Data is beautiful. Data provides us with an objective shared language that can cut through ambiguity to make the complicated seem simple. In business today, data is increasingly playing a role in the setting of long term strategic direction as well as day-to-day decision making.
The maximum - “If you can measure it you can manage it” has become a central tenant of modern management practice, with data taking on an especially prominent role in the way many organizations evaluate employee performance, with the clarity and accountability gained through data seen as the holy grail of performance management. However, despite the usefulness of data, there is a darker side to our obsession with numbers that all business leaders should keep in mind.
The way in which data is typically used to manage employee performance is as follows; 1) define business goals, 2) assign responsibility for completing part of the goal to each individual involved, 3) attach metrics in the form of targets/KPIs to each individual to ensure accountability, and 4) check in regularly - those who meet their targets are rewarded (increased responsibility and/or remuneration), while those who don’t are retrained or replaced.
The problem with this approach however is two fold:
Let’s take a closer look…
When Leaders reward staff based on KPIs, they are openly setting the expectation that KPIs are important. As a result, staff naturally turn their energy towards achieving the goals that have been set for them in order to reap the rewards. This can serve a business well in a stable environment where initial KPIs have been set to align well with the business’s overall mission and direction. Unfortunately, most businesses operate in a dynamic and complex environment. If KPIs have been poorly set or remain rigid rather than dynamically adjusting to accommodate changing conditions, KPIs become measurement for measurement’s sake. This can be disastrous for a business as staff continue to chase irrelevant numbers rather than working towards true business goals. KPIs must always and only be used to support a business’s core mission.
Hot Tip: Regularly reevaluate KPIs to account for changes in business context. If a KPI has become irrelevant or conflicts with the business’s mission it should be dropped. Don’t waste energy on measurement for the sake of measurement - not everything that can be counted counts.
Data by it’s very nature inspires competition - everyone knows that first is better than second, and rewards should be distributed justly. Why then are we surprised that competitive behaviour and siloing is commonplace in our organization when we pit people against each other for praise, raises, or promotions?
The folly here for many organizations is failing to acknowledge that individual performance is only partially related to individuals - individual performance is a product of an individual AND the people around them - the whole is greater than the sum of its parts. Viewing performance with this lens encourages a culture of “what’s good for the team is good for me”.
Hot Tip: Formal rewards and recognition need to be distributed as a function of both individual AND team performances in order to increase cooperation and reduce siloing.
Despite good intentions, the systems we create can sometimes have unintended consequences. But, make no mistake, we need systems to encourage accountability for employee performance within our organizations, and data used wisely is the right tool for the job.
If you are a leader in the workplace, HR Business Direction can assist you to embed data and performance reporting systems that support a positive and productive workplace culture.
Alistair Kerr, MPsychOrg; PostGradDip Psych; BPsych
Organisaitonal Development Strategist | Psychologist
07 3890 2066
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