7 Deadly Sins of Performance Measurement
S p ri n g 2 0 0 7
V O L . 4 8 N O. 3
Michael Hammer
The 7 Deadly Sins of Performance Measurement and How to Avoid Them
REPRINT NUMBER 48302
S P E C I A L R E P O R T: M E A S U R I N G T O M A N A G E
THE
OF PERFORMANCE MEASUREMENT
[and How to Avoid Them]
By Michael Hammer
7 Sins
DEADLY
SPRING 2007 MIT SLOAN MANAGEMENT REVIEW
Operational performance measurement remains an unsolved problem. Despite the relatively little attention it gets in the management literature, designing and using metrics to track and improve operating performance is one of the most persistent problems that organizations face. In my interactions with companies in virtually every industry, I scarcely ever encounter one that believes it has an effective set of metrics for their operations: manufacturing, customer service, marketing, procurement and the like. To be sure, companies do have measurements for these areas that they employ every day, but few managers or staff believe that these metrics are the right ones or that they help the company improve its performance and achieve its strategic goals. This is remarkable for two reasons: First, operational performance measurement is so fundamental
Michael Hammer is president of Hammer and Company, a management education and research firm based in Cambridge, Massachusetts. He is also a Visiting Professor of Engineering Systems at MIT and a Fellow of the Said Business School at Oxford University. He is the author of numerous books and articles on transforming operational performance. His Web site is www.hammerandco.com. Comment on this article or contact the authors through smrfeedback@mit.edu.
19
S P E C I A L R E P O R T: M E A S U R I N G T O M A N A G E
to basic operational management that it should presumably have been resolved a long time ago; second, in the last several years companies have developed much more sophisticated strategic measurement systems, based on such tools as the balanced scorecard,
V O L . 4 8 N O. 3
Michael Hammer
The 7 Deadly Sins of Performance Measurement and How to Avoid Them
REPRINT NUMBER 48302
S P E C I A L R E P O R T: M E A S U R I N G T O M A N A G E
THE
OF PERFORMANCE MEASUREMENT
[and How to Avoid Them]
By Michael Hammer
7 Sins
DEADLY
SPRING 2007 MIT SLOAN MANAGEMENT REVIEW
Operational performance measurement remains an unsolved problem. Despite the relatively little attention it gets in the management literature, designing and using metrics to track and improve operating performance is one of the most persistent problems that organizations face. In my interactions with companies in virtually every industry, I scarcely ever encounter one that believes it has an effective set of metrics for their operations: manufacturing, customer service, marketing, procurement and the like. To be sure, companies do have measurements for these areas that they employ every day, but few managers or staff believe that these metrics are the right ones or that they help the company improve its performance and achieve its strategic goals. This is remarkable for two reasons: First, operational performance measurement is so fundamental
Michael Hammer is president of Hammer and Company, a management education and research firm based in Cambridge, Massachusetts. He is also a Visiting Professor of Engineering Systems at MIT and a Fellow of the Said Business School at Oxford University. He is the author of numerous books and articles on transforming operational performance. His Web site is www.hammerandco.com. Comment on this article or contact the authors through smrfeedback@mit.edu.
19
S P E C I A L R E P O R T: M E A S U R I N G T O M A N A G E
to basic operational management that it should presumably have been resolved a long time ago; second, in the last several years companies have developed much more sophisticated strategic measurement systems, based on such tools as the balanced scorecard,