The Fast Company column by Mark Goulston , Vijay Govindarajan , and Chris Trimble on By the Numbers: You can't quantify Learning talks about when 'objective measures' are likely to be counter productive.
In fact, the jobs that are most effectively reduced to single quantities
are the ones that are the most one dimensional. The broader a person's
responsibilities, the more complex and subjective the evaluation. Measures
become more ambiguous. There are more stakeholders with a wider range of needs.
Evaluations come at specific points in time, but there are always short-term
versus long-term tradeoffs. In the face of such complexity, do you want to
motivate only what is measurable?
What gets measured, gets done. When you have a clear, unambiguous measure that captures most of the value of a person's work, use it. But recognize that this is a luxury. It is not the norm. In fact, there is always a heavy dose of subjectivity in evaluating managers and executives. Accept it. At best, you can tie performance to pre-negotiated predictions of what is possible. For mature businesses with plenty of consistent history on which to base predictions, this is reasonable. But as we discussed in our previous column, the innovation process is anything but predictable.