Performance Measurement is Not Performance Management!

    

Traditional performance management systems have either measured organizational financial data and short-term profitability or individual employee performance. Neither method has proved successful, so each has evolved to include additional measures: organizational financial performance expanded to include customer, internal business process, and learning and growth measures via the Balanced Scorecard, and individual performance appraisal measures expanded from assessing subjective dependability and commitment to measuring performance on objective goals.  Over the years, both methods came to be known as performance management systems even though they continued to measure rather than manage performance.

     

As such, they both have retained the underlying philosophy that “if it can’t be measured, it can’t be managed.” This philosophy is rearward-looking rather than forward-looking. Measuring something implies that the thing has already occurred, while managing something implies that the thing is in progress and is continually being guided, directed, and, well, managed.  True, part of management involves measuring progress over time in order to determine where improvements and/or changes should be made going forward, but measurement is only part of management, not the end state.

     

We find that there is very little actual performance management going on in organizations; virtually all of it is performance measurement.  And organizations are so used to taking their yardstick out to measure things that they don't realize the tremendous positive difference it would make if they started managing those things instead.

Comments

[Joe Pentlicki]

Wayne,

Thanks for your commentary on the differences between performance measurement and performance management. I agree with your premise that performance management involves taking action based on measurements. Performance measurements, implemented properly, provides for both leading and lagging indicators. In addition, properly implemented performance measurements are aligned strategic goals providing KPIs for measurement and decision-making. If I understand you correctly, this is where performance management can accelerate success exponentially.

The challenge that I see across numerous organizations is a lack of worthwhile and meaningful measurements. In many cases, the only measures many small-to-medium sized companies have is a reflective view of the previous month's financials: "did I make money or not?" To manage performance for organizational success, an organization must understand what metrics are important for the business; they must understand what impact those measurements have on the organization; and they must understand when those measurements indicate success or failure.

This leads to my question; organization's without effective measurements still need to manage performance to be successful. This is the proverbial 'chicken and egg' argument. In your view, which comes first, the chicken or the egg? Can you have one without the other?

Looking forward to your response.