Thursday, May 21, 2020

The Performance Measurement Blind Spots

The issue of Performance Management measurement isn't about accuracy, but of validity and reliability.

You can only manage what you measure. Effective performance measures help the management do value justification in a language the organization understands for making wise investments. It is very hard to measure performance objectively and meaningfully.

Often the more meaningful and important thing you want to assess, the harder it is to measure objectively. Here are some causes of blind spots in performance measurement.

Dysfunctional performance management practices: Performance Management has always been followed by the word "system" or "process.” First, you need to consider why you need to do performance management. Then, how to do it in the right way. One possible cause of the performance measurement blind spot is the fact that many organizations can neither sufficiently measure the value they provide nor articulate the value in a tangible way. More specifically, the dysfunctional performance management systems are possibly caused by complicated processes, inflexible procedures, or bureaucratic management style, etc.

Sometimes, performance management becomes its own industry, forgetting its very goal to make business improvement or delight customers. The organization that didn't have a systematic approach to measurement and analysis at both the strategic and operational level has a giant blind spot that is impairing their performance or strategy management effectiveness. To close the measurement gap, make a seamless alignment of the strategic goal and operational performance. The performance measures need to motivate teams to achieve more and enable the management to deliver the ultimate business goals. High-performance businesses can select and measure KPIs and also become very adept at measuring business results and show performance improvements continuously.

Lack of recognition or honest feedback: Some traditional performance management causes dysfunctional behaviors and motivates people to hide bad news on delays and cost overruns. Lack of effective feedback management will deepen the functional gaps and create measurement blind spots. The useful feedback such as feedback on business action/impacts/outcomes, feedback on project realization/implementation, feedback on organizational potential can significantly improve business performance. Lack of recognition or honest feedback causes business stagnation, people get stuck in their comfort zone, and slow down the business speed.

The feedback gaps are also possibly caused by homogeneous team settings. Highly innovative and high-performance organizations with a diverse workforce have fewer blind spots because people do not fear to provide feedback. To close the performance measurement gap, the excellent feedback management offers you the clue to see things you might ignore; and gives you invaluable information to improve. The content of the feedback is oriented towards expected behavior, makes a continuous and measurable improvement, and cultivates the culture of performance. Feedback needs to be continuous, as close to real-time as possible, helps to not only to act but aids to feedforward for achieving measurable performance results.

The "measurement" of productivity, not productivity itself has blind spots: The disconnect between recognition and performance generates performance management blind spots. Sometimes the business managers keep on asking employee productivity instead of focusing on getting things to work correctly. Or set-up KPIs that show productivity improvements, but no real business improvements. The disconnect occurs or the performance blind spot is created when the wishful thinking at higher levels detaches from reality at lower levels. The performance management blind spots cause the management decision ineffectiveness because they probably wouldn't know where to invest in new business capabilities or improve workforce productivity based on an information-based agenda.

Businesses have become very adept at measuring the result. When productivity is low, further analytics is needed for an understanding of the cause whether it is due to the change or learning curve, inefficient practices or processes, or the culture complacency. Often, the "disconnect" part is the bigger issue that causes dysfunctional performance systems, miscommunication, management blind spots, and slows down the speed of business change and innovation. The multifactor productivity analysis would examine the process to determine what elements of production made the employees more productive. The key factor is to maintain acceptable productivity during any potentially disruptive change process and make continuous deliveries to maximize business performance.

The issue of Performance Management measurement isn't about accuracy, but of validity and reliability. To close the measurement blind spot, the performance measurement setting requires a system with components that all work together, focusing on achieving the ultimate goals of the organization as a whole for the long term business prosperity.


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