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Seven Deadly Sins

Optimize Blog - August 20, 2014 - 0 comments

Let us state up front that the sins to which we refer are those of performance management – not the originals relating to theology found in literature elsewhere!
Operational performance management remains a misunderstood and unsolved problem. Designing and using metrics to track and improve operating performance is one of the most persistent problems that organizations face. In fact we scarcely ever come across an organization that has an effective set of metrics. Companies have measures but few managers or staff believe these metrics are the right ones or that they help the company improve its performance or reach its strategic goals.
This is remarkable for two key reasons. Firstly operational performance management is so utterly fundamental to basic operational management and secondly the development of more sophisticated strategic measurement systems over the last ten years based on tools like the Balanced Scorecard, has come on in leaps and bounds with data manipulation applications and very snazzy dashboards.
So why do metrics largely not help organizations? Why are we measuring the wrong things and why do organizations continue to fall into the trap of measuring what can be measured rather than measuring the right things. Let’s consider the seven sins of metrics management:
Vanity – One of the big mistakes organizations make is to measure the things that make them look good rather than what might create value. An example might be acknowledging complaints within 24 hours when a true metric might be around complaint resolution times.
Selfishness – This occurs where organizational boundaries dictates the development of metrics. What good is it if Sales is measuring a metric which is at odds with the Underwriting department?
Narcissism – This is where metrics are all inward facing and only viewed from the companies’ perspective. Metrics that show you have the item in stock are pointless if the stock is not on the shelf and therefore cannot be purchased by the customer!
Apathy – This is where a company gives insufficient thought to what needs to be measured. In this situation metrics are meaningless and the organization fails to understand how it delivers value.
Myopia – Too often companies measure only a small element of what really matters. Focusing on production costs at the expense of overall product profitability is a good example. How many supposedly service centric organizations have moved their call centre operations to low cost labour markets but then have failed to deliver on any adequate level of customer service using that cheap labour?
Precipitousness – Almost without exception, using metrics to reward employee behaviour delivers some form of unintended consequence and usually to the detriment of the organization. This is often not thought through in the haste to change behaviour. We recently encountered a company where a cost control drive created a situation where the marketing department ordered a certain supply of a brochure because the unit cost was lower based on volume. Unfortunately this translated to four years of brochure stock which of course will be changed prior to it all being used.
Incompetence – The most serious of all the sins. This is the sin of not being serious about measurement in the first place. We see organizations using them as excuses for poor performance rather than identifying root causes. We see metrics being used as a way to apportion blame. Sometimes the metrics have been created by self-interest and in some companies loudness of voice carries more weight than objective data.
These seven deadly sins are not exclusive and many overlap or are related and therefore a single metric may be evidence of several of the sins. Regardless, a company that commits any or all of these sins will find itself unable to use its metrics to drive improvements in operating performance which is essential for the sustainability and success of the organization.
Redemption comes from measuring the right things, measuring them in the right way and using metrics systematically. Ultimately an organization needs to deliver a measurement friendly culture………

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