Wednesday, April 08, 2009

Belshaw’s World: Seven deadly sins of performance measurement

Note to readers: This post appeared as a column in the Armidale Express on Wednesday 1 April 2009. I am repeating the columns here with a lag because the Express columns are not on line. You can see all the columns by clicking here.

Our current obsession with performance measurement has become quite pernicious.

The global financial crisis provided a graphic illustration of what can happen when organisations and people base performance and pay on short term financial metrics. However, the problem is far broader and deeper than this, because it has come to affect – infect – nearly every aspect of life.

Don’t get me wrong. I actually support performance measurement. It’s just that we do it very badly.

Human beings are not machines. We are complex creatures motivated by a range of different things, trying in day to day life to manage our confusions, to balance all the different pressures upon us.

Performance measurement systems must take this into account if they are to have positive longer term results. They also need to recognise that not everything can be measured.

Thinking about this in terms of my own experience as a manager and adviser, I decide it might be interesting to list seven of the deadliest sins of performance measurement as I see them.

One: make people work harder, longer hours, to achieve target.

This sin involves setting targets that can only be achieved through longer hours. People have only so much time. You can sometimes get an immediate improvement by making people work harder, but real longer term results depend upon working smarter.

Mr Rudd should, perhaps, note this one!

Two: set measures that depend upon things outside personal control to achieve target.

A remarkable number of systems, especially in professional services, focus on personal performance as the central measure. This assumes that the work is there, that people have control over work flows. If neither is true, then your measurement system becomes an automatic de-motivator.

At a broader level, the setting of unachievable performance targets has played a key role in the de-motivation and near collapse of the NSW health and child welfare systems.

Three: set measures that encourage your staff to over-charge the customer, reduce quality or simply lie. .

Focus just on earnings or volume without taking quality and service into account and you build in an incentive to over-charge customers.

Alternatively, and we see this sometimes in call centres, you force lower standards.

In perhaps the worst cases, you create an incentive for staff or management to simply lie, to falsify numbers.

Four: create a one size fits all system.

Peoples’ needs and capabilities vary.

A staff member that can only work limited time may, in fact, be very valuable. A staff member that can only do certain things may be very valuable. It all depends on how much you pay relative to the contribution.

If you create a universal measurement system that fails to take relative net contribution into account, then you will build in disincentives. You are also likely to end up making false judgements about staff.

Five: focus your performance management system just on those things that can be measured precisely.

Many key contributions cannot be easily measured.

Because you get what you measure, however imperfectly, you can be sure that the things not measured will be ignored.

Six: create a disconnect between organisational values and performance measurement.

Too many organisations set up measurement systems that conflict in some way with the organisation’s stated values. This leads to cynicism and loss of morale.

Seven: destroy fun.

There is a strong connection between motivation and morale and enjoyment of work.

Make the formal performance measurement system the central feature of firm life and watch the joy flow away.


Lexcen said...

Jim, in Victoria the government imposed performance measuring system on hospitals has erupted in scandal as more and more hospitals have been exposed in their practice of fudging the figures on their patient waiting lists to qualify for government bonuses. Maybe all those who advocate performance measuring should understand that you cannot get blood from a stone.

Jim Belshaw said...

You are dead right, Lexcen.

rummuser said...

Jim, I do not know whether the sins are more in the public sector or in the private in your patch of green. In mine, in the public sector, there is no performance appraisal worth its name. It is a crying shame and all attempts to change it have been stone walled by the vested interests. Read the bureaucracy.

In the private sector, there are two distinct types of organizations, one with some degree of professional management and the other, totally owner/family managed. In the former some remarkable advances in performace appraisals and reward/punishment systems have been implemented and undergo innovation on an ongoing basis. In the latter, it does not matter any way. The former is a formidable number of enterprises and it is heartening to see professional HR practices being implemented.

I have worked in and with both types of organizations and can agree with your observations. I have just one addition. If the goal setting and the appraisal system can be democratized, many of the ills can be done away with.

Jim Belshaw said...

Imteresting observations, Ramana.

I am writing from my own experience and observations, of course. It makes we wonder about cultural and historical differences.

Just how different is India from Australia?

Bobq said...


From a different context that either Australia or India i would have to support Rummuser. Where there are no sanctions for poor or even criminal behaviour, no performance measures and no rewards for achievement or probity, public administration ossifies. Risk taking in the public interest is foolish, while corruption or pandering to private interests is encouraged.

You must remember what the Commonwealth Public Service was like in 1980 and before! To a real extent, the South Australian public service is still that way. Try and get service out of them, or a non-SES job with them. Both are exercises in frustration.

Fortunately, both of these examples at least had sanctions for criminal behaviour, but even in Australia, I've seen public servants get off more from lack of evidence than anything else.

Where incompetence cannot be sanctioned, incompetents will flourish. Where criminality is not punished, corruption will flourish.

While the pendulum of performance measurement can swing far, far too far, that applies in both directions.

rummuser said...

I suspect, very little, in this specific area.

Jim Belshaw said...

Interesting comments, Bob and Ramana.

Putting the corruption issue aside, that is a completely different debate, I do indeed remember the pre-1980s public service.

One of the reasons that I was so interested in the reform movements lay in a belief that they would make the Australian public services more effective and pro-active. I don't think that this has happened.

I wrote a lot on the pattern of change in public administration in earlier posts. Perhaps it's time to revisit this.