Key Performance Indicators, 4th Edition

CHAPTER 2The Myths of Performance Measurement

Overview

Since humans first walked the plains in search of food, myths have been central to their beliefs. These myths having no scientific basis just hearsay. Many management practices, still used in the 21st century, are corrupted by ill-informed beliefs. In this chapter, I explore the myths surrounding performance measurement that have given rise to this dysfunctional situation.

This chapter will ensure that there is a better understanding about how currently held beliefs can limit the usefulness of performance measures and in particular, the KPIs.

Key learning points from the chapter include:

1. The myths surrounding performance measures
2. Tying remuneration to KPIs will encourage manipulation of these measures
3. The damaging nature of year-end targets
4. Delegating a KPI project to a consulting firm will lead to failure
5. The myths surrounding The Balanced Scorecard (BSC) Methodology that limit the scorecard's effectiveness
6. The dangers of the BSC strategy mapping
7. Cascading measures down an organization is a damaging process
8. The primary use of performance measures is to support the organization's critical success factors rather than help implement strategies

I have become increasingly aware that key performance indicators (KPIs) in many organizations are a broken tool. Measures are often a random collection prepared with little expertise, signifying nothing. KPIs should be measures that link daily activities to the organization's critical ...