The Downward Spiral of Measuring People's Performance

Does measuring people's performance actually improve the performance of the organisation as a whole?

Performance measuring / management includes

1. Giving them bonuses, promotions or other rewards for good performance
2. Denying them those things as punishment for poor performance
3. Sacking them or firing them
4. Putting in place identtification of training needs and mentoring and coaching.   

But, does the act of measuring performance worsen it? .

Is there a chance of a vicious cycle

1. Managers want people to perform better so they monitor people to assess their performance
2. When they are monitored, the people feel judged and most take it personally and feel threatened
3. When feeling threatened, they get defensive and, to protect ourselves, they try to 
• Hide performance problems 
• Manipulate measures
• Set achievable targets
4. These acts worsen the performance and leads to more monitoring and the
5. performance goes down further.

ANSWER : 

Let people collaboratively measure process performance and not people performance..

CASE STUDY

1. Priority identified as the “Accuracy of the billing process” because the customer survey showed that they did not pay the bills which were inaccurate or had confusing rates.
2. It was decided that the operational challenge is to improve three specific performance outcomes (1)     timely payment of invoices (2)  revenue collected for all consignments handled (3)  ease of understanding of invoices, statements and adjustment notes
3. A small team worked together to define the billing process and its purpose, analyse their billing process to identify where the causes of problems were and develop performance measures to monitor the improvement of the billing process.
4. They created 5  “Process Result Measures” (1) Value of Overdue Accounts  (2) Age of  Overdue Accounts (3)  Customer Satisfaction rating on Invoice Accuracy (4)  Bad Debts as a % of Revenue (5) Total cost of Billing and follow up function % Billing
5. The flowcharted the process and  systematically walked through it to identify the problems that currently prevented good performance in the areas of  (1)   Freight consignment notes are not always supplied when they should be, and freight is shipped without them (2) Freight consignment notes go missing when they are paper-based. (3) The wrong charges can be applied when the data about exactly what freight and what amount of freight is not accurately provided by the customer (4) Accounts should never get to this stage, but there is a considerable number that are in dispute over what has been invoiced and the charges applied .
6. Before they decided how to fix these billing process problems, the team designed a few measures to track these problems in-process so they could tell whether or not their fixes were working. They called these measures ‘In-Process Measures’ (A)  % Freight Consignment Notes Not Supplied  (B) % Freight Consignment Notes Electronic (C)  Accuracy of Freight Data = Number of errors found in quantity or type of freight that would affect how the freight was charged, divided by the number of freight consignments (D) Value of Accounts in Dispute = The total amount of revenue associated with accounts that are currently being disputed by customers.
7. Thus, the team could focus very directly on fixing the problems that mattered most, and making sure that their efforts were improving the in-process measures, and in turn improving the process result measures.