Performance management – the challenge of measures

by Dec 31, 2013Blog0 comments

On the eve of the New Year we complete our reflection on the Human Capital trends of 2013 with a look at performance management.

Performance management – the challenge of measures

The last part of Deloitte’s Human Capital Trends 2013 paper looks at the challenge of performance management, and how, like so much else, it is being transformed.

Deloitte discusses a number of emerging trends in performance management, and contrasts them with old-fashioned approaches. The paper is worth reading for the wide range of ideas that they discuss, and several of them relate to a particular area – performance measures.

Measures as incentives

Measures are important because they drive behavior. They bring the potential for praise and rewards, as well as for criticism and punishment. Getting the incentives right is vital to making any system work correctly, whether it’s a business, a computer game or the government of the United States.

Deloitte offers a lot of good advice on providing measures that incentivize the right behavior. Being very clear about objectives is important, as is connecting individual and team objectives to those of the wider organization. If the organization has an objective to move away from post and towards electronic communication, but an employee’s measures include one where success is sending out lots of letters, then he will not work towards that greater aim. Even slight mismatches can have huge impacts.

Ensuring that the right data is gathered also matters. Many performance data is gathered electronically, but feedback from co-workers can be vital in getting a fair and balanced view.

Big needs vs. small needs

It is also important to consider how the measures are applied, and where necessary to separate out the measures used for different purposes.

There is a growing recognition in the field of education that measures used to judge the performance of schools are warping their behavior and damaging education. The same thing can be seen in shallow, tick-box workplace training exercises aimed at showing that everyone has been trained. A measure designed to drive better behavior across the organization – ‘everyone has passed information security training’ – can turn into bad behavior on the individual level – training that is shallow and not integrated into working practices.

The problem is that what the organization needs – a broad overview of progress – is not the same as what the individual needs – a fair assessment and incentive to improve. If the two become tangled, they can create hidden pockets of poor performance.

Look at turn-around time in administrative departments. Saying that a team should respond to 95% of applications within three days might sound like it will lead to fast resolution for clients. However, it motivates the manager to encourage fast responses regardless of whether they resolve the application. They hit their response target when they go back to the client asking for further information or telling them about a delay. From the customer’s point of view this is not a meaningful response, and it may even delay resolution through unnecessary back and forth exchanges between the customer and the employee. However, it hits the team target, and so drives individual behavior. It is the kind of measure that is helpful in the broad overview but can be harmful to performance, and it hides the problem behind that positive overview.

Thinking into the future

Deloitte briefly raises this paradox in the use of measures, but does not have space to explore it in more depth. But unless we can tackle this problem, finding a way to provide overview measures without incentivizing performance problems, then all our efforts will be in support of the wrong measures, and so the wrong incentives.

– Mark Lukens

Links or other articles in this series:

Link to the full paper on Human Capital Trends

Mark Lukens, MBA

Mark Lukens, MBA

Founding Partner at Capatus
Mark Lukens is a founding partner at Capatus and located in the New York office. He leads the Capatus’ Global Talent and Advisory practice. He is also an expert in the firm’s research and nonprofit practice. Lukens has more than 20 years of c-level executive and consulting experience delivering strategies and transformational programs to firms ranging from start-up to Fortune 50. He has worked with clients in Europe, North America, South America, and Asia. Lukens worked extensively in various product and service categories including health care, life sciences, government, nonprofit, technology, and professional services. He also advises clients in other industries including commercial and industrial, retail, logistics and transportation, media and more. Lukens serves on several Nonprofit Boards and is a professor at the State University of New York where he teaches in the School of Business and Economics with a focus on marketing, international management, entrepreneurship, HR, and organizational behavior to name a few. Lukens has a technical background as a MCSE and earned an MBA from Eastern University.
Mark Lukens, MBA


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