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Block 20: Performance Measurement - Coggle Diagram

- - - - ROI Drawbacks: It can encourage short-term thinking. For example, a manager might reject a long-term investment that yields 20% ROI if their current ROI is 30%, even though the investment could benefit the company in the long run. ROI = (Divisional profit ÷ Divisional investment "assets employed") x 100%
        
        likely to be the case if the manager is given incentives linked to the ROI value for the division.
        
        Also, It can also make divisional managers reluctant to invest to replace equipment and maintain the buildings, since these costs would reduce ROI.
      - ROI Benefits: This measure combines profitability and efficiency in the use of assets and is a useful measure to compare divisions against each other, and performance over time.
- - - - How quickly can a company pack a parcel?
      - What sort of customer satisfaction scores are customer service teams across industries getting?
      - How well are other office-based organisations with around 5000 employees doing at reducing their carbon footprint year on year
- - - - Real process improvements lead to better performance, making further data analysis less insightful because the problem is solved.
    - - Superficial changes manipulate metrics to meet targets without solving the underlying problem.
    - - Only high performers are included in evaluations, skewing results by hiding poor performers
    - - Persistent performance gaps are concealed by removing problematic metrics rather than fixing root causes.
  - - - "Use It and Lose It" Principle: Rotate/update metrics over time (e.g., Balanced Scorecard) to prevent gaming and keep focus relevant. and Avoid stagnation by periodically refreshing targets.
  - - - Employees focus only on measured areas, neglecting unmeasured but critical tasks. "unacceptably poor performance has occurred in areas where performance is not measured. Employees will focus on the activities they are rewarded for and ignore the others"
    - - Targets are met technically, but in ways that undermine real goals.
      - Example: A bus driver arrives on time by skipping stops, or managers cut training to meet budget—only to face higher turnover costs later.
    - - Metrics are gamed through loopholes or outright fraud.
      - Example: A fast-food worker counts a single customer ordering dessert as a "returning customer" to hit targets.
    - - Question the numbers—look beyond surface-level results.
        Combine quantitative data with qualitative insights (e.g., employee feedback, customer complaints) to get the full picture.
- - - - Focuses on following strict procedures and plans.
      - Emphasizes adherence to established rules and guidelines.
    - - Encourages learning and creativity.
      - Focuses on fostering innovation and adaptability among employees.
  - - - Top-down authority structure.
      - Emphasis on position power and hierarchical decision-making.
      - Detailed job descriptions with clear roles and responsibilities.
    - - Dispersed authority, with decision-making spread across the organization.
      - Emphasis on expert power, where authority is based on knowledge and skills.
      - Flexible job descriptions that allow for adaptability and role fluidity.
  - - - Detailed rules and procedures covering many topics.
      - Strict adherence to established protocols.
    - - Broad rules and procedures, with fewer detailed guidelines.
      - Focus on practicality and flexibility, allowing for innovation.
  - - - Information on performance is used by supervisors to monitor and control staff.
      - Emphasis on oversight and compliance.
    - - Encourages self-assessment and continuous improvement.
      - Information on performance is used by staff to learn and improve.
  - - - Encourages conformity and adherence to established norms.
      - Focus is on controlling individual behavior to ensure consistency.
    - - Encourages creativity, innovation, and freedom.
      - Promotes a culture of experimentation and adaptability.