I was just relaxing a little bit from another long day at the client site when I saw this movie on YouTube. In my opinion the movie really shows the bottlenecks within an organization with respect to performance management.
Enjoy!
The previous post triggered me to post something on the dark side of performance management. Something I should have been doing weeks ago, since we started this thread with Frank Buytendijk on his weblog.
The previous post suggests what we think is the right way to approach performance management: linking overall goals to what employees can understand and control, and rewarding them accordingly. However, as Frank so eloquently introduced, behavior may very well be influenced by performance management systems, but too often the behavior invoked is not in the best interest of the organization. We thought it might be interesting to make a small inventory of some of the flaws in performance management today.
We've all heard the stories about top executives earning huge bonuses. I'm not sure about other countries, but in The Netherlands this always leads to a lot of discussion in the media. Apparently, when bonuses are big enough, people will try whatever they can to earn their bonus. One of the problems I encountered with bonuses is that they often drive performance at the department or individual level, but tend to overlook performance of the organization as a whole. From my own experience in consulting I have seen this lead to situations where a project would be staffed with people from one group, where it might be better to use consultants from another group. Apparently, in this case the performance management system promotes high productivity instead of co-operation. It would however be in the best interest of the consulting firm to promote having the most qualified team, in order to serve the client the best way possible.
Please let us know your experience with the dark side of performance management. I'm passing this thread over to Tom Hudock, who commented on our previous post on his BI for Business People blog. Let's find out what dark side he has experienced. I hope it's not as bad as with Luke Skywalker...
In the McKinsey Quarterly a good article was published about how to measue performance in service-oriented organisations. Services are more difficult to measure and monitor than manufacturing processes, but executives can rein in variance and boost productivity if they implement rigorous metrics.
Faced with stiffening competition, increasingly demanding customers, high labor costs, and, in some markets, slowing growth, service businesses around the world are trying to boost their productivity. But whereas manufacturing businesses can raise it by monitoring and reducing waste and variance in their relatively homogeneous production and distribution processes, service businesses find that improving performance is trickier: their customers, activities, and deals vary too widely. Moreover, services are highly customizable, and people — the basic unit of productivity in services — bring unpredictable differences in experience, skills, and motivation to the job.
Such seemingly uncontrollable factors cause many executives to accept a high level of variance — and a great deal of waste and inefficiency — in service costs. Executives may be hiring more staff than they need to support the widest degree of variance and also forgoing opportunities to write and price service contracts more effectively and to deliver services more productively.
As with any task or operation, to improve the productivity of services, you must apply the lessons of experience. Consequently, measuring and monitoring performance (and its variance) is a fundamental prerequisite for identifying efficiencies and best practices and for spreading them throughout the organization. Although some variance in services is inescapable, much of what executives consider unmanageable can be controlled if companies properly account for differences in the size and type of customers they serve and in the service agreements they reach with those customers and then define and collect data uniformly across different service environments. To do so, it is necessary to bear in mind a few essential principles of service measurement.
None of these principles is easy to implement. Top executives are likely to face resistance from managers and frontline personnel who insist that services are inherently random and that service situations are unique. Managers who have grown used to the protection that lax measurement affords may be reluctant to view their operations through a more powerful lens. But only by adopting these principles and implementing rigorous measurement systems throughout the organization can service executives begin to identify reducible variance and take the first steps toward bringing down costs and improving the pricing and delivery of services.
After this seriuos content I would like to show you life ain't all bad. At YouTube I found an hilarious clip which was based on the movie Office Space.
