Avoiding Performance Measurement Pitfalls

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Avoid performance measurement pitfalls

Mistakes in measuring business performance can lead to unpleasant consequences. Learn to recognize the most common pitfalls, so you can plan to avoid them.

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 Mario has found that he and his team are spending much more time and energy than they expected tracking data on their performance metrics. Which performance measurement pitfall might Mario and his team fallen into?

Not the best choice. This pitfall would not likely cause the problems that Mario and his team are experiencing. Instead, failing to regularly assess a team's objectives and metrics could cause a team to have outdated metrics that no longer reflect changes in business conditions, such as new competitors or new company strategies.


Correct choice. Mario may have defined to many major objectives for his team. Typically, each objective has two or three critical success factors, each of which translates into one or more performance metrics. Thus, an overabundance of objectives can create so many metrics that managers end up expending too much energy tracking data on those metrics.


Not the best choice. This pitfall would not likely cause the problems that Mario and his team are experiencing. Instead, using too few metrics that call for subjective data (such as employee morale or customer satisfaction) could cause a team to have a shortage of leading indicators. And without sufficient leading indicators, managers can't proactively manage their team's performance.


 Bella has begun noticing that the customer feedback her team members are collecting during after-sales phone surveys is uniformly positive overall. Bella is concerned that this feedback may not be genuine or valid. Which performance measurement pitfall might Bella and her team fallen into?

Not the best choice. This pitfall would not likely cause the phenomenon that Bella and her team are seeing. Rather, defining objectives and metrics that don't support strategy could lead to undesirable (and unexpected) business outcomes. For instance, a company fails to achieve its cross-selling goals because call-center employees are being told to process customer phone calls more quickly than before.


Not the best choice. This pitfall would not likely cause the phenomenon that Bella and her team are seeing. Instead, responding to performance shortfalls by launching major change initiatives would likely cause a team to notice that, despite extensive investments in change, performance shortfalls persist.


Correct choice. Uniformly positive feedback suggests that the performance data may not be objective. For example, salespeople may be "coaching" new customers to give positive responses to after-sales survey questions so that the salespeople meet targets related to customer satisfaction—and earn bonuses.


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