A clearer, more accurate performance management strategy
Over the past two decades, performance measurement has profoundly changed societies, organizations and the way we live and work. We can now access incredible quantities of data, display, review and report complex information in real time, and monitor employees and processes in detail. But have all these investments in collecting, analysing and reporting data helped companies, governments and people perform better?
Measurement Madness is an engaging read, full of anecdotes so peculiar you'll hardly believe them. Each one highlights a performance measurement initiative that went wrong, explains why and – most importantly – shows you how to avoid making the same mistake yourself.
The dangers of poorly designed performance measurement are numerous, and even the best how-to guides don't explain how to avoid them. Measurement Madness fills in the gap, showing how to ensure you’re measuring the right things, rewarding the behaviours that deserve rewarding, and interpreting results in a way that will improve things rather than complicate them. This book will help you to recognize, correct and even avoid common performance measurement problems, including:
Measuring for the sake of measuring Assuming that measurement is an instant fix for performance issues Comparing sets of data that have nothing in common and hoping to learn something Using targets and rewards to promote certain behaviours, and achieving exactly the opposite ones.
Reading Measurement Madness will enable you to design a simple, effective performance measurement system, which will have the intended result of creating value in your organization.
From the Authors xi PART I INTRODUCTION 1 1 The Road to Insanity 3 2 Performance and Measurement 13 What is performance measurement? 14 What is performance? 15 What is measurement? 17 Getting the number or changing the behaviour? 20 PART II PERFORMANCE MEASUREMENT 21 3 Measurement for Measurement’s Sake 23 Making things measurable 25 Measures and more measures 27 Competitive measuring 27 Sticky measures 27 Conflicting measures 28 Losing the link to performance 29 Excessive reliance on measures 30 Fixating on measures 31 Getting desensitized to numbers 33 Getting lost in performance data 34 Paying the price 35 Preventing learning and change 37 Learning points 37 Deciding what to measure 38 Designing a robust indicator 40 Managing with measures 41 And finally… 41 4 All I Need is the Right Measure! 43 How difficult can this be? 46 What’s in a name? 46 Knowing the purpose 47 Poor relations 48 It’s in the formula 49 Frequency 50 Where does the data come from? 51 What will you do with the results? 53 How strong are your indicators? 54 Is the indicator measuring what it is meant to measure? 55 Is the indicator only measuring what it is meant to measure? 56 Is the indicator definitely the right indicator? 57 Is the indicator consistent regardless of who measures and when? 58 Can the data be readily communicated and easily understood? 59 Is any ambiguity possible in the interpretation of the results? 60 Can and will the data be acted upon? 61 Can the data be analyzed soon enough for action to be taken? 62 Is the cost of collecting and analyzing data justified? 63 Will the measure encourage any undesirable behaviours? 64 Learning points 66 It’s not just a KPI 66 Pass or fail 67 And finally… 67 5 Comparing Performance 69 Apples and pears 73 Differences in data collection 73 Different datasets 75 Different methodologies 76 Interpretation and presentation 78 Timeliness 80 Special variation 81 Choice and relevance 82 Using data unintended for comparative purposes 83 Yes, but… 84 Moving up the rankings 85 Unintended consequences 89 Learning points 92 Which data to collect? 93 Collection mechanisms 93 Consistency 94 Handling ambiguity 94 And finally… 95 PART III PERFORMANCE MANAGEMENT 97 6 Target Turmoil 99 What are performance targets? 102 When targets go bad 104 Are targets so bad? 106 The main pitfalls 107 When targets do good 114 Clarity and commitment 116 Unexpected benefits 118 Learning points 119 Types of targets 121 Setting targets 122 Feedback 123 Targets and incentives 124 In summary 124 And finally… 126 7 Gaming and Cheating 127 Gaming: what is it? 129 Gaming and cheating 133 What drives gaming and cheating? 137 The pressure to perform 139 Targets – the wrong kind and in the wrong way 141 The climate of competitiveness 142 Types of gaming 144 The number and predictability of gaming behaviours 145 Learning points 149 Relieving the pressure 150 Setting the right kind of target 150 Foreseeing the future 151 Improving data management systems 151 Changing the culture 152 And finally... 154 8 Hoping for A Whilst Rewarding B 157 Common management reward follies 160 Hoping for teamwork whilst rewarding individual effort 160 Hoping for the long term whilst rewarding short-term gain 162 Hoping for truth whilst rewarding lies 163 Hoping for contribution whilst rewarding outcomes 166 Hoping for budget control whilst rewarding overspend 167 Learning points 169 Targets, rewards and measures 169 Reward people later 171 Avoid negative spillover 171 Systems thinking 172 And finally… 173 9 Failing Rewards and Rewarding Failure 175 Top rewards for top performers 178 Rewarding failure 179 Failing rewards 180 Measurement, rewards and motivation 182 When financial rewards backfire 185 What motivates us? 188 Learning points 192 Motivation and long-term goals 192 Different strokes for different folks 193 The right measures 194 The time to reward 195 Team vs. individual rewards 195 And finally… 196 PART IV CONCLUSIONS 197 10 Will Measurement Madness Ever Be Cured? 199 And finally… 203 References 205 Index 217
DINA GRAY, PhD is a Strategic Business Consultant lecturing on Cranfield University's Executive Education programmes, and she is also Chair of the Regional Advisory Boards for the Innovation Group plc. advising on strategic performance implementation. PIETRO MICHELI, PhD is Associate Professor of Organizational Performance at Warwick Business School. As a management consultant, he has worked with over 30 organizations, private and public. As a researcher, he has published widely on the subjects of performance measurement and innovation. ANDREY PAVLOV, PhD is a Lecturer in Business Performance Management at Cranfield School of Management and Director of the Executive MSc in Managing Organisational Performance at Cranfield. He is a regular speaker at conferences around the world, and his work has been published in numerous industry and academic journals.
