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Why Do So Many Business Performance Measurement Initiatives Fail to Live Up to Expectations?Heather Chatwin, Managing Consultant, Metapraxis |
I might get an award for the longest speech title! Do please shout from the back if you can't hear me.
Mark's been talking about how the function of the Tomorrow's Company has developed, and has been telling us about a new language of business success. He also alluded during this discussion to our shared interest in actually introducing new frames of performance measures, and that's really what I want to talk about today.
This slide is a schematic which shows a few things that people have introduced in their performance measurement frames. The launch of the Foundation that we're all participating in today very much coincided with the takeoff of the interest globally in introducing new performance measure frameworks, and all of our shared experiences here and elsewhere in the world have very much helped to push back the boundaries of what we know, what we've learnt and indeed what we have achieved.
I myself have undertaken quite a number of projects within organisations, helping them to develop frames of measures and have also been exposed through forums such as this one today to a great deal of other experiences in other organisations. I am finding that I get asked more and more frequently now if I can characterise some of the success criteria of projects, and if I can distinguish the more successful from the less successful projects.
This is my opening question to you, but I won't embarrass anybody by picking on them and asking them if they can put their hand on their heart and say "yes, our project has made a significant and a lasting effect on our organisation".
I'm going to pick up on four themes. The first is to take a quick look at some of the current views of keys to success and I've unashamedly cribbed those from all sorts of different sources but they are just examples of things that others and myself are putting forward as things that you have to get right if your project is going to be successful and make a significant impact on your organisation.
Then I'd like to look at some of the characteristics that I've identified on some of the less successful projects that I've encountered. Firstly, why it seems that so many of these projects do ultimately fail to live up the expectations of the senior management team who embark on them. Then, the main body of my talk will be to look at a framework for addressing some of the behavioural issues which I believe are the key reasons why many of these projects aren't living up to expectations.
I won't go through the whole list and read out all these points because you have the handout. They are just some of the points that academics and practitioners have made at recent conferences. The first two are fairly global sets of advice, something that Robert Kaplan has spoken about on a number of occasions. The final one I think is quite interesting: establishing targets for non-financial measures. This is one of my own particular hobbyhorses, and is also one of Bob Eccles' particular themes as well. I think many of you will have met Bob Eccles through the Foundation and will perhaps be aware of the "Performance Measurement Manifesto".
I fundamentally believe that this isn't the whole picture. I will turn now to look at some of the characteristics of the less successful projects that I've encountered. I've worked with around 15 senior management teams over the last three years in companies ranging from newspapers and publishing through chemicals, all sorts of different organisations such as distribution companies. Some of those projects have been more successful than others.
These and some of the other experiences I've shared with people who are also working in this field make me feel that there are sorts of factors which are, if you like, "not right" in a project. In a great many projects for instance, senior management involvement is limited to away days - nice sessions in a hotel where they all sit down and review the strategy and development frame of measures. I've even seen a case where the executive team delegated the implementation to the IT director, which in that instance was probably valid as they had a management information project under way and this could have been subsumed into that. But by the time that we actually got to talk to the person who was doing the work, it had been handed from him to a senior IT manager, then to the EIS manager and it actually ended up on the desk of the EIS analyst. All of the people further up in the hierarchy had effectively just moved the whole task down one stage in the chain.
I was very concerned because I think at that stage, the EIS analyst was so far removed from the people who had the vision of what they were wanting to achieve. His route of communication was through this pyramid but it was very difficult for him to actually deliver something which was going to be effective.
Here are a few more examples. I think that the last point is quite interesting. I've shared experiences with other consultancies who work in this field as well and it seems that companies are far more willing to bring in outside advisors to help them establish a frame of measures. Somehow that seems to have a lot of added value, and people are quite willing to embark on quite extensive exercises to do that.
When it comes to actually making it real and taking that paper output - a list or framework of measures - and making those part of the management culture and part of the every day management processes, there is much less willingness to bring in outside advice. Obviously, as consultants we have a vested interest in this area but it seems that the implementation has, or is seen as having, less added value. That's the point I wanted to make.
My conclusions are (these are very much personal conclusions and I would be interested to hear whether you share any of them), that the keys to success that I mentioned at the outset are vitally important but they are not enough. They are not an exhaustive set of criteria. My experience is that most companies are developing excellent frames of measures. They may be more or less ambitious in what they're trying to achieve in terms of changing the organisation. But generally these operate a top-down approach, starting by making sure the strategy is very clear and that everyone does understand it, breaking that down to developed measures to underpin those goals. But many of the projects are faltering at the implementation stage and I have seen three particular things emerging.
Most of the methodologies do tend to concentrate on developing the measures. I believe that with these frames of measures, you define where you want to go but also define what the organisation is trying to achieve in terms that people can relate to and where they can actually action information and performance measures. They don't tell us really how to get there and what to do next or differently. It's all these behavioural aspects that seem to be receiving insufficient attention.
How can we get to a framework which helps us to address these behavioural issues? What can we do differently?
We use model that we have developed at Metapraxis and which some of you may have seen before. It's a model which describes business performance management. It's necessarily simple and we don't pretend otherwise, but it has helped us to understand how to make these balanced performance measurement projects really work.
I'll just talk you through it for a moment, for those of you who haven't seen it. What we're saying is simply that results happen in all organisations. Typically and traditionally in most organisations, the measurement systems have been established at the audit process. So they tend to be driven by that and the need to publish results either internally or in the external market. There's a response and targets may be more defined and so on. That's the judgmental loop. In terms of making your business performance measurement framework bite, you really need to concentrate on what we call the "business control" loop. Those same measures are analysed and compared against targets, and that happens in most organisations more or less well.
But what's really key is the softer side of the business control process which is the dialogue with the line managers, then commitment to the diagnosis of either what's going wrong or what can go better, and then action. So we're saying that the implications of this model for an organisation introducing BPM are that the measures of business performance must focus on the drivers of future financial performance, as much as on the downstream effects. This analysis of the performance drivers and results is as central a process as the measurement. Without the analysis, the dialogues won't happen. Without effective analysis, the dialogue breaks down or isn't of as good quality as it should be. Without that, the line managers won't commit to forward action and the results won't be improved.
Back to the original question: if you have embarked on BPM project or if you are going to, how effective is your project in addressing each of these steps? Where has the emphasis been? I think the basic problem for many of these projects is that the emphasis and focus is all on the measurement frame.
What I'd like to do now is put forward a frame using this as a simple model that will help us to address some of these other issues and to raise some of the issues surrounding analysis and dialogue.
I have a few pointers which I have developed in my experience over the last three or four years. It's very important before we start to develop measures that the organisation is clear about what they are trying to achieve. By that I don't mean that they want to achieve a new framework of measures which seems to me the objective that a lot of organisations have. This is a popular theme for management - "we ought to have some of it" - and I think that's very dangerous. I also don't think it's necessary to have as an objective achieving fundamental strategic change. I think that BPM can be equally valid for organisations looking to achieve some incremental change or just trying to get the focus of the management debate, the balance of the issues that are debated, more accurately reflecting the underlying business issues.
I've mentioned the methodologies before and I think most of them are fine. I have no real axe to grind about any of them. They start with the strategy which is obviously key, then breaking down. What is important is to look at the activities involved in that methodology and to work out whether those fit the organisation, and then tailor them to suit yourselves. Many of the other points are fairly straightforward.
I've mentioned the methodologies before and I think most of them are fine. I have no real axe to grind about any of them. They start with the strategy which is obviously key, then breaking down. What is important is to look at the activities involved in that methodology and to work out whether those fit the organisation, and then tailor them to suit yourselves. Many of the other points are fairly straightforward.
Moving on to analysis, there are two themes that I believe are fundamentally important. The first one is the budget. Many of the organisations that I've worked with have actually been quite reluctant to tackle the existing budget model, and to take some of those new measures and build them into that budget model. This means that even if they go forward and set targets for those new measures, they are not an integral part of the target framework that the organisation is used to relating to. They become, if you like, a "nice to have", something on the side but not quite as big a part of the fundamental focus of management attention as the straightforward budgets are. Obviously, we need to move fairly rapidly in these projects so we don't really want to wait if the next budget round is nine months away. I think we should be clear that we're setting some interim targets, and make sure that everybody is aware that they are interim - but do it all the same.
The second theme is reporting. Whether that is paper-based, screen-based, however that happens, what's important is that the new report should be substantively different from the current one. It's very important to focus on key issues so instead of having your P&L and your non-financial measures tagged on the back, there should be an integration of financial results and non-financial performance drivers. This draws out the cause and effect relationships between those. It should focus on key issues in the management calendar and what key issues the organisation is facing.
One device is to use graphics to make the report attention-grabbing and to aid the rapid assimilation of messages. As an example, I'll pick up on the focussing on key issues. In this case, it will be a business process: year-end forecasting. I'll take you through a case study example. This is trying to use graphics to help move from analysis to dialogue, to open up a dialogue with perhaps non-financially oriented line managers, people who can actually effect change.
In this case study, we're looking at a Japanese subsidiary of our organisation and we've got a message coming from the Japanese controller to say he is not going to meet his budgets in Quarter 4. The budget is about $850,000 and they are only forecasting under $650,000 so it's a fairly significant decrease. I'm a little bit nervous about this particular forecast because he's been beating budget successfully all through the year, so I'm not really sure whether I believe him.
We need a decent analysis and this is a schedule which is a sort of necessary but evil part of that analysis. Most financial people feel fairly comfortable with this. We see here at the bottom line we've got the budget with him forecasting to fall well short of that. We can see that the actuals have been well ahead. In my role as Financial Controller at the centre here, I have tried out some different scenarios to see what I think he might achieve and you can see they are fairly simple ones. Let's assume we do budgets, let's assume what we did last year might happen, and at the moment we're ahead of budgets. Now that's fine and as a financially literate person, I might be quite comfortable with that but it's not really going to help the dialogue process. So let's look at it in a simple graphical way.
This is just the same information represented on a graph. Here we've got the pink line showing actuals, the red line a forecast and green for budget. Those are the risk scenarios which I tried out to give myself a rule of thumb feel for whether the forecasts were reasonable. We see that two of them are definitely on the pessimistic side and then the forecast falls outside the range that I would have thought was credible all together. So I'm starting to get to a point where I may be able to establish a dialogue with the Japanese subsidiary but I just feel that I want to get a closer look at these numbers first. So perhaps I might want to look at it on a year-to-date basis.
This really emphasises how far he has been moving ahead of budget each month. There are my scenarios at the end. It means that if we take the December figure, here it shows what we're expecting to do for the year with the budget coming in at just over $3million, the forecast perhaps coming in at just over $4million and that's right at the bottom of the range scenarios that I tested. I may still want to focus even more on the future because after all, that's what I'm trying to achieve - a better understanding of what might happen and a way of presenting that information which is going to help me to open up an effective dialogue.
Quite a number of you will have seen this sort of chart before and it's what we call the "windsock". Here we have the deal in September with the year-end position that we saw on the previous chart. There's our budget for the year and so on. All the chart does is assume that after doing the analysis and creating the risk scenarios each month, we now obviously have less of the year to forecast and therefore the window is narrowing in. It gives me quite a lot of information about my Japanese colleagues' forecast because whilst they have revised their original, pessimistic forecast, they are still right at the bottom of what my scenarios make as a reasonable out-turn. I might have felt comfortable without knowing any more about this particular example but now I am clearly going to want to enter a dialogue with this subsidiary. I want to know why they have marked that forecast down and I have my risk window which will give me some basis for going back to them and opening up that dialogue.
I think it's vital that the MD ensures that the management process does include the right occasions for this dialogue, not just for things that are vitally important. There have to be occasions for the right sort of dialogue between the analysts and the line managers, between the centre and subsidiaries in a supporting way. It's vitally important that the management agenda has to reflect the balance of new management focus.
Quite often in these sorts of projects (and I've seen this happening), the review of a new report just get slotted into the normal review of monthly financial results as part of the executive management agenda. What we try to do is more fundamental than that - we're trying to change the focus and change the relative amount of attention that is put on different business issues.
All of senior management have to use the new language to support the management debate. That links back to Mark's point about leadership. Without that leadership and without people showing by example, then new frames of measures won't become the thing that your company is run by.
I'll finish off with a case study of sending a message back to Japan.
Let's look at the next stage in the business control cycle, at commitment. This is a really difficult area because for many organisations who have been putting in new frames of measures, there hasn't been a commitment to changing the compensation and bonus schemes. In many cases, the individuals involved in the project probably don't have the access nor the authority to do this. The Chief Executive may feel that he wants to try out the new frame of measures before going as far as changing the way that people are rewarded. It obviously is vitally important to replace existing compensation schemes because if you don't and there's any conflict between the peoples' personal targets and the way that they are rewarded, then they will obviously continue to manage to those.
It's obvious that it's a difficult area. But I think there is a compromise that is sensible. That is to review those bonus and compensation schemes and to try to remove any areas which are seriously in conflict with the new frame of measures.
Just to recap on the point about leadership, it is absolutely key that the senior management demonstrate by their actions that the new agenda is the reality.
My final point, to summarise the business control model and using it as a way of making balanced performance measurement bite in your organisation, is that senior management have to be actively involved in all of those phases - the analysis, dialogue and the commitment phases as well as measurement.
I will leave you with that final thought
Thank you.
Lord Butterworth
Questions and comments?
Ian Meiklejohn
Could you explain what you mean when you talked about delegation of responsibility in the whole process?
Heather Chatwin
I think that the key is determining what is appropriate to delegate. Obviously the senior management team aren't going to be building new reports in the computer systems. But so often, I've seen the delegation of the whole process - so if you like, the document which describes the measures which may or may not be well defined at this stage, becomes part of the job of somebody further down the line. They typically haven't been closely involved with the process of establishing those measures. I feel that the senior management have to stay more closely involved and not with just a single individual championing the project. For instance, they have to be very closely involved in designing those reports, helping the IT people, the finance people or whoever is in charge of actually building the system to understand exactly what is important; helping them to understand what are the important cause and effect relationships which have been established in the scorecard; helping them understand how the senior management team are going to want to cut and slice the organisation when looking at different performance measures and what the appropriate view of the organisation is.
David Towers
May I ask a couple of things out of personal interest. How many companies in your experience have started to put performance measures to the business processes?
Heather Chatwin
An increasing number are talking about it - a slightly cynical reaction. Quite a number of people have come to me and we've discussed how they might go about it. I feel there's still perhaps not reluctance but a little concern about whether it's going to work effectively, whether it's going to fit in with the top-down strategic view of the goals - whether those two (the top-down view and the process view) are actually going to mesh together or whether there's going to be some conflict. I think people are still struggling with that.
David Towers
In our experience, we find that in terms of operational reality and integration of processes, you get the "so what" factor from management. It doesn't tell them how to improve the business. I think you mentioned in your slides that knowing how to get there is a key question that management often want to know, how to put the reality now into measures that they are trying to achieve. We find the use of processes a way of doing this.
Heather Chatwin
I think it's getting the right balance, isn't it? Do you drive the measurement framework from the goals or from the processes? Does measurement of the process merely underpin achievement of those goals? It is a matrix issue and I think we'll be gathering more experience in the months ahead about how that works when more companies have got further through the implementation of process-driven performance measures.
Bob Newman
You talked about choosing a methodology - do you have any more comments on the sort of options that are available in terms of the extent to which each particular establishment should be involved, the extent of tailoring you should do, the different types of methodologies?
Heather Chatwin
I don't have any strong views. I think most of the methodologies work well. Obviously, there are some fundamental choices if you wanted to go for an entirely process-driven approach. I, myself, would be more reluctant to take that approach. I don't think there's enough evidence yet to know whether that's going to be successful. Really, it's down to the organisation and what they feel comfortable with. An instance I have come across recently is that a number of the members of the senior management team had been reading about the balanced business scorecard, and that was the terminology that they had got used to talking about business performance measurement in. So in tailoring a methodology for them, it was quite necessary to stick with that terminology. It doesn't mean that they have ended up designing a methodology which was pure balanced business scorecard because it didn't work entirely. In their organisation, they had some shorter-term goals that they wanted to emphasise rather than the long-term strategic direction of the organisation as a sort of first stop, or first step in their process.
Ian Meiklejohn
In the research that we're doing, companies have started to try and develop their own framework but linked to existing frameworks such as the EFQM model. We're finding quite a lot of companies now don't want to confuse management and staff by introducing a second conceptual framework. So they are using something like EFQM and then tailoring that specifically to their own business strategy, emphasising the elements they want to introduce. I think that's one option for a company that has got something like a balanced performance initiative under way.
Heather Chatwin
I think the point about not confusing people is vitally important. As these exercises cascade down an organisation, the messages are obviously diluted and if you can keep a very clear focus, then that's going to make everything come together and the whole process work more effectively - you get the buy-in to all of the measures and the direction that you are trying to establish.
Trevor Nicholas
During Mark's session, the phrase "inspired loyalty" came up as one of the company aspirations, and later we moved on to investing in people. Throughout your talk, there have been constant references, quite naturally, to people-related issues. How do you think we're going to reconcile these aspirations and the need to concentrate on the Charles Handy view of the world - there's no job for life, itinerant workers, six weeks on and six weeks off type of world we're going to live in? How are we going to get loyalty? If they're only going to be there for a few months, how are we going to get people to take real interest in these measurements because they have got to be long-term if they're going to have any value?
Heather Chatwin
That's a very big question. Inevitably, it's going to be difficult if you really believe that is the world which we're going to be living in. I think it's important again that you have a simple and clear focus, clear goals, and that these are well communicated. Using a frame of performance measures is a very strong tool for communicating goals. I think that it's a contributor to that clarity of purpose, that clarity of focus. Mark, do you have any comment?
Mark Goyder
We've certainly found this issue raised more and more with the Enquiry. For example, we arranged a workshop this year with 50 companies and their consumer affairs, customer service professionals. This is one of things that they were saying. Some people were saying: "I'm being reorganised three times a year and reengineered twice a year and everything else, and it's actually rather difficult for me to keep my customer focus on the long-term commitment". The conclusion that we came to in that seminar is that actually, the more change there is out there, the more constancy of values and strength of your underlying core becomes important. Far from values being a rather soft afterthought for competitive success, values actually become absolute and more and more central. Whether there is perhaps a portfolio of workers supplied or whether the workers see themselves as part of the core, never quite knowing if they'll still be part of the core in three years time - unless people think there is something about the business that makes it worth continuing commitment, unless there's something to give them - a reason to believe in - then the business hasn't got a chance.
Trevor Nicholas
It's going to be a sea change to many managers. There was something in the Harvard Business Review called something like "Boxes and Bubbles Management". All the boxes were hard things like command and control of budgets, and on the soft side was leadership, motivation, empowerment and a host of other things. They found that 90% of companies were very happy with the boxes but absolutely hopeless with the bubbles.
I think that most companies here are still focussed on the boxes and don't know much about the bubbles - in fact they almost get embarrassed by it in some companies. But I think we've got quite a massive change if we're going to make really good effect from paperwork, the type of work that Tony Cleever's group is doing and indeed the work we are trying to do in this forum.
Geoff Smith
The one thing that is becoming apparent is a going on a little bit from what Mark has just said and I'd like Heather to comment on this. Because there are so many initiatives to change things inside a company, employees are beginning to demand to know why - what are they supposed to be going to get when they've done it yet again? I've just been in a company where there were 15 initiatives going on simultaneously, with five different lots of consultants. They had a bewildered workforce and amongst them was a measurement system. The successful companies that I've seen change measurement (or I've seen them after they've changed measurement), have spent an enormous amount of time (two to three years) getting an understanding of why there was a need to change. Have you seen any companies that have gone to this trouble to try and get the understanding of why there's a need for a new measurement system, and the benefits they are striving to get from having it?
Heather Chatwin
I think a lot of companies are embarking on measurement projects without being clear about what they're trying to achieve. Often, whilst undertaking reengineering projects, it feels good - it feels right. But that isn't really a valid reason for doing it. If you are undertaking a major reengineering programme or major strategic review, then balanced performance measurement is a necessary part of that and is driven by the other change that you are trying to put on the organisation.
Geoff Smith
Have they actually tried to get this understanding of why it's necessary to do it?
Heather Chatwin
I think is the answer is that I have seen it but not as frequently as I would have liked. In my experience, it's happened most readily in smaller organisations with a very coherent senior management team. Often, the real value of designing the frame of measures comes from the requirement to stop, review the strategy, make sure that everybody agrees with it, that everybody does interpret it in the same way. In fact, as I'm sure a lot of you will have experienced as well, you will often find that there are fundamental differences of interpretation and of course, as those filter down the organisation, problems can ensue. So that's actually a plus and a minus point if you like.
When you get to the larger organisations, many are embarking on measurement as part of other projects (reengineering or change projects), but I'm still seeing quite a lot of instances where the timing isn't really appropriate. It's either too early - before the organisation's decided where it's trying to go, or too late - they are already trying to get there using the old measures and then you're running to catch up, or reopening debates that have really been finalised.
Peter Smith
Just picking up on your slides and being part of this language exercise, there is a difference now between loyalty and commitment. They no longer mean the same. Organisations in the past were encouraged to demand loyalty and commitment but in fact if we go down the Charles Handy route, you can only go down it partially. Organisations have changed, and are flatter. Loyalty is no longer something that people are prepared to give. They are prepared to give commitment. I think it's that word which certainly in the Inquiry we debated at some length at the last Inquiry meeting. Most people came to the view that commitment was the language we should encourage use of.
I would just like to ask you to what extent as part of the measurement process, the question of commitment is a measure?
Heather Chatwin
I think it's one of those soft areas where organisations struggle to establish effective measures. I think really, my view would be that the commitment you're looking for goes back to my slide about the business control cycle - it's commitment in the context of commitment to action, commitment to doing things differently, commitment to diagnoses of business problems or business opportunities using the new frame of measures as the basis of the analysis. In terms of commitment to the measurement process itself, I don't think that can be separated from the whole process of business control. Again, I'd make the same point that I made earlier - having the very clear statement of goals and measures helps to broadcast what commitment the organisation is looking for. It is also then very straightforward for people to buy-in or not, as they choose. Perhaps at that stage, whatever commitment exists does start to become clear. But actually trying to measure it is one of those things where because you are measuring it, you will get what you want. It's not a very easy area to establish an effective performance measure for.
Trevor Nicholas
Isn't there a problem that if you seek to measure and formalise it, you could actually destroy what most of us mean by it? With a contractual commitment, you would mean X in return for your money. But in the old days, what we meant by commitment was that we paid you for a 37 hour week to do this, but if the computers broke down, we weren't at all surprised (even though we didn't write it down on a piece of paper) if you went in and worked 24 hours around the clock to get the computers up again voluntarily, because that was expected and known as company loyalty. I always thought very strongly as a manager that if I ever formalised this, I would kill it. As soon as you say to people what you expect, then they want to be paid for it and they want overtime. If you leave it to good nature, then you get a vastly better response. I think the same danger applies in metrics. If you try to get everything conformed, then I think you lose whatever is left of the great loyalty.
Heather Chatwin
You are relying on having established a definition which actually encapsulates what you were trying to achieve. It's the old adage of you do get what you measure.
James Dobree
Regarding Metapraxis, what measures do you use to manage your business?
Heather Chatwin
As a consultancy and software organisation, we're obviously driven by the traditional consultancy measures: utilisation, realisation, those sorts of things. In the softer areas, again it's more difficult. We are a small organisation so we wouldn't need to measure commitment formally because it's very obvious. But we would discuss it.
James Dobree
Do you discuss the measure of utilisation?
Heather Chatwin
Yes. In different contexts, depending on the level at which it is being measured, because obviously, different people in the organisation have different responsibilities. Some of us are responsible for providing future workload, some of us are just responsible for doing the work that we are provided with and jumping up and down if we've got a gap in our schedule. So the measures are used and we have very clear definitions about them. But what they are used for varies, depending on the issue that we are addressing at the time.
James Dobree
You stay well away from the softer measures - the bubbles?
Heather Chatwin
Soft and "measure" don't really go together very well. We discuss the softer issues, as most organisations do. But again, it's back to this question of do you try and force fit a formal definition for something soft? I don't think it's necessary in an organisation of the size of Metapraxis, and I think it's dangerous in larger organisations. I would almost flip it and say that what we haven't talked about is the other side of performance monitoring, which is the soft, textual information. Perhaps, that is way forward - to look at formalising the capturing of textual information, commentary and discussion, rather than trying to establish a definition of a measure.
Mark Goyder
Maybe part of the problem here is that we are expecting a measure of commitment to be more objective than it actually needs to be. For example, thinking of one of the young CEOs that I was talking talk in retail, I remember him being absolutely obsessed with feedback of all forms - whether it was the way he structured annual middle management conferences or whatever. He designed things so that every manager in a group of middle managers through that conference got a depersonalised feedback without knowing what individuals had said. With the example of a Chief Executive of a middle-sized manufacturing company which does quarterly employee moral surveys, if the same questions are asked every quarter, the only thing definitive about it may be that you're looking at changes through time and you're comparing. But there are ways of getting a kind of independent feedback on the health of your relationships. I think that's what companies are after.
Matthew Nixon
I just wanted to comment on the question about measuring the soft things. I used to work for a "big-six" consultancy who measured everything, and this was then reduced to numbers ultimately. I don't think that was really a very successful strategy because at the end of the day, if you are talking about a performance feedback mechanism for individuals, something that reduces it merely to numbers or to whether you put a one or a two for that particular project, whatever it might be, doesn't actually get the essence of the problems across to people of what they need to improve on - although it does allow you to draw graphs! I think we need to watch out regarding reducing everything to numbers. It really doesn't work in some areas - but that doesn't mean we can't measure or we can't feedback to people or we can't do better. The smaller scale of a company like Metapraxis has actually proved more to me as we have better communications because we are all in the same office and we can talk to each other.
Nick Kohl
I just can't let that final statement go actually without commenting on it. Establishing a framework of measures is the easy part. I think that statement might go into your potential failures at the beginning, because I think establishing a successful framework of measures is extremely difficult. Referring back to what Keith was saying about success logs, I believe we should have a performance management model that reflects our business strategy. If we have that, to identify in no more than six metrics (although Bob Eccles would say that if you go above four, you're getting over complicated), I believe becomes very difficult - and you cascade down from there.
Heather Chatwin
I myself don't buy in to the "only four or six measures". I don't think any organisation can be reduced to that small amount.
Nick Kohl
But you can cascade down from there, so any business unit manager has his own contributing four or six measures.
Heather Chatwin
I obviously understand that but I still feel that at any level, you need a far wider frame of performance information to be able to really understand what to do differently if something is off course - what to do differently if an opportunity is identified. Yes, it is a slightly glib statement and I'm really only trying to drive home my message that getting the measures right is only the very first step of the process. There is a lot more that has to happen after that, and really that's where I see most projects at the moment falling down.
Nick Kohl
I think the conundrum is the more measures you get, the more complicated it becomes and the less you understand what it is you are looking at.
Heather Chatwin
Yes. You have to have the right balance obviously, and you shouldn't go through some of the examples that I have seen in organisations where they have a report on KPIs and have got 452 of them - and they still call them KPIs! It's about balance.