In this podcast, Stacey Barr highlights common mistakes in performance measurement and the importance of well-formulated measures. She discusses the distinction between actions and true performance measures, the dangers of vague KPIs, and the significance of precise quantitative measures for evaluating performance effectively. The conversation also touches on the detrimental impact of vague language on performance measures in business and management, emphasizing the necessity of comparisons in evaluating performance changes over time.
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Quick takeaways
Well-formulated performance measures provide a method of comparison for evaluating performance, objective evidence for accuracy, and granularity for detecting small changes.
Initiatives, events, and sources of data should not be confused with actual performance measures, which require clear relevance and specificity to assess organizational success.
Deep dives
Importance of Defining Performance Measurement
Effective leadership includes the skill of measuring performance accurately. Performance measurement is about quantifying the essential aspects of what needs to change over time to achieve desired results. Through numbers, leaders gain insights that human judgment may miss, providing a clearer historical perspective and unbiased comparisons for better decision-making.
Common Mistakes in Performance Measurement Terminology
The landscape of performance measurement terminology is often confusing, with multiple terms used interchangeably, such as KPIs, lead measures, lag measures, and performance metrics. Many mistakenly believe these terms indicate distinct measures when, in truth, they often relate to the same concept. It is advised not to dwell excessively on specific terms but to focus on the underlying principles of effective measurement instead.
Avoiding Mistakes in Defining Performance Measures
Organizations commonly make mistakes when setting performance measures by confusing initiatives or milestones with actual performance measures. Initiatives refer to actions taken to enhance performance, while milestones denote specific time-based achievements. Measures of activity completion are not true performance measures, as they do not directly reflect changes in desired outcomes.
Ensuring Data Accuracy and Relevance in Performance Measures
One significant challenge in performance measurement is deriving meaningful measures from sources of data. Relying on arbitrary data sources, such as customer surveys, without clearly defining performance goals can lead to inaccurate conclusions. It is crucial to identify quantitative indicators that specifically reflect the intended outcomes to avoid misconceptions and ensure data integrity.
Stacey Barr: Practical Performance Measurement
Stacey Barr is a specialist in strategic performance measurement and evidence-based leadership. She is the creator of PuMP®, a performance measurement methodology that routinely transforms measurement cynics into its greatest advocates.
Stacey is also the author of two books, Practical Performance Measurement: Using the PuMP® Blueprint for Fast, Easy, and Engaging KPIs*, and Prove It!: How to Create a High Performance Culture and Measurable Success*.
In this conversation, Stacey and I discussed some of the common mistakes that leaders and organizations make with performance measurement. We also explore what well-formulated performance measures have. Plus, Stacey has kindly made her book available for free to our listening audience.
Key Points
Common mistakes in performance measurement:
Initiatives are not performance measures
Events or milestones are not performance measures
Measures of activity completion are not performance measures
Sources of data are not performance measures
A few vague words don’t make a performance measure
Well-formulated performance measures have:
A method of comparison that we can use to tell whether performance is good or not
A base of objective evidence that gives a reasonably accurate and reliable picture of current performance
A sufficient degree of granularity to detect small but important changes in performance to which we should respond
Relevance to the organization’s priorities
The ability to show changes in performance levels over time, giving us enough context to avoid short-sightedness
Resources Mentioned
Download a free copy of Stacey’s book, Practical Performance Measurement
The PuMP® Approach to Performance Measurement and KPIs
Book Notes
Download my highlights from Practical Performance Measurement in PDF format (free membership required).
Related Episodes
How to Actually Move Numbers, with Chris McChesney (episode 294)
How to Leverage People Analytics, with Jenny Dearborn (episode 323)
The Truth and Lies of Performance Management, with Michael Bungay Stanier (episode 361)
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