Beware the Dumbing Down of Metrics

As reported by HRI, The practice of "dumbing down measures," although a time saver, is hazardous to the development of top performance, according to Paul Walsh, a senior lecturer at the Australian Graduate School of Management, University of NSW, Australia. Walsh describes how this practice is occurring due to the widespread use of dashboards and scorecards. He defines the dumbing down of measures as "the practice of repeatedly substituting measures of achievement with less and less relevant surrogate measures until what remains is an activity or initiative measure, not a measure of outcomes achieved." In practice, however, available measures are not always perfect. Referring to R. Simons' work in 2000, Walsh recommends first identifying types of measures used. This system classifies measures as: objective (can be verified through audit), subjective (relies on judgment), complete (reflects all relevant components) and responsive (management action can affect it). Walsh suggests that initiative measures and process measures alone report on activities rather than strategic outcomes, but outcome measures - either through exact measures or proxy measures - cover more of the attributes of good performance measures. When faced with less-than-perfect measures, Walsh recommends, make use of the following workarounds: 1) identify the type of measure to allow those interpreting the data to make necessary adjustments; 2) link measures to a strategic theme to provide more clarity and 3) based upon Simons' work, use a "rule-based decision tree," which takes into consideration the organizational climate when evaluating the adequacy of measures. (Measuring Business Excellence [Walsh], 2005, pp. 37-45)