1. No mechanism to revise performance targets
Businesses undergo constant change – training programs; automation; business process improvements; changes in strategy; organisational restructures and so on. Because of these changes, management should expect improvement in performance. Therefore, management must structure some mechanism to update performance targets with changes in Business.
For example, if according to HR self-service Business case, productivity of HR staff should increase by 30%. After HR self-service software implementation, Performance target should update to measure proposed improvement.
2. Broken links between Performance targets and Company vision
When Performance targets relate to company’s vision, it gives employees justification, as why meeting certain performance targets are important. All performance targets cannot to be tangible. However, management must ensure they relate to company’s vision.
For example, company has quarterly goal to increase sales by 15%; it means each Sales Executives has target to sell at least 17 cars per month.
3. Not communicating big picture
Management must communication how individual performance targets relate to company’s customers, stakeholders and financial position. It helps to motivate employees towards common goal.
For example, to ensure company eligibility for Best Customer Service Award, each Product Manager should target to reduce customer complaints by 10%.
4. No consideration on cost of performance measurement
Like all other business operations, Performance measurement incur cost. Cost depends on methods and techniques used to measure performance. Management should analyse cost and value of performance measurement.
For example, consider automation of manual data gathering process; streamline KPIs; use standardised performance measurement techniques and accounting practices to reduce cost.
5. Using old Techniques
Management should consider business process; tools; platforms utilised for capturing raw data, tools to generate; present and communicate reports.
For example, consider different ways to collect raw data, consider modern software tools for data manipulation and report preparation.
6. Narrow view
Performance measurement should aim to show 360-degree view. It will help management to visualise and act on more complete picture.
For example, Salesman with the best performance may not be the one with highest number of sales. Instead, who has highest weighted score considering number of sales, customer feedback and customer complaints.
7. Draw inferences from narrow perspective
It does not matter how good Performance measurement framework is. Management should draw inferences based on information that is more subjective. Always consider wider perspective.
For example, Decline in sales one division may be due range of different reasons like weather; employment; local competition; local trends and so on. Management should look at the overall big picture and take appropriate steps.