When Does Measurement Provide Highest Value?

^{Group of business partners showing thumbs up while sitting at workplace in office}

Are you using your measurement process for learning or for judgment?

Measuring and improving organizational performance play a crucial role in strategy execution. Measurement process enable objective evaluation of performance and support a culture of continuous improvement.

However, measures (or KPIs) will only be effective in a positive environment, without any blame and judgment. This is because a culture of continuous improvement is built on testing and learning from experiences and not having any fear of the results. In a negative environment, the following behaviors emerge:

Measuring what is easy rather than what is important – (selecting target hitting guaranteed and meaningless KPIs, such as: time spent for customer service or number of conferences attended).
Setting easily achievable but insufficient target values.
Manipulating the data or the system – (manipulating the scope of KPIs to achieve desired results, making adjustments within the system, submitting incomplete or intentionally incorrect data, etc.).

These behaviors do not add any value to the organization’s performance. In fact, they can be detrimental rather than improving.

Our measures provide objective information about the performance of our work and the processes we work within. It is essentially a learning tool.

What do we learn from our KPIS:

Is what we’re measuring at the desired performance level?
Are the improvement projects we’ve initiated to achieve our goals effective? Which ones worked, which ones didn’t?
How much impact have we achieved as a result of our improvement efforts and in how much time?

This information guides us to select what to do next:

If what we’re measuring is at the desired performance level, do we want to improve more and so initiate another improvement study?
If the project we’re implementing isn’t working, will we stop it and try a different approach?
Will we deploy the successful implementation into other areas of the organization?

This perspective is the basis of continuous improvement culture. I’m talking about a continuous improvement process roughly consisting of the following steps:

Identify a goal/objective to achieve and design a powerful and meaningful KPI to track it.
Measure the current performance level.
Set the target level.
Identify the reasons why current performance is not at the desired level.
Test/Implement actions to eliminate the root causes.
Measure to prove whether it works or not.
If it doesn’t work, identify the reasons and change the project.
If it works, deploy.
Go to the beginning of the process.

A culture of continuous improvement requires a mindset that supports an experimental approach and learning from the measurement results. Therefore, not fearing the results is a prerequisite for this process to work.

The most meaningful action to support such a positive culture, according to PuMP methodology, is to change the definition and perspective of KPI accountability. Instead of defining accountability as hitting target values, a behavior that aligns with continuous improvement steps can be the focus.

In other words, accountability can be defined as tracking meaningful KPIs in important performance areas, interpreting them, coordinating with different teams to identify root causes, taking timely action, learning from mistakes, reinterpreting, taking action again if necessary, and ultimately achieving fundamental performance improvements.

“If employees perceive that measurement is in place to help them to become more successful (rather than to monitor and judge them) and to empower them (rather than manipulate them), then measurement will become a powerfully positive force in the organization.” Dean R. Spitzer, Transforming Performance Measurement

So, what do you think?

You can check out the links below for more information:

What is a KPI Owner Accountable For? (staceybarr.com)

Tell Me How You Measure Me… (staceybarr.com)

The 5 Conditions to Measure Personal Performance (staceybarr.com)

You can watch the recording for this webinar: https://www.rubica.co.uk/webinars/how-measurement-motivates/