production environment where products go through one machine (M1) before they are worked on by a second machine (M2). If the downstream machine has a lower capacity than the upstream machine, then using machine efficiencies to evaluate the operators will lead to a build up of work in process invetory in front of the downstream machine. Consider aMost organisations have problems with their performance measurement systems. Some of the more common ones are discussed below.

Measures are Disconnected from Stakeholder Needs: Measures that organisations focus on sometimes have little bearing on the needs of their important stakeholders - shareholders, customers and employees. As an example of such a disconnection, consider the business school which measures itself by the accomplishments of its faculty, size of its facilities etc, rather than the measure that should count, namely the post graduation success of its students. Or take the manufacturer of alcoholic beverages that has measures of product quality based on esoteric factors that are not derived from consumer feedback.

Measures Do Not Support Major Business Goals: Sometimes measures are created without any associated goals or performance standards. Such measures are just data collection exercises which have no contribution to the achievement of business objectives as they are not actionable.

Measures Drive the Wrong Performance: In a surprisingly large number of instances, measures and indicators selected by management not only to not support the goals of the organisation, but actually lead to performance that opposes those goals.

For instance consider a situation in a production environment where products go through one machine (M1) before they are worked on by a second machine (M2). If the downstream machine has a lower capacity than the upstream machine, then using machine efficiencies to evaluate the operators will lead to a build up of work in process invetory in front of the downstream machine. Consider an

ees. As an example of such a disconnection, consider the business school which measures itself by the accomplishments of its faculty, size of its facilities etc, rather than the measure that should count, namely the post graduation success of its students. Or take the manufacturer of alcoholic beverages that has measures of product quality based on esoteric factors that are not derived from consumer feedback.

Measures Do Not Support Major Business Goals: Sometimes measures are created without any associated goals or performance standards. Such measures are just data collection exercises which have no contribution to the achievement of business objectives as they are not actionable.

Measures Drive the Wrong Performance: In a surprisingly large number of instances, measures and indicators selected by management not only to not support the goals of the organisation, but actually lead to performance that opposes those goals.

For instance consider a situation in a production environment where products go through one machine (M1) before they are worked on by a second machine (M2). If the downstream machine has a lower capacity than the upstream machine, then using machine efficiencies to evaluate the operators will lead to a build up of work in process invetory in front of the downstream machine. Consider a

n esoteric factors that are not derived from consumer feedback.

Measures Do Not Support Major Business Goals: Sometimes measures are created without any associated goals or performance standards. Such measures are just data collection exercises which have no contribution to the achievement of business objectives as they are not actionable.

Measures Drive the Wrong Performance: In a surprisingly large number of instances, measures and indicators selected by management not only to not support the goals of the organisation, but actually lead to performance that opposes those goals.

For instance consider a situation in a production environment where products go through one machine (M1) before they are worked on by a second machine (M2). If the downstream machine has a lower capacity than the upstream machine, then using machine efficiencies to evaluate the operators will lead to a build up of work in process invetory in front of the downstream machine. Consider a

e not actionable.

Measures Drive the Wrong Performance: In a surprisingly large number of instances, measures and indicators selected by management not only to not support the goals of the organisation, but actually lead to performance that opposes those goals.

For instance consider a situation in a production environment where products go through one machine (M1) before they are worked on by a second machine (M2). If the downstream machine has a lower capacity than the upstream machine, then using machine efficiencies to evaluate the operators will lead to a build up of work in process invetory in front of the downstream machine. Consider a

production environment where products go through one machine (M1) before they are worked on by a second machine (M2). If the downstream machine has a lower capacity than the upstream machine, then using machine efficiencies to evaluate the operators will lead to a build up of work in process invetory in front of the downstream machine. Consider another instance where customer service personnel at a call centre are measured on the number of customers they "process" per day and amount of time they spend on each call. The resulting effect will be that customers are rushed off calls and issues are unresolved.

Contaminated Measures: Measures can be contaminated and lose validity for a number of reasons. Consider popular productivity measures like revenues per employee or something similar. The problem with this measure is that the monetary values on which it is based can be contaminated by inflation. This it can appear to improve for no other reason than that the purchasing power of the currency in question has declined.

Conclusion To properly manage your business, your system of measures must be devoid of the common problems outlined above.