Search

COMMENTARY
HR & EDUCATION | Contributed Content, Singapore
Published: 02 Jan 12
1368 views


Are your performance measures costing you money?

Performance measures and key performance indicators (KPIs) are a powerful part of a Singapore manager’s tool kit but when applied inappropriately their cost can actually outweigh the benefit they provide. Are you using your performance measures appropriately or are they costing you money?

Performance measurement is important in any business. An old adage, which still stands true today is ‘you can’t improve what you don’t measure.’ By informing us of where we are at, performance measures play several key roles. They:

- Provide control: management can measure current levels of activity and see where improvements can be made
- Enable decision-making: they provide important information and visibility across the organisation, helping executives make timely and effective decisions
- Provide direction: performance measures link activities to the business strategy and provide employees at all levels with information about what is required to drive the organisation towards its aims

A well-designed and well-executed performance measurement process can drive a company towards its strategic objectives and provide that competitive edge. Unfortunately, there are a number of pitfalls awaiting the unwary organisation, and in the worst-case scenario, the costs associated with establishing and generating performance measures can even outweigh the benefits.

Some of the most common issues with performance measurement are:

1. Lack of alignment across the organisation
All performance measures need to be for the overall improvement of the organisation and should not drive conflicting behaviour. Within some organisations departments and individuals find themselves in conflict, as the targets they have been set have a negative impact elsewhere. For example, a product development group may be measured against number of production trials, but production trials inevitably have an adverse impact on plant uptime, and maximising uptime could be the performance measure for the manufacturing department. This can cause conflict between the two departments and a sub-optimal outcome for the organisation.

2. Gaps in the measures applied through the organisation hierarchy
A good test to see if an organisation is using performance measures to effectively deploy and drive strategy, is to ask an individual at the lowest level in the organisational hierarchy to explain how the performance measures used for their role or the processes that they work on, link to the achievement of the overall business strategy.

For example, a KPI for completion of planned maintenance activities. This should have an effect on machine availability and thus on master production schedule performance, and subsequently on the ability to deliver in full on time (DIFOT), which is fundamental for achieving a business strategy of becoming a reliable business partner.

This example illustrates the cause-effect relationship between the measures applied at the different levels of hierarchy within the organisation. Understanding how the different measures affect one another helps to highlight any gaps in strategy and can be useful in identifying improvement activity, particularly if higher level measures aren’t achieving their targets. Providing visibility throughout the organisation also allows different departments and individuals to see how they contribute to the success of the business, giving them more incentive to do well and consequently greater job satisfaction.

3. Not being used to drive improvement
Many organisations devote considerable time and resource to the preparation of performance data and brightly coloured charts and presentations each month, but not all of them do anything with the outcome. It’s no use displaying performance measures on the wall if they don’t provoke any action – in this case some attractive wallpaper will do the same job, for considerably less cost! A significant effort is required to measure performance properly and to get full value, organisations need to include targets and control limits to drive better performance going forwards. Performance levels should be analysed and in the event targets are not being achieved root cause analysis undertaken to understand why, and then corrective actions agreed and monitored. Improvement without measurement is impossible, but measurement that is not used to drive improvement is a waste in itself.

Stuart Harman, Partner, Oliver Wight 

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.



Sign up for our newsletter

 

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.

Tags: Stuart Harman, Are your performance measures costing you money, Oliver Wight

LATEST HR & EDUCATION JOBS »
  • No jobs posted on this category.
PRINT ISSUE »

Subscribe Now
Singapore singled out in Asia for weak M&A appetite

116 views

Is the KL-Singapore High-Speed Rail project still on the right track?

255 views

The changing taste of Asian art collectors bodes well for the Western art market

21 views

MOST READ EXCLUSIVES

The 10 richest Singaporeans

The 10 richest Singaporeans

Altogether, their total amount of wealth dropped by 20% to US$32.5 billion.

by KRISANA GALLEZO
13 Apr 2015 | 125534 views
 

Here are the credit card deals you shouldn't miss during the Great Singapore Sale 2015

Here are the credit card deals you shouldn\'t miss during the Great Singapore Sale 2015

The GSS begins today.

by MARIANNE ESTIOCO
29 May 2015 | 26324 views

Check out P&G Singapore’s new office with outdoor working spaces

Check out P&G Singapore’s new office with outdoor working spaces

It occupies 6 contiguous floors within The Metropolis.

by LEE ANNE BABIERRA
30 Apr 2015 | 23787 views
 

This retired banker's fintech startup makes complicated wealth management a piece of cake

This retired banker\'s fintech startup makes complicated wealth management a piece of cake

Mesitis provides low-cost aggregated wealth reporting for all investors.

by MARIANNE ESTIOCO
25 May 2015 | 8052 views

All the single ladies: Here’s Singapore’s first female-centric dating app for you

All the single ladies: Here’s Singapore’s first female-centric dating app for you

Its female-friendly features help women find serious daters.

by LEE ANNE BABIERRA
20 Apr 2015 | 6934 views
 

Get to know the husband-and-wife duo behind the novice 3E Accounting

Get to know the husband-and-wife duo behind the novice 3E Accounting

This local accounting firm expanded from 2 to 35 members in just 4 years.

by KRISANA GALLEZO
24 Apr 2015 | 6214 views

Take a sneak peek at Equinix’s $300m international business exchange data centre in Singapore

Take a sneak peek at Equinix’s $300m international business exchange data centre in Singapore

Which took almost a decade to finish.

by KRISANA GALLEZO
27 Apr 2015 | 4754 views
 

Check out this quaint co-working space that occupies 5 conservation shophouses

Check out this quaint co-working space that occupies 5 conservation shophouses

It has private offices, an events space, and even a beer garden.

by MARIANNE ESTIOCO
22 May 2015 | 4242 views

Hootsuite boosts its APAC team opening a new office in Singapore

Hootsuite boosts its APAC team opening a new office in Singapore

Its VP talks about the importance of the company’s culture in line with opening the new space.

by LEE ANNE BABIERRA
18 Jun 2015 | 2131 views
 

Get bitten by the travel bug in Skyscanner’s quirky Asia-Pacific headquarters

Get bitten by the travel bug in Skyscanner’s quirky Asia-Pacific headquarters

Meeting rooms are named after Asian tourist spots.

by MARIANNE ESTIOCO
5 Jun 2015 | 2115 views

Bye bye blurry video calls: Here’s a WebRTC startup that offers close to HD video quality using any device

Bye bye blurry video calls: Here’s a WebRTC startup that offers close to HD video quality using any device

Find out how they are building the next generation of web communications.

by LEE ANNE BABIERRA
2 Jun 2015 | 1890 views
 

Le Petit Paradis recently rebranded as Enoch’s European

Le Petit Paradis recently rebranded as Enoch’s European

It’s a full-fledged contemporary European restaurant blossomed from a motorcycle accident.

by KRISANA GALLEZO
22 Apr 2015 | 1844 views

HAITE Group launches its first aviation training center in Singapore

HAITE Group launches its first aviation training center in Singapore

It is the first major investment by a Chinese aerospace firm.

by KRISANA GALLEZO
13 May 2015 | 1624 views
 

El Mero Mero founder says Mexican food is not just about tacos and burritos

El Mero Mero founder says Mexican food is not just about tacos and burritos

See how a former legal professional pursued his passion for food.

by LEE ANNE BABIERRA
26 May 2015 | 1257 views

This bold ad film tells you what happens when maids are not given their due day off

This bold ad film tells you what happens when maids are not given their due day off

‘Mums & Maids’ generated 5 million views in 5 days.

by KRISANA GALLEZO
7 May 2015 | 1254 views
 

Fragrance Du Bois to launch a new scent this year

Fragrance Du Bois to launch a new scent this year

Also, check out its pop-up boutique at TANGS Orchard open until April 26.

by KRISANA GALLEZO
17 Apr 2015 | 1137 views

Singapore retailers turn to technology to boost productivity

Singapore retailers turn to technology to boost productivity

Shopping for the first child is always challenging for the parents.

by STAFF REPORTER
15 May 2015 | 1105 views
 

This app is out to prove that Singapore is anything but boring

This app is out to prove that Singapore is anything but boring

And Sugar helps SMEs in the process too.

by MARIANNE ESTIOCO
2 Jun 2015 | 1090 views

This handy app lets you book nearly any service under the sun

This handy app lets you book nearly any service under the sun

Find technicians, babysitters and more with Page Advisor.

by MARIANNE ESTIOCO
8 Jun 2015 | 1009 views
 

Get your head in the game: Testing challenges await the Internet of Things

Get your head in the game: Testing challenges await the Internet of Things

Industry experts share their concerns over security and testing standards.

by LEE ANNE BABIERRA
4 Jun 2015 | 898 views

Megafash sets the stage for local entrepreneurs to introduce indie brands

Megafash sets the stage for local entrepreneurs to introduce indie brands

It plans to expand in Malaysia and Indonesia.

by KRISANA GALLEZO
20 Apr 2015 | 866 views
 

Hey, boss: This startup wants to be your all-around sidekick

Hey, boss: This startup wants to be your all-around sidekick

Alpha7 wants SMEs to join the Cloud.

by STAFF REPORTER
16 Jun 2015 | 864 views

Former strategy advisor reveals aspirations with his newest mobile app startup

Former strategy advisor reveals aspirations with his newest mobile app startup

Rediscover and fall in love with your city all over again.

by LEE ANNE BABIERRA
22 May 2015 | 808 views
 

Need some help? This app lets you book a cleaner in five minutes flat

Need some help? This app lets you book a cleaner in five minutes flat

Sendhelper is the new breed of booking apps.

by MARIANNE ESTIOCO
26 May 2015 | 770 views

Leave your valuables unattended: This on-demand cleaning service offers $1m liability insurance

Leave your valuables unattended: This on-demand cleaning service offers $1m liability insurance

Book a reliable cleaner in seconds with Helpling.

by MARIANNE ESTIOCO
22 Jun 2015 | 537 views
 
close Don't Show Again

STAY INFORMED! Get our free weekly newsletter