Page 49 - Performance Leadership

38 • Part I A Review of Performance Management

Table 3.1

Unintended Consequences of Performance Management
People Impacting on Measurement Measurement Impacting on People
• Tunnel vision—focusing on what is • Gaming—underachieving once targets
easy to measure instead of what is have been made
important
• Measure fixation—trying to change • Misinterpretation—incorrect or
definitions to make the numbers look incomplete interpretation of the
better metrics
• Misrepresentation—cheating the • Suboptimization—using corporate
system, forging numbers resources to optimize one’s own
targets, instead of corporate objectives
• Ossification—presenting outdated • Myopia—focusing on the short-term
information quick wins, instead of longer-term
strategic objectives

For instance, a group in a back office asks one member to work late,
but to punch the time clock for all. In the end this is the most serious
of all dysfunctional behaviors, because it can easily become fraud.
Many of the recent bookkeeping scandals were caused by pure mis-
representation. For instance, consider a large multinational that oper-
ates many different off-balance entities that buy products and services
at the end of the quarter so that the main entity makes the numbers it
forecasted to the shareholders and financial analysts. This is a form of
“stuffing the channel.” Another example plays on a more operational
level. In many consumer goods industries a salesperson sells the prod-
ucts to retail, such as shops and chains. In one case the salesperson
promised the customer an additional discount if he would order more
products than were needed. Secretly the salesperson advised the cus-
tomer to ship back the surplus of goods the day after receiving the order.
Returns were not part of the compensation plans of the salesperson, and
returns were not correlated to the revenues. Obviously, a more balanced
set of metrics is needed.
Gaming is the opposite of measure fixation and misrepresentation.
It means manipulating the business to make the numbers look good
(instead of manipulation of the numbers to make the business look
good). Both transgressions are equally serious. Gaming occurs when
managers start to underachieve once the target has been reached. The