I hope your organisation doesn’t suffer from the problem I’m about to describe –  but we all know examples from organisations that do. It hit me forcefully on a recent occasion when a relative was in hospital. Without going into too much detail, he was admitted with an electrolyte disorder. Once the hospital managed to get the electrolytes back into balance, they discharged him. Unfortunately, he collapsed on his way back to hospital for an outpatients’ appointment, was readmitted, by his own reports not terribly well looked after, acquired an infection and over 90 days later was finally moved out into convalescence care. I wonder whether performance measures had any bearing on his premature discharge from hospital in the first place.  If so, these resulted in significant longer-term costs and resource usage. This is what I am calling “measurement savvy, performance stupid”.

Let me give you another example. A team in a government department was tasked with selling a building to reduce the estate and generate income, whilst at the same time another team was trying to acquire additional space of a very similar size and nature in exactly the same area. The individual tasked with the sale had key measures and targets to meet and so went ahead with the sale.  This meant the department as a whole incurred all the costs of disposal and reacquisition because no one was thinking about the overall costs and performance. Again, measures not driving performance.

But this is far from being just the domain of the public sector. One oil service company I have worked with created a strong focus on KPIs in their supply chain. But all the measures were supply chain measures about order fulfilment, efficiency of the supply chain and reducing stock. These measures weren’t customer focused, so the logistics team were continuously fighting the rest of the organisation whose real target was to keep the customers’ operations running. Again, measures not thought through and having the wrong consequences.

I have a suspicion that too many of us are measurement savvy and performance stupid. It happens in organisations where people think measures are important and focus too much on them.  It happens in organisations were people don’t understand that KPIs are just indicators and not real performance. It happens in organisations where senior management don’t think the management control system in place is important enough to warrant their attention, whereas in many cases it can create or destroy their business.

Do you have situations like this? Identifying the problem is the first step towards doing something about it.

Mike Bourne