Saturday, January 12, 2019

Reflections on performance management

I have sometime to reflect lately about performance and a favorite of mine performance management. As always I fall back on Dr. Deming's 7 (or 14) deadly diseases of management, especially "eliminate management by numbers, numerical goals. Substitute workmanship"! And, the often misquoted "you have to manage what you can’t measure"

What is even worse is that traditional performance management not only focuses on the numbers but is also doing this by looking to the past. Surprisingly, most organization in this day and age still rely on periodic consolidation of business data to give them an idea of what is happening now by looking at the past, last month, last quarter and even what happened last year. This they believe is a measure of how they are performing and even more dangerously an indication of where the business is heading.

The world as we know is in transition to a real-time world where data is ubiquitous - the so called Digital Transformation. We hear everyday how AI, Big Data, IoT, AR/VR, etc is changing peoples life and how we work. These new technologies are also changing the way we do business and the way we run our manufacturing plants. Yet this change is held back by a mindset that is still deeply rooted in traditional main-frame and paper based process thinking. Even executives that feel they are progressive are still operating under these rules. I am just amazed at people who believe that they are cutting edge when they generate an excel report based on manually transformed data that is a month old - and these guys run huge business operations.

Image result for cartoon about performance using historical data

We take an employee survey once a year, spend 1 month consolidating the data and up with a PDF report. Then we analyze it and take decisions about our business based on this static report over the period of a year. What about using the wealth of online survey tools to get a real time view into the employee life, using social media tools to gauge employee satisfaction, etc. The surprising thing here is that using these modern tools is cheaper and less effort than managing “the employee survey” process, but will the shareholders accept this data? Hmm… probably not, so let’s go back to paper so we can show them that we are performing - Deming is turning in his grave!

People, Deming was warning about this in the 1960s! The perilous belief that we can run a business to satisfy the numbers and share holders is dead - the digital age will allow them to see performance in real time, and even predict it. The current availability of information and the speed that we can get it will expose the flawed traditional practice of performance management and hopefully make it obsolete. We will have the technology and data to prove that we are "managing what we can't measure".

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