Dean Spitzer, an organizational psychologist and business consultant with 40 years of experience, gives a presentation on overcoming skepticism in performance measurement. He notes that most performance measurement systems are ineffective and poorly aligned. Measurement is often misused to monitor and control employees rather than provide useful feedback. This causes fear and distrust of measurement among employees. Spitzer advocates for using measurement to facilitate learning and improvement, taking the threat out of it, and ensuring it rewards the right behaviors.

1. Overcoming Skepticism in Performance Measurement Dean Spitzer, Ph.D. President Dean R. Spitzer & Associates Inc. Human Capital Institute Webinar April 14, 2011

5. You get what you measure , because what you measure is what you manage and reward No matter what is said, measurement and rewards tell people what the organization thinks is really important!

7. Strategy-Aligned Performance Management Derive Value Drivers from Strategy Identify Strategic Measures Identify strategy- aligned Operational Measures Continually test for strategic and operational alignment Identify Performance Targets Develop Incentive Plans Revise (as needed) Business Strategy Ongoing Performance Management Operational Plans

8. Management is based on measurement, and all other organizational systems are dependent on the measurement system No organization can be any better than its measurement system

11. Measurement is ubiquitous and intuitive

13. One of the biggest problems in organizations is lack of alignment among ‘measurement systems’ Organizations with poor performance measurement will be poorly aligned, with functions pursuing their own self-interest and often working at cross-purposes Project Management Information Technology Not only don’t most organizations have a single integrated measurement system, but the disparate measurement systems don’t even communicate! Budgeting Sales Operations Customer Service Human Resources Marketing Finance Learning

14. In most organizations, financial measures are the only organization-wide ones “ The CFO is the shadow CEO.” – corporate executive

15. Most organizations are drowning in data

16. Measurement in most organizations is a mess! In The Agenda , Michael Hammer puts it this way: “ A company's measurement systems typically deliver a blizzard of nearly meaningless data that quantifies practically everything in sight, no matter how unimportant; that is devoid of any particular rhyme or reason; that is so voluminous as to be unusable; that is delivered so late as to be virtually useless; and that then languishes in printouts and briefing books, without being put to any significant purpose.... In short, measurement is a mess." 2 3 4 5 6 7 8 9 10

18. On a personal level, how people “experience” measurement is the key to how they will respond to it

19. So much measurement is being used to for self-serving purposes "Most often when we see illogical behavior, the fault is in the measurement system, not in the employees." [Brian Joiner, quality expert and author] An auto industry financial analyst said she spent 75% of her time finding ways to justify decisions that had already been made.

21. You get what you measure, so make sure you’re measuring the right things!

22. Measurement is imperfect Measurement System Flaws Flaws Flaws Flaws Flaws Opportunity Motive Manipulation = f (Opportunity, Motive) It is easy to manipulate measurement (and too often the organization doesn’t really want to know the truth).

26. Measurement tends to be threatening and is resistant to change “ Measurement is one of the most sensitive issues in any organization.” - Eliyahu Goldratt “ Why would I want to change the measurement system that has rewarded me so richly?” - IBM Vice President

27. The confusion between ‘measurement’ and ‘evaluation’ causes particularly big problems Too often evaluation and its consequences prevent learning from measurement

29. Understand what measurement is actually saying

30. The purpose of measurement is to assist in making more effective decisions and creating knowledge and wisdom Learning about, and from, measurement is crucial to increasing organizational intelligence

32. The “Context of Measurement” makes all the difference and it is as important as the measurement itself

33. There is a serious “measurement leadership” gap Who is currently leading measurement in your organization? Who are the key measurement stakeholders in your organization who can become “measurement leaders”? Improving measurement is one of the highest leverage things any organization can do.

39. There are many routes to rewards; measurement tells people what they are Rewarding the wrong behaviors is the most wasteful thing that any organization can do.

41. Make sure you’re rewarding the right things If You Want… Then Reward… Not… Profits Profitable sales Any sales revenue Teamwork Collaboration Individual efforts Quality Process improvement Lack of defects Training effectiveness Skills used on the job Course satisfaction Innovation Creative ideas Conformity Customer retention Customer loyalty Lack of complaints Safety Safe behavior Reported accidents Productivity Acceptable production Total production Problem Solving Problems found and solved Problems hidden

52. References Dean R. Spitzer, Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success , N.Y.: AMACOM, 2007 Dean R. Spitzer, SuperMotivation: A Blueprint For Energizing Your Organization from Top to Bottom , N.Y.: AMACOM, 1995. Bob Nelson & Dean R. Spitzer, 1001 Rewards & Recognition Fieldbook , N.Y.: Workman, 2003. Dean R. Spitzer, “Power Rewards: Rewards That Really Motivate,” Management Review , May 1996. Dean R. Spitzer, “How to Develop a High-Motivation Compensation System,” Performance & Instruction , October 1995.

53. Thank you! Dr. Dean Spitzer [email_address] www.deanspitzer.com