What gets measure gets done is a popular phrase amongst performance management experts. Managements and staff will tend to concentrate on only those aspects of a business that they know are being measured and monitored. Examples of when this irresponsible act lead to dysfunctional behaviour by managers abounds in practice.
This issue of what gets measured gets done has posed a lot of problems for managers in their bid to find a solution to inefficiencies arsing as result of staff and managers not paying due attention to those things that are not measured. What a manager sees as good performance may not necessarily mean that it is good for the overall success of the company. This is commonly referred to as goal congruence problem.
There are two major areas as far as performance management is concerned and they are:
• Segregating managerial performance from economic performance: this is ensuring that the manager’s managerial capability is not affected by surrounding economic reality.
• Dealing with controllability: here we talk about responsibility accounting and holding managers responsible for things that are under their control.
In this post, I will be sharing tips on how to tackle the ‘what gets measured gets done’ syndrome especially as it relates to small and medium sized businesses.
14 WAYS OF DEALING WITH WHAT GETS MEASURED GETS DONE SYNDROME
Education is the number one thing that be used to dissuade workers and staff from solely focusing on only those things that are measured. It is through education that managers and other employees of a company would learn that their actions can be detrimental to a business if they only care about those things that are measured.
There is no way a company can measure the amount of smiles of the face of its front desk staff but this act of wearing a smile while at the front desk is vital to the survival of a company.
2. Proper Communication
One thing is to have objective and another thing is to have them properly communicated to those that are saddled with the responsibility of making sure that the objectives are met. A craftsman doe instance cannot deliver the required finished work if the instruction is not properly communicated to the craftsman. Same applies to delivering quality goods and services in an organization.
3. Measure the Right Things
The right things must be measured if a company is to avoid being plagued by what gets measured gets done syndrome. Little can be done to dissuade human beings from focusing attention to those areas that they are being judged on. So, to ensure that things are in sync, a business should strive to measure the right and important things.
4. Include both financial and non financial
Non financial performance metrics are always at the risk of being left out during the design stage of performance management and measurement metrics. For this reason, managers unavoidably fail to deliver on those non financial aspects of a business.
To improve things a bit, both financial and non financial factors must all be included in the performance appraisal system
5. Align goals and metrics with corporate objectives
Aligning corporate goals and objectives to things that are measured will guarantee that managers will be working towards achieving the long term goals of the organization. A company with a long term goal of becoming market leader through product differentiation will not be doing great if it does not measure quality and customer satisfaction vis-a-vis growing market share.
6. Focus on Customer
The customer always king. Regardless of efforts, we are not doing well if majority of the customers are not satisfied. Staff members will not only pay attention on things that are measured if they are judged based on the overall customer satisfaction level.
7. Weighting of Rewards
The practice of weighting rewards is used to discourage managers from paying too much attention in one area. A manager whose bonus is based on averaging at least 40% in all metrics will not favour any process.
8. Rewarding Teams and Groups
One major drawbacks of basing rewards and bonuses on individual basis is that unhealthy competition is indirectly encouraged. Managers will be forced to do things that are not really measured if doing so will benefit another department if the managers bonus is whole or partly dependent on the performance of that other department.
9. Include long-term measures
ROI and ROCE have been criticised for focusing too much on the short term by discouraging managers from investing in projects that would dilute their short term profit even when acceptance of the project will no doubt improve the overall company performance. To overcome this problem, long term approach like EVA (Economic Value Added) should be used.
10. Constantly review of performance measurement systems
Performance measurement metrics or system should be a living system whereby things are constantly reviewed to determine suitability. What worked yesterday may not necessarily work today therefore adjustment has to be made to reflect current reality as doing this will ensure that managers will not dwell long on outdated activities.
11. Strike a Balance between Volume and Quality
Performance measurement should not only be about ‘how many’ but should tend towards ‘how significant’. A factory worker for example will not bother to make quality products if all that he or she is appraised on is the number of product produced within a given time. To help reduce the what get measured gets done syndrome, measure of the number of defective products should be taken into account.
12. Using Share Option
The introduction of share option will ensure that managers do things that will not be short term oriented. Although this may somewhat be outside the control of the managers as there are many factors that affects share prices other than the company’s performance.
13. Adopt the Accountability Theory
Through the adoption of hard and soft accountability theory, managers will be discouraged from engaging in actions that will not lead to goal congruence.
14. Measure what Really Matters
The whole point of measuring things is to motivate people into taking action that will help move the business forward. For this to be achieved, attention must be shifted from measuring what is measurable to measuring what really matters.