The Measurement Trap in Strategic Performance Management
Performance measures are vital aspects of our organizations and performance management. To go with the words of the fifth century B.C. philosopher Philolaus – without measures we can understand nothing and know nothing. Once organizations have defined and clarified their strategy, measures can be used to gauge performance in comparison to, for example, their expectations, targets or competitors. Measures enable us to define future goals like a certain market share or shareholder value, and they should help us understand whether we are on the right track towards delivering our strategy. Indicators should allow us to challenge our business assumptions and provide us with insights that will guide our everyday decision making. Without indicators we can’t assess our success, we don’t know whether our assumptions or decisions were correct, and we don’t see whether we are moving into the right direction.
However, this is not what happens when most organizations implement performance management. What we see is often a very narrow use of measurement. Common reality is that there are too many metrics, no one knows why they are being collected, and most people agree that the measures that are used are not measuring what they are supposed to measure or what really matters. Organizations have become obsessed with measuring everything that walks and moves but often fail to measure what really matters. In many cases measurement has become an administrative burden where we spend a lot of our time collecting and reporting metrics, which we know is of little or no value. As a consequence, few strategic insights are extracted from the measures we collect and little or no learning takes place.