatives are controlled by special project teams undertaking secretive work, such as acquiring new operations or technologies. They will monitor their progress through project reporting. These new initiatives will become business as usual only when the new business or product is part of daily activities.
While some strategic initiatives will impact directly on business as usual the impact of these initiatives can be managed better through monitoring measures in the critical success factors.