When built into management processes, performance metrics become a system which will generate organizational behaviors that comply with what is measured, i.e., “you are what you measure.” Hence, this will encourage behaviors which help present a good score for the individual or for the department.
This may or may not, however, help to achieve strategic goals. Therefore, when building performance metrics, we must begin with the end result in mind. We need to focus on what we want as outcomes of our work processes. This presents a dilemma, as we do not work as a set of isolated departments, but in collaboration with others. Processes that begin with an individual are continued or completed by others. So, how do we effectively measure outcomes when a single individual or group is not controlling all the key steps?
Several basic frameworks have been proposed to build intelligent metrics that help form sets of composite measures to simplify this problem. For example, the SMART (see accompanying section “Building and Testing Performance Indicators”) test is frequently used to provide a quick reference to determine the quality of a particular performance metric. But these do not, however, address how the measures will interact to stimulate an effective network of key processes. How can individuals see what the effects of their improvements are, if these get lost in the noise of company management reports?
One problem is that business processes are segmented, and many departments are collecting silos of information that produce metrics used only for the sake of measurement. These silos then reinforce divergent opinions of company performance and limit a common understanding of what new behaviors are needed. So, a major factor in implementing performance measurement is changing the way performance is measured and reported and how people view success within their own processes.
For many organizations, this is “where the rubber hits the road:” How can we build realistic, practical metrics which drive change? How can we articulate company objectives through enterprise-wide metrics in an integrated measurement system?
