A major milestone in making the connection between measuring as a human activity and performancewas in 1494, when Luca Pacioli published in Venice ‘Summa de arithmetica, geometrica, proportioni et proportionalita’ (‘Everything on arithmetic, geometry, proportions and proportionality’). It detailed a practice the Venetian sailors had in place to evaluate the performance of their sailing expeditions, which became the basis of the double-entry accounting system.
The subjective nature of individual performance evaluations and the dominance of financial indicators for evaluating enterprise performance became stepstones for performance management in human activities.
The industrial revolution ...view middle of the document...
As such, their use of performance management systems should reflect their own “personality”. You can try an igloo in Sahara, but it won’t work. The performance architecture of each organization needs to be unique and to reflect its internal and external environment.
System thinking provides a much richer context for understanding and improving performance. Command-and-control worked in time for the army, for increasing productivity of unskilled workers during the industrial revolution and for organizing large organizations (such as the public service). Today, knowledge workers form the majority of the workforce in developed economies, operate in a much more interconnected environment and have to make decisions at an accelerated pace. Understanding the systems in which we operate, analyzing flow and learning based on data become ever more important today, and complement the traditional simplistic managerial approach of executing orders from above.
KPIs should be used primarily for learning. The role of KPIs should be the one of providing the required information to assist in navigating towards the desired results. The same principle is used by ants, who leave pheromone trails to assist each other in navigating towards the food source. Similarly, the nerve impulses travel through the different points of the nervous system, transmitting information. KPIs results should travel through the organization, facilitating communication, providing a base for analysis /synthesis and ultimately decision making across all levels of the organization.
Data accuracy in human administration is an elusive desideratum. Niels Bohr once said: “Accuracy and clarity of statement are mutually exclusive”. Accuracy is a challenge in exact sciences and even more in human administration. Striving to obtain any KPI data is a challenge in itself for many organizations and data accuracy is an even bigger ask. The use of KPIs should acknowledge this aspect and be oriented towards making the most out of existent data, oftentimes by using variance intervals. This approach is used by the human body. If the temperature drops under a safe limit, we shiver. If the temperature increases, we sweat. Both are performance improvement initiatives of the body, aimed to regulate its temperature back to safe limits. The KPI here is the temperature. While it is not a constant, its trend is good when within certain safe limits.
The use of KPIs for rewards and punishment should be limited and driven by self-assessment. Purposeful oriented behavior is a characteristic of living organisms. For humans and many other species, this behavior is amplified by rewards and punishment. Along with this amplification, risks are amplified, too. Gaming of results, lack of cooperation, decreased morale and work accidents are some of the undesired consequences. On the other hand, the majority of nerve impulses in the human body transmit general information. Only in particular situations, pleasure or pain...