Chapter 6: Performance Management

OVERVIEW

What gets measured, gets done.

Tom Peters ^[1]

Tom Peters, co-author of In Search of Excellence and A Passion for Excellence, emphasized the quantitative aspects of running a business. He observed that organizations, including his own, that focus on a set of goals (sometimes lofty goals) and measurement schemes to watch progress generally do well at meeting or even exceeding those goals. Measurement influences behavior, and people whose performance is being measured generally respond by performing better. The objective of performance measurement is to influence behavior in a way that helps achieve organizational goals.

Customer satisfaction was Tom Peters' best indicator of future health of a company more so than market share or profitability. He encouraged companies to use customer satisfaction as the primary basis for bonuses or other variable pay components and for annual performance reviews and to do so at every level in the organization. He also encouraged monthly monitoring of key quality measures, posting progress in highly visible locations in every workspace, and making it topic #1 at every staff meeting. His teachings can be applied to any part of an organization, but work best when applied companywide.

In the 1990s, Kaplan and Norton conducted extensive research on benchmarking and published their findings in the Harvard Business Review. They introduced a scheme for managing performance measures that would extract the greatest performance from an organization and drive strategy decisions through the use of measures in a balanced score card. The concept was simple enough the...