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Quite a few people still seem to think that performance measures are only needed at the end of the planning cycle, to check and see whether the goals were achieved and the strategic initiatives implemented.

They’ll decide what the measures will be during or soon after they develop the plan, and then after the year has passed, they’ll start looking to those measures to see if the plan was successfully achieved.

If you believe that performance measures are solely for judging whether or not something happened, it’s understandable you’d use them in this way.

But that’s not what performance measures are for. They are feedback:

• to help you execute your strategic initiatives,
• to test if they are working or not, to change them as the world around you (and all the assumptions you made when you planned) change,
• to readjust your budgets so resources go where they are most needed,
• to learn where the true leverage is to achieve the strategically important and mission-critical results.

Phil Jones discusses this in his book “Communicating Strategy” (1):

“…you may believe you have the best strategy, that you are communicating it in the most congruent and effective way, but it will fail, because the organization’s systems, structures, practices and processes will stop it happening. Failing to address these issues will mean that you effectively handcuff the organization and restrict its ability to execute your strategy.”

Great performance measures give you regular feedback as your strategic initiatives are unfolding, as they are beginning to have an impact on the results they were chosen to impact. Great performance measures are a big part of taking off those handcuffs.

(1) Phil Jones, “Communicating Strategy”, Gower, 2008

JOIN THE DISCUSSION:

Are performance measures used as tools for judgement, or tools for learning, in your organisation? Share your suggestions on the blog.

1. Prahlad Bhugra says:

   July 2, 2013 at 9:45 pm

   Stacey, the concept of using performance measures for learning and not for appraisal of a person is well known from Deming’s time. As found by Deming, most of the variations in any process are contributed mainly by defects in the system, people only contribute about 5%. Deming suggests that we should not be having appraisals as this kills intrinsic motivation in people.
   Use of control charts and other statistical tools have been taught from ancient times to look into variation in a process and identify whether the variation is random or special cause.
   I have been working with US multinationals for last many years. I see that appraisals are linked with performance measures as well as competencies of the person. So, I see lot of fear in people to meet their targets at year end – in doing so I see during my reviews the Managers manipulate data to look good infornt of management. Although trend analysis is the way to look at performance measures, I see only instantaneous corrective actions being taken by professionals (Red, yellow, green on balanced score cards). After a year, the data is thrown and new set of data is created & monitored.
   One more problem I see is that the measures used in companies are lagging indicators and people are not able to connect them with their day to day operations. Also, very few leaders use statistics in their analysis of performance measures- although the school curriculum teaches statistics
   I feel it is all about having aligned leadership in a location – who understand KPIs outcome and the way they have to be looked into and take actions to drive out fear from people’s mind while doing continuous improvement in the organization delinking the performance measures from appraisals. In short, everything starts at the boardroom of the organization. People at middle and lower level managements can use Deming’s concepts for improving their responsibilities but they also get corrupted if top leadership uses the measures for judgment. So they can do little.
   Prahlad

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2. Stacey Barr says:

   July 4, 2013 at 7:29 am

   Prahlad, I agree absolutely with your comments. They mirror my own experiences too. Thanks for the contribution… I will try and respond in more detail in a couple of weeks. I am on vacation right now but wanted to say thanks for your great insights!

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