Why Won’t Leaders Fix the Performance Measurement Problem?

by Stacey Barr

If performance measurement is fundamentally important to business and organisational success, why do so many leaders get it wrong, and so few are willing to fix it?

Leader in business suit with a super-hero cape

Performance measurement should be a powerful and well-integrated part of every leader’s role. Sure, many leaders have flashy dashboards and piles of KPI reports. But they struggle with useless or irrelevant KPIs, which don’t align tightly enough to their strategy, aren’t presented in a way that shows the truth, and don’t reach targets. These struggles are a chronic problem no dashboard can ever fix.

In human health, we talk about chronic and acute problems all the time. You break your femur and you have an acute problem. You develop osteoporosis and you have a chronic problem. Acute problems are hard to ignore, and need to be fixed urgently. But chronic problems can go unnoticed, and it can feel like we still have time before we must commit to fix them.

It’s the acute problems – the urgent and exciting – that get leaders’ attention. Too many seem to prefer to react to emergencies than prevent them. Performance measurement is about preventing problems, so emergency-loving leaders have no incentive to give it the right attention. Consequently, performance measurement hasn’t been given the resources to be done properly and work well. So it’s become a chronic problem.

Does your organisation have a chronic performance measurement problem?

There are some inarguable symptoms that a performance measurement approach has become a chronic problem:

  • people don’t use current KPIs even when they’ve been told to
  • there are rumours and stories about KPIs driving gaming and dysfunctional behaviour
  • important goals remain unmeasured, or trivially measured by milestones or simple counts
  • few people trust the data underlying KPIs
  • discussion about actions, milestones and excuses dominate performance meetings
  • simplistic – and even incorrect – techniques are used to interpret KPI trends and changes
  • there are more goal posts moved than targets met

When the chronically poor performance measurement approach persists, it’s like osteoporosis. More bones are likely to break; more emergencies are likely to happen. But more plaster casts is not the solution.

There’s no quick fix to the chronic problem of poor performance measurement.

Seth Godin says that the worst kinds of problems are the chronic ones. That’s because they grow slowly over time, are not easily noticed, and get harder to fix as they worsen. In the case of poor performance measurement, bad practices become deeply embedded. And changing those practices seems like too much work.

If we did decide to fix the chronic problem, Seth would likely agree a plaster cast won’t work:

“Chronic problems are most often solved by building new systems. New ways to engage with the issue over time, methods that create their own habits and their own forward motion.”

This means a new approach to performance measurement.

How do we fix the chronic KPI problem if we don’t own it?

Our KPIs continue to be bad, because fixing them – or the underlying system that produces them – isn’t fun and exciting. It doesn’t make us heroic. It doesn’t give us immediate satisfaction and relief. The cynic in me believes that emergency-loving leaders avoid a good measurement approach because a chronically bad one guarantees there will be a steady supply of emergencies that make them heroes.

Many current leaders may not be the first to convince – Tomas Chamorro-Premuzic, an organisational psychologist, says that we have so many incompetent (male) leaders because of our “inability to discern between confidence and competence”. We promote and follow those with confidence, not necessarily the competence, to lead. In the words of Mr Waturi, Joe Banks’ boss in “Joe Versus the Volcano”:

“I know he can get the job, but can he do the job?”

The job is evidence-based leadership. But Tomas Chamorro-Premuzic’s incompetent leaders tend to have arrogance and hubris, and won’t likely understand or embrace evidence-based leadership. So don’t start with the leaders who love emergencies. Start with the people who value prevention over cure. You know, they are those who:

  • have a continuous improvement mindset
  • enjoy a system working well
  • are facilitators, not heroes

With these kindred spirits, we can make small changes over time to chip away at the chronic condition of our performance measurement systems. Maybe it will be the fastest way, until we can promote more competent leaders?

Do leaders perpetuate poor performance measurement practices because they’d rather be known for fighting fires than preventing them?
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You and your colleagues are the leaders of the future. But in the meantime, what can you do to treat the chronic condition of your performance measurement system, to slow down the damage it’s doing?

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