What Gets Measured Gets Done

WHAT GETS MEASURED GETS DONE

Tom Peters was one of first business gurus who acknowledged the importance of using quantitative measures for ensuring that work is done and even results can be improved. In his article “What gets measured gets done” published in 1986 (Peters, 1986) he is giving examples of measures used in his own organization in four main areas: customers, innovation, people and leadership.

The measurement process has evolved in the last 20 years to more innovative and structured performance management systems. The most known are: Balanced Scorecards, Dashboards, Management Cockpits, KPI (Key Performance Indicators). These tools are quite similar displaying in different ways a number of quantifiable measures in four main areas: finance, internal processes, customers, and people.

Almost every organization, big or small, is using nowadays a performance management system. If the rules or best practices to build these systems are quite similar, the way how they are analysed and used by each organization for further improvement can be quite different. Are these performance management systems just some other nice tools or are they really effective management tools for ensuring that work is done and further improved? Are these tools measuring what is really important for an organization? Are the indicators properly analysed and appropriate actions are taken?

First of all, it is important to understand why a measuring process is needed. It has been requested by the stakeholders? External or internal communication must be improved? Does the management need to have a set of measures to know if progress is made and goals are reachable? Does the management want to send a signal to the employees that their activities are linked to the organization overall goals and their performance will be evaluated in relation with these goals? A performance management system built only because new IT software was available or for the good image of the organization will probably not bring any value-added nor will have an impact on the results. If the management has identified the need to focus on some specific areas in the organization, then this will be the starting point in defining the directions and the type of indicators of the new measuring process.

The next step in creating a performance management system is to identify the areas to be measured, which metrics to define for each area and how should they be calculated. Albert Einstein reportedly had a sign on his office wall that stated: “Not everything that counts can be counted, and not everything that can be counted counts.” (Williamson, 2006)

The areas to be measured can be those with poor results, needing improvement, being important or specific to the organization. Economic theory predicts that such performance management systems focus on the areas that are measured potentially at the expense of those areas which are really important but are difficult to measure or is not wanted to (for example the areas where the stakeholders of the indicators could not or did not want to agree on a way to measure them). A service-providing organization will put priority on the indicators measuring the satisfaction of their customers. A production plant instead will focus on the metrics to use for optimizing the production process. In general, what is measured needs to be important for both the business and those directly or indirectly affected by what is measured вЂ" in other words “when something is measured but it isn’t important, it probably won’t get done” (Williamson, 2006).

Experience shows that often many indicators defined per area are just numbers without content (“number of products sold”, “number of complains”, “number of people trained”). Therefore instead of listing for an area all the measurable indicators that are easy to define and calculate, it is worth making first a list of the points to focus on. Each point then will be broken-down into relevant, understandable and measurable goals so that progress can be tracked. To support improvement for each indicator will be specified a target value or a benchmark (standard) against which the current performance should be compared. For example, for a production plant one key area to measure is the production process and its optimization. An indicator that can be used for this area would be people productivity defined as “total units produced / total people hours spent”. Its value can be compared then with a benchmark of the industry and variation can be monitored.

After the indicators have been defined and calculated, the next step is their analysis and use to support decision-making, to improve or correct current performance, to identify and prioritise the improvement targets, to explain failures and demonstrate successes. If defining the measurement process is difficult enough, analysis of the measurements and taking the appropriate actions is much more challenging because it has a higher impact on results and behaviour of people. When is not done correctly it will become uncontrollable and will have negative consequences. For example, improving a production process means in most cases that people have to learn new skills, shift responsibilities or even change or leave the job. If this actions is mot properly prepared it can have a negative impact on those directly affected and overall on the organization.

This impact can depend on the type of organization, department or culture.

In the organizations or departments where work is organised as project вЂ" for example IT, production, sales, the measuring process is done in a very structured, controlled and “scientific” way thus reducing the risk of failure or negative impact. Project management has become in the last years a “science” in its own right due to the fact that most organizations have changed from