Performance measurement and management wake mixed feelings in organizations. Disappointment, anxiety, and sometimes even fear. Still, we can’t escape the fact that various performance evaluations, management control, and a continuous need to run faster and aim higher are there to stay in our organizational life.
A million-dollar question then is, how could we, or the managers in modern organizations, implement such performance management practices that would encourage the type of behavior that supports performance improvement. Instead of those practices that deteriorate employee motivation, jeopardize the organizational culture, and ultimately, the success of the organization.
No matter what interventions or business activities you are measuring, there are few important things to keep in mind when developing and implementing performance metrics.
Focus on the essentials and be clear with your objectives.
If you don’t know what you are aiming for, don’t start with the metrics but get back to the strategy room. It is you, not anyone else, who should know what information is needed to evaluate whether you are doing well or not in whatever you do.
There is no lack of metrics cookbooks, performance management frameworks, or consultants, to assist you, but in the end, it is you who needs to choose what is important for and in your business. Keep your eye on the ball.
Encage those who matter the most.
Customers define the value of your products or services and employees make it all happen. Don’t even think that you have all the wisdom needed for developing a perfect performance management system on your own. If you didn’t notice, the time for that went by already.
Today, co-creation, co-production, and participation are not only timely management buzzwords but something that you really need to consider also in performance management. Academics talk about integrative leadership and performance dialogue to make a distinction between the ‘old’ management control and what could be called ‘modern’ performance management.
Of course, the real world isn’t always black and white. Remember that your metrics will always reveal what is valuable to you. Walk the talk.
The data do not suffice.
Data is where it all begins. Use the force to direct the energy of your employees. Evaluate, control, budget, motivate, promote, celebrate, learn, and improve. It makes no sense to waste your money and energy in measuring if that is the end.
Be eager to learn and open-minded when having new data. Challenge yourself and the people involved. Shake it and share it. Ask as many why’s needed to find the root cause. The explanation, the reason why you either failed or succeeded. That is where the value of performance measurement lies.
And, followed from the second point, make benefit of multiple opinions and performance dialogue also when interpreting the data. Let them all help you.
One of the main messages in what I have written above is that you really need to know and understand the business and the context when developing performance metrics. The better you understand how the managers, or other users of performance information, think and what they do and expect, the better you can serve their information needs.
Many indicators or KPI’s and even readymade measurement frameworks are applicable across industries. However, it may well be that the most appropriate ones to measure and evaluate your business are not among those solutions already available. If you think that you found the answer from the market, it may well be that you are playing according to someone else’s playbook.
Common indicators enable comparison but may lead to competition on efficiency. Proving the value of unique and innovative strategies may require unique and innovative performance information. It is not the simplest way to approach performance measurement but may provide valuable opportunities for learning and improvement.
Always be sure that your measures direct the energy where you want!
Harri Laihonen,
Professor, University of Eastern Finland
