Thoughts on ways to improve the management of professional services firms

Tuesday, December 05, 2006

The Seven Deadly Sins of Performance Measurement

The Juris more partner income blog had a useful post on performance measurement including some links to previous posts. However, it got me thinking about the reasons why I think that the current obsession with performance measurement has become so dangerous.

Human beings are not machines. We are complex creatures motivated by a range of different things, trying in day to day life to manage our confusions, to balance all the different pressures upon us. Performance measurement systems must take this into account if they are to have positive longer term results.

Thinking about this led me to define what I call the seven deadly sins of performance measurement. I see that Chris Marston has been dealing with some of the same issues. The sins are:

  1. Make people work harder, longer hours, to achieve target. This sin involves setting targets that can only be achieved through longer hours. People have only so much time. You can sometimes get an immediate improvement by making people work harder, but real longer term results depend upon working smarter.
  2. Set measures that depend upon things outside personal control to achieve target. A remarkable number of systems focus on personal charge performance as the central measure. This assumes that the work is there, that people have control over work flows. If neither is true, then your measurement system becomes an automatic de-motivator.
  3. Set measures that encourage your staff to over-charge the customer. Focus just on charge without taking quality and service into account and you build in an incentive to over-charge.
  4. Create a one size fits all system. People's needs and capabilities vary. A staff member that can only work limited time may in fact be very valuable. A staff member that can only do certain things may be very valuable. It all depends on how much you pay relative to the contribution. If you create a universal measurement system that fails to take relative contribution into account, then you may build in disincentives. You are also likely to end up making false judgements about staff.
  5. Focus your performance management system just on those things that can be measured precisely. Many key contributions cannot easily be measured in strict quantitative terms. The problem here is most acute for firms that limit their measures to financial variables. Because you get what you measure, however imperfectly, you can be sure that the things not measured will be ignored.
  6. Create a disconnect between firm values and performance measurement. Too many firms set up measurement systems that conflict with stated firm values. Your measurement systems should reinforce, not ignore or conflict with, firm values.
  7. Destroy fun. There is a strong connection between motivation and morale and enjoyment of work. Make the formal performance measurement system the central feature of firm life and watch the joy flow away.

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