CEO Briefs - Why measurement matters in corporate performance

Why measurement matters
If you're not (accurately) measuring staff performance, there is a whole lot you are missing out on.
AND; if you can't measure it; you cannot manage it, or improve it.

Why is measurement so important in shaping performance?

  1. Measurement directs behavior.  Most employees consciously or unconsciously operate on the following assumption: “tell me how you measure me, and I will tell you how I will behave.”
  2. Measurement makes performance visible.  If it’s not being measured, it simply can’t be managed or improved.
  3. Measurement focuses attention.  When people are faced with so many competing demands on their time and resources, what is measured is what they give their attention to – particularly when it is linked to reward or punishment.
  4. Measurement clarifies expectations.  Performance measures are a primary means by which management can communicate its expectations to employees in clear and unambiguous terms.
  5. Measurement increases objectivity. Measurement is essential to “managing by fact” – otherwise you are left to lead with charm and personality.
  6. Measurement improves execution.  "Execution" calls for action.  Execution therefore calls for the measurement of action.  Where there is no measurement, or where measurement is not overtly important, there is little action, and therefore little execution.
  7. Measurement promotes consistency. Unmeasured systems tend to be highly variable systems; they have no way predicting performance or of guaranteeing consistency.
  8. Measurement facilitates feedback.  Feedback in the form of timely, relevant measures is the basic navigational device of any individual or organization.  A team with no measurement-based feedback, is similar to a ship crew with no navigation instruments.
  9. Measurement improves decision-making.  One of the major causes of failure in decision-making is poor or non-existent use of data.  One accurate measure silences a thousand opinions and establishes a sound basis for decision making.
  10. Measurement promotes understanding.  Systematic measurement leads to sound understanding of the variables concerned, which is essential for maintaining high performance. 
The success with which mid to long-term business goals are achieved is frequently determinable by how a company manages performance.  How well it manages performance is, in turn, determinable by how well it measures performance.
The one thing you don’t want, though, is get stuck managing routine performance requirements. 

Contemplate this:  How would you rate performance measurement in your organisation (1: Poor; 10: Excellent); what performance measurement framework do you use; what performance measurement tools do you use; are they efficient; are you measuring the right things; are the results of measurement actively used to feedback strategy and to direct performance behaviour?

We know that no one organisation is like another.  Our CEO Briefs are intended to give CEOs and other C-suite Executives insights into what we know really matters to them, to hopefully both provoke and inspire them to take necessary action in ways that best suite their circumstances.

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