The article The 7 Deadly Sins of Performance Measurement (and How to Avoid Them) appeared in Sloan Management Review in spring 2007.

It is a highly recognizable tale of the way performance measurement cripples performance in many of our organizations. The nice thing is that the article doesn’t stop at that. It also tells us about the importance of measurement and of how we can measure the things we need to know.

A quote:

‘There are two related keys to ensuring that a performance measurement system is focused on the right things.

The first is to emphazise end-to-end business processes, the cross-organizational sequences of activities that create all customer value. Processes transcend functions and other organizational units and are the mechanisms by which the myriad activities performed in an enterprise are integrated to realize results. Typically an enterprise of any size has five to 10 primary business processes, each of which may be decomposed into a similar number of subprocesses. By focusing its measurement system on processes rather than functions, an enterprise helps create alignment and a common focus across disparate units; instead of each seeking to optimize its own unique metric, departments are encouraged to work together to improve the performance of the process(es) of which they are part. …

The second key to ensuring that the right metrics are selected is to determine the drivers of enterprise results in terms of these processes. … to determine what factors were most critical to the company’s success and to identify metrics that captured them.’

The full article can be downloaded on the website of Hammer and Company.