Measurements Do Matter

What gets measured gets done. That’s all there is to it. We have known this since the first grade, as I was reminded this week as my seven year old is in the middle of testing at his school. So why do so many organizations struggle with how to measure performance and link individuals’ goals to company objectives? Why is it not as simple as my son’s school, where kids who achieve a certain score are moved to a “gifted” program where the rest remain in the standard curriculum?

The biggest challenge I have seen with measuring performance is identifying and agreeing upon the right metrics at the corporate, function and individual level. I believe the reasons things often break down are twofold:

One tendency is to start with the metric – sales calls, throughput, training hours, etc. This is completely backward. The right place to start is the desired outcome – what are you trying to achieve as a company, a department and an individual? Starting with the goal in mind and then determining how to measure progress towards this goal begins to directly link individual performance with company strategy.

The other tendency is to start at the bottom with individuals setting goals without a clear understanding of how they link to the company’s strategy or desired outcomes. Goal setting usually happens on an annual or maybe even a quarterly basis, while the company’s strategic plan has been sitting on the shelf for a number of years and is not longer relevant to the current goals. Leaders need to clearly articulate their goals for the company and how functions and individuals contribute to success.

I am a big proponent of the Balanced Scorecard as a performance management framework to “translate strategy into action”. The idea of utilizing the Balanced Scorecard or another approach is intimidating to some, because it seems like a lot of work to end up with the same old measures. The key is not the tool, but the process of reexamining the company’s goals across a number of dimensions and effectively communicating them throughout the organization so individuals can relate to how they impact the broader success. I will discuss the Balanced Scorecard in more detail in a future post.