Performance Management

by Peter Parkes

Common pitfalls

Performance management should bring about continuous, blame-free improvement, but there are several common pitfalls.

Don’t measure - do!

Some companies are setting up grandly-titled Business Intelligence Units, indicating that they have somehow moved on from performance management and management information. These departments are often staffed by relatively junior people, and the onus is on collecting information and reporting. Measurement and reporting are only steps in the performance management process; the most important step is taking management action to move towards agreed goals. The measures belong to the managers with a span of control, not to a BI team who simply facilitate obtaining and reporting on data.

Lack of alignment


When we were asked to review the improvement programme for a large and diverse organisation, one aspect of the programme stuck out: they were intending to procure a performance management system before drafting missing corporate and departmental strategies and business plans. Attempts to pull these activities into a logical order were resisted, as they felt it was crucial to get a system in place to satisfy external monitoring (which had highlighted the lack of explicit strategies as well as performance management).

The system was bought and populated with some popular measures. However, was this system moving the organisation forward in delivery of their (non-existent) corporate strategy and objectives, or just keeping the bees busy? Was it helping them to change, or was it establishing and confirming broken processes?

Performance Management as an IT system

I have worked in several companies that have had a directive from on high, or from regulatory bodies, to introduce performance management. Usually, the first thing they have done to ‘tick the box’ is to purchase one of the many commercially-available computer systems. The associated salesmen and consultants will all advise that introduction is a change management initiative, about people and processes, in other words. This advice will often go unheeded, however, and ‘the dinosaur will be digitised’; in other words, they will continue to do what they did before, but have the information in a computer system instead of in Excel or Word. Don’t let this become another ‘failed IT project’.

Note that there is a trend for posts of Heads of IT to become Chief Information Officers. Their span of responsibility will often encompass ‘Data Protection’ and ‘Freedom of Information’, and increasingly ‘Business Intelligence’. If the role genuinely reflects the title – in other words, they become accountable for performance management – then raising this responsibility to board level can only be a good thing. If they are primarily motivated to keep the IT systems running, however, it is probably a waste of an opportunity.

Not being very SMART

When working on several Public Private Partnerships for business process outsourcing with local government, a sticking point has been agreement of Service Level Agreements. These are essential when outsourcing departments to ensure that a level of service is maintained and improved. The problem arises when the public sector body insists on their target performance, or even perfect performance, on the day of transfer. There is an implicit expectation that the staff legally transferred over to the private sector body will put their underwear on outside their trousers over the weekend and suddenly improve performance across the organisation from bottom quartile to upper decile. It can be done, but it takes time and resources. Be reasonable; be SMART.

What gets measured, gets done

The above is an attractive maxim, but became a label for one of the big pitfalls for performance management, and KPIs in particular. The inferred corollary is that this is at the expense of what does not get measured, which deteriorates. One reaction to this is to keep introducing extra measures. I have personally seen Service Level Agreements for departments with less than ten staff that contain more than 200 KPIs (note that these were designated ‘Key’ – can you imagine trying to drive your car with 200 instruments on your dashboard?). This is an indicator of the way that the measures are used, or at least perceived in other words, to change personal behaviour.

A commonly-cited example comes from the outsourcing of call centres, of which we all have personal experience. Ever wondered why the line goes dead or we get referred on sometimes? SLAs for call centres often have metrics for the number of calls handled per hour. This may be as many as ten. When you ring up with more than a five-minute problem you may get ditched, or the following calls may get hung up to bring personal metrics back in line. Of course, the real objective of the principal organisation is the number of satisfied customers. How should we measure this?

Failure to understand our business processes

Key tip

Map and fix the processes before putting measures on them.

Unfortunately, most of us spend a good part of our working life doing unnecessary work. This is because the overall procedures we are following across the business are sub-optimal and often broken. Putting measures onto broken processes serves to establish and entrench the broken process and make it very difficult to improve performance. Ever had an unhappy experience with call after call to customer services?

Performance Management as a carrot and stick

There is obviously a close link between personal performance and team performance, and one of the barriers to the introduction of successful performance management has been the intended or supposed link to pay and remuneration. Sales staff may be motivated by incentives on the numbers of sales they bring in, but making similar ‘carrots’ widely available to other sectors of the workforce can be an obstacle to team work, and places unhelpful pressure on staff. There are several candidate measures in the health service, so managers should ask ‘Are we using performance management to abscond from the responsibility to develop and motivate our staff?’