What gets measured gets done

Corporate executives and heads of organizations and communities are too often disappointed by the performance of their management team and employees. The result is nearly always punitive retribution, firings, additional rules or some other form of negative reinforcement. What would-be leaders often fail to realize is that the very behavior that they find unacceptable is behavior that they are responsible for through the measurement systems they put in place.

No organization can afford to tolerate sub-standard performance. However, seemingly poor performance can often be correlated to the system or process that employees are working within. True Leaders take the time and effort to design corporate and personal performance measurement systems that are based on a BALANCED set of metrics, and then reward their employees based on the desirable BEHAVIORS and the positive OUTCOMES that result.

A classic example (but one that I have witnessed first hand) is measuring sales performance only (or primarily) on orders booked, without adequate regard to profitability, actual shipments or returns. The results?.. The Sales organization “hit their numbers” and therefore qualified for their incentive bonuses! How?.. By cramming as many new orders into the last fiscal quarter as possible. The unintended consequences of this lop-sided measurement system were: orders booked in the 4th quarter which were then cancelled in the first quarter of the new year; orders that undercut price to the extent that they were not profitable; artificially large orders which robbed volume from next year in order to meet this years quota; and a Customer Service department swamped with return authorizations in the new year. The impact of course was catastrophic, leading to a shortfall in profits, starting the new year with a deficit in sales and numerous low and mid-level sales people being fired (note not senior management.. but more on that later). These Sales professionals were for the most part honest people trying to do their jobs and make the company successful, as well as wanting to maximize their own compensation by doing what was asked of them.. SELL!!

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11 Responses to “What gets measured gets done”

  1. Jonathan Says:

    I think that the quote “What gets measured, gets done” is very dangerous but it encourages people to measure everything, rather than what’s important. I prefer the quote “Not everthing that counts can be counted and not everything that is counted counts”. One example of the problems that faulty measurement can cause is on my blog: http://alignment.wordpress.com/2008/03/10/measuring-lack-of-crm-usage/

  2. links for 2008-04-01 | The BFD on Brewed Fresh Daily Says:

    [...] What gets measured gets done « Mark Smith The other Cobalt Group bloggger. “seemingly poor performance can often be correlated to the system or process that employees are working within. True Leaders take the time and effort to design corporate and personal performance measurement systems that ar (tags: Business Leadership) [...]

  3. ANDREW KANAA Says:

    one needs to define performance explicitly otherwise one could be judged wrongly

  4. Mukul Says:

    Measure everything significant (that has limitations i.e time ,finance etc)that needs to be done(measure the correct parameters), keep the tagets realistic, and the job will be done.

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