As I work with individuals and organizations on topics related to maximizing the performance of people in the new business normal, I am regularly asked about how to go about measuring performance. This topic is enormous and rich in content. Performance measurement is also a tricky topic with a significant potential impact on performance improvement. With this in mind, let’s cover some basics to get us started in developing our understanding about performance measurement and people.
What is performance measurement?
Performance measurement as it relates to people is a process of assessing the desired outcomes of an individual or group and the means of achieving those outcomes by collecting and reporting information using in-process measures. These individual measures are often combined into performance measurement systems used to monitor, assess, adjust, diagnose and ultimately achieve the desired performance levels. Effective performance measurement systems are designed to support the business and organization model.
In the new business normal, organizations that strive to get or keep a competitive advantage must have effective ways to determine how well people are performing and methods to improve performance. A successful performance measurement system yields the following “fruits”:
- Directs behavior/focuses attention/clarifies expectations
- Promotes accountability and facilitates feedback
- Increases alignment—vertical and horizontal
- Enables action–Improves decision-making; assists with problem-solving; provides insight and knowledge; enables prediction and forecasting
The performance measurement cycle includes these steps:
- Planning and selecting
- Collecting and distributing
- Analyzing and interpreting
- Taking action and reviewing
The language of organizations is often said to be numbers. Measurements provide the opening lines to the story of understanding the performance of people. Let’s look at understanding the story of performance measurement as it relates to the planning and selection steps in this process.
Planning and selecting the best measurements for people performance first requires a clear determination of the purposes for which the measurements will be used. Consider these factors listed below:
- Pick the right ones that really drive performance, not just the ones that are easy to measure
- Choose measures that add value creation to the customer
- Avoid measurements that lead to chasing rabbit holes and don’t really help get results
- Choose the right number of measures—critical few, not the trivial many
- Select measures that provide a comparative basis, such as performance to goals, standards, baseline, etc.
- Use measures that can be collected and used on a timely basis
- Choose measures that are analyzable on a macro or micro basis—roll-up or drill down
- Pick measures that cannot be easily manipulated to achieve desired results (people can’t fudge)
I like this quote from business thought leader Stephen Covey. I think it relates to picking measures with the purpose in mind that move us in the right direction and position our ladders on the “right wall”:
If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster. Stephen Covey
The purpose for which a measurement is used is the single most powerful determinant of the reaction of people to it. Two potential measurement purposes include:
- Informational: Understanding, helpful feedback, learning and improvement
- Motivational: Judgment, control, reward, punishment, or justification
People generally respond more favorably to measurements that are informational, objective and helpful to them in the performance of their jobs. They are less receptive to and more suspicious of subjective measurements where there are perceived value judgments involved. People don’t inherently mind measuring or having their performance measured. They just don’t like being “measured upon”.
In considering which measurements to use for people performance, the culture of the organization is important. Successful organizations are ones that have recognized the importance of instilling a high performance culture where measurement is an expectation. In these organizations, performance measurement leads to people interaction, which includes dialogue, insight, learning, decision-making, prediction and accountability.
In the new business normal, performance measurement is a nonnegotiable that must be in place for individuals and groups to support the organization in reaching its desired outcomes. The first two steps of planning and selecting are foundational and critical to the overall effectiveness of the process of performance measurement.
What steps does your organization go through to plan for and select performance measurements for people? Any tips?