Companies are becoming increasingly sophisticated in the performance management process with annual merit increases and incentive payouts linked more closely through formula-driven systems. This has been accompanied by a shift towards “metrics” (simply another word for measures). The old adage, “if you can’t measure it, you can’t manage it,” has gained increasing credibility.

We’ve listed some key questions that ought to be addressed when using metrics to evaluate performance:

• Do you use metrics for evaluating performance?
• Are employees accountable for delivering on specific targets?
• Do you pro-rate outcomes (% of plan) where the resulting percentage is meaningful (e.g., sales, production volume or, with not-for-profits, number of grants/sponsorships)?
• Do you have metrics that require qualitative evaluation (e.g., customer perception/satisfaction scores, budget performance)?
• Do you need metrics for your incentive plan?
• Do your metrics include productivity measures (e.g., sales per sales rep, GM% by product line)
• What do the metrics mean? Lots of activity measures with no productivity and no deliverables (e.g., number of invoices processed, number of sales calls made)?
• When are activity measures relevant?
• Have you gone overboard on metrics? (You have too many of them!)

We invite you to log on to our survey of performance management practices. After you complete the survey, we’ll share the results with you so that you can benchmark your practices against other companies. The URL is: http://www.zoomerang.com/Survey/?p=WEB227XZ6AQKCC

Remember:

• Qualitative performance objectives require criteria to answer the question: What does it mean to achieve this objective?
• Performance objectives are the “what.” Each performance objective requires an action plan to answer the question “How will you achieve this objective?”

If you need answers to any of the questions listed above, please don’t hesitate to call us.