Performance measures change behaviour. Whether it’s in a positive way e.g. greater focus and alignment on strategic goals. Or in a negative context e.g. a sense that it is judging personal performance.
One of the main reasons leaders fail to achieve their strategy is they underestimate the impact measures have in driving our behaviour. If measures are not updated in-line with the change a strategy sets out, then teams feel the conflict of what they are being told is important vs what they are being measured on. Most of the time, there will only be one winner.
Measures have a powerful influence on both our focus and behaviours. If our measures are not aligned with the most important strategic results, then we potentially undermine our ability to achieve them.
I was recently helping a multi-national organisation to have better cross-functional alignment in their key accounts, instead of brand-only focus and siloed working. There was never a conversation had where the sales teams didn’t recognise the need for this change because of shifting market conditions, yet there was a conflict; why? Because they were still being measured and rewarded, on their performance as a brand, not on their contribution to a cross-functional approach. This ultimately overrode their focus on the change, even though the market conditions dictated that a cross-functional approach would have far more return.
It’s an individual example of a common issue in strategy execution, performance measures that contradict our most important strategic goals and, as a by-product drives behaviours that are counter to what we are trying to achieve.
3 ways to see if your measures support your strategic ambition
1. Has the evidence of success changed?
Strategy requires change. In a recent Rubica survey, respondents said that an average of 63% of their strategic goals required change. If we are making a change, it is likely that the evidence of success has changed too. By being clear in what evidence we need to see that would make us believe we are achieving our strategic goals, we create a standard that challenges our measures as well as our behaviours.
2. Do your existing measures align with the evidence?
We have our evidence, do our measures align? Leaders are usually aware of the need for performance measures to feedback on their strategic goals. What is usually missed, is whether the existing measures are fit for purpose as a result of the goals. By missing this crucial step, we risk having conflicting measures that drive opposing behaviours and, sometimes, create a drop in performance, not an improvement. Testing your existing measures against the evidence of success you have defined is a critical step in creating the right focus and behaviours within the team.
3. Does your team have continuing focus on the measure and the goal?
Changing behaviours is as much about focus and repetition as it is a recognition for change, and measures create a focal point for this. In the example of the key account change I highlighted, the challenge was that the focus and engagement existed at a brand-level, but not cross-functionally around the key account goals. Our measures provide the evidence of success, and continuous focus on moving this in the right direction helps us manage our change and the blockers that undermine it.
Underestimating the impact measurement has on achieving our goals is one of the fundamental reasons organisations struggle to achieve their strategy. Measures drive focus and behaviours, especially if our reward structure is determined by them. As management expert, Peter Drucker said “what gets measured, gets managed”; let’s make sure those measures are set up to help us succeed.