Page 51 - Performance Leadership

40 • Part I A Review of Performance Management

with all the means to make the target on the performance indicator.
Although this sounds good as a plan, in practice it can lead to subop-
timization. Managers look at maximizing their own targets, even at the
expense of the overall strategic objectives. Many small suboptimal
results then lead to one big negative result. Having co-ownership for
performance indicators will lead to more collaboration.
Misinterpretation happens when people base their decisions on
faulty data. Often this happens if the measurements and systems are
old and full of forgotten exceptions and modifications. A typical exam-
ple would be the accuracy of the number of customers the organiza-
tion has. If the faulty measures are the result of a programming error
that repeats itself every time the report is run, the consequences may
be limited. At one point managers become used to a certain number
and track the positive or negative change. Given the stability of the
error, the reported changes may trigger the right interpretation anyway.
Sometimes misinterpretation may not be the result of an honest error,
but deliberate. A good set of metrics triangulates the business drivers
and performance indicators, so that there are multiple ways to calcu-
late the correct results. Of course, the results should match.
Another form of misinterpretation happens when a metric is out-of-
date but still available in the management reports. This phenomenon
is called ossification. As the metric has lost its relevance, it may very
well lead to users ignoring the information because they cannot apply
it in their decision making. The danger is that the sentiment spreads
and the overall set of information is being seen as outdated. Ossifica-
tion may even be a political instrument. Middle management might
choose not to update the management information. This allows the
lower levels of management to shield their operations and not provide
current insight. This is dealt with best by creating a schedule for
reevaluating the validity of the metrics, like a “best before” date.
Before putting metrics in place, it is important to determine the
ways in which to play the numbers. It is equally important to realize
that no matter how many ways you come up with, there is always
someone who finds another way. The way people use the numbers
needs to be reevaluated once in a while. Then there needs to be a
brainstorming exercise on how people would possibly react and
behave in their daily work when confronted with the new metrics, and