Measurement Madness: Recognizing and Avoiding the Pitfalls of Performance Measurement

Chapter 2Performance and Measurement

One of the most puzzling things about performance measurement is that, regardless of the countless negative experiences, as well as a constant stream of similar failures reported in the media, organizations continue to apply the same methods and constantly fall into the same traps. This is because commonly held beliefs about the measurement and management of performance are rarely challenged. However, successful performance measurement is possible. We have worked with numerous organizations that have managed to extract many benefits through the intelligent use of performance measurement. Success stories include businesses gaining an enhanced understanding of their internal and external environment; institutions triggering greater organizational learning; executives having the ability to make more informed decisions; and, ultimately, organizations achieving better financial results and stakeholder satisfaction. However, we are not just relying on our personal experience; a growing body of research evidence has demonstrated that performance measurement systems can be productive and helpful in improving organizational performance.¹

Yet, more often than not, getting performance measurement right is a difficult task. Therefore, the central question of this whole endeavour is how can organizations use measurement systems as positive drivers of performance and change, whilst mitigating against negative behavioural consequences? Before trying to ...