Why Do You Measure Performance?

by Stacey Barr

The reasons why we measure performance can profoundly influence how we do it, and whether it improves performance or not. What’s your reason?

Hand holding up cardboard sign asking the question Pourquoi. Credit: https://www.istockphoto.com/portfolio/jk_stock

Management gurus like Peter Drucker have long since put to bed the idea that measuring really does improve performance significantly more than if we don’t measure. But this doesn’t drive most people’s reason why they measure performance. Let’s look at a few of the most common reasons and consider how they might influence both our approach and our results.

Reason 1: You measure because you’re told to.

Who ‘tells’ us to measure performance can vary. It might be our manager, expecting more accountability from us. It might be the Strategy Office, expecting us to come up with some KPIs for the KPI column in the strategic or operational plan. It might be consultants or regulators or industry experts.

When someone else’s request is the reason we measure, it can influence us to take an approach that just gets it done and over, as quickly as possible. We might brainstorm KPIs, or see what data is available already, or quickly google for KPI examples.

But KPIs selected for this reason won’t be relevant to what we know really matters. It’s little wonder then, that performance measurement often feels like a corporate hoop to jump through, that takes up time we should be spending on “real work”.

Reason 2: You measure to CYA (cover your arse/ass).

Sometimes we might measure to show we’re doing lots of work, doing good things, getting heaps of stuff done. Then maybe managers will stop constantly changing or streamlining or redesigning what we do, or stop putting pressure on us to work harder or smarter or more productively.

When KPIs are used to judge our performance, we give into the temptation to choose activity measures, that just show the volume of work we’re doing. Or we choose vanity metrics, that always have positive trends to show things are all good.

We can’t get the truth about what really needs improvement from neither activity measures nor vanity metrics. So our attention goes toward more activity, or improving what’s already going well. And ignoring what really matters for our team’s or organisation’s success.

Reason 3: To manage staff performance.

There are many organisations that still insist organisational performance is driven by people’s performance. KPIs are set into employee performance agreements (or appraisals), and people are individually accountable for hitting targets. These managers believe such KPIs are an objective method to decide who’s performing and who isn’t.

We know that measuring for judging people’s performance is threatening to just about everyone other than the top performers. It drives them to do any of three things: choose measures that are easy to perform well in, manipulate the data so that the measure shows the desired result, or take actions that focus on hitting the target.

All these ‘dysfunctional behaviours’ lead to short-term and once-off improvements, often at the expense of real performance in results that really matter. That’s because people account for only 10% of performance problems. The truth is that 90% of performance problems are in work process design, which constrains people.

Reason 4: To negotiate for more resources.

KPIs have been used to demonstrate how worthwhile a team’s outputs are, how capable the team is, how super things could be if the team had more funding. No-one likes having their budget cut. And it seems that the way to keep or grow your budget is to show how well you perform. It’s a dynamic known as Success to the Successful.

So again, like with Reason 2 above, the KPIs that are chosen will be the ones that show the excellent productivity of the team, and good-news stories of their activities.

Isn’t it counterintuitive though, to give more resources to what’s already working, and deny resources to what needs to be improved? Again, we risk leaving important but poor-performing outcomes to continue to erode, while gold-plating outcomes that are already fit for purpose.

Reason 5: To monitor strategy execution.

One common intention for using KPIs is to make sure that the strategic initiatives are being implemented as planned. “We have 57 strategies, and they all matter. We need to be sure we get them all done.”

Perhaps this is why so many organisations have so many performance measures that aren’t real measures at all: the milestone. But people will argue, seemingly until they’re blue in the face, that reaching a milestone for a project or initiative means that performance must be better.

How so, exactly? How does completing a task on time mean that the task’s intended output was produced, and that the output lead to the intended outcome? It doesn’t. Milestones are just cheap and nasty padding for the KPI column in the strategic plan.

Reason 6: To achieve targets set by the strategy.

With the KPIs that are direct evidence of the results that matter most, it’s easier to focus on how far current performance levels are from targeted performance levels. And these KPIs steer us in the right direction with cause analysis and process improvement techniques to find good ways to lift current performance levels until they reach those targets.

When closing performance gaps, with a focus on learning rather than judgement, is the reason to measure performance, there is a drive to learn how to design meaningful and relevant measures. It might even be taken seriously enough to choose a deliberate measurement methodology.

When most people in a company or organisation have this reason for measuring performance, it suggests a continuous improvement and results-oriented culture. It could be a very energising place to work.

Reason 7: To continually improve capability to achieve the organisation/company vision.

When organisational capability is taken seriously, almost every KPI has a line of sight to the performance results implied by the mission and vision. And every team knows which of the KPIs are their responsibility, or how to design KPIs that contribute to the organisation’s capability.

Targets are set to guide resource allocation, but innovation means the targets are often exceeded. Business experiments quickly identify the best ways to achieve or exceed targets. Organisational learning and systems thinking ensures people are focused on the highest leverage ways to improve performance.

Imagine turning up to work each day, knowing that virtually everything you and your colleagues were going to do was verifiably contributing to making the world a better place?

Does the reason really matter?

If you haven’t noticed already, reasons 6 and 7 are the only ones that lead to whole-of-organisation performance improvement. The first 5 reasons breed misunderstanding and mistrust of measurement, and that ultimately erodes organisational performance. So yes, the reason does matter!

There are no doubt more than seven reasons people have for measuring performance. Who knows how many there are? But it might be a good conversation to have with your colleagues: why do you measure performance? What are your reasons? Why do you bother? What value comes from doing it? What value should come from doing it? How can your approach to performance measurement improve, so it can better fulfil this purpose?

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