Spitzer is president of Dean R. Spitzer & Associates and widely acknowledged as one of the world’s leading authorities on performance measurement and management. His latest book, Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success, has been hailed by reviewers as “a breakthrough,” “a masterpiece,” and “the most important book ever written about performance measurement.” His advice and counsel are sought by companies and government agencies throughout the world. During his distinguished career, he has helped more than 100 organizations on five continents improve their performance. Spitzer’s client list reads like a Who’s Who of outstanding companies. He has been a leader and internal change agent in the private and public sectors, a professor at five universities, the author of eight books and more than 200 articles and individual book chapters, a keynote/featured presenter at more than 100 conferences worldwide, and recipient of many awards and recognition for his professional contributions. Spitzer earned his M.A. from Northwestern University and his Ph.D. degree from the University of Southern California. In addition, he has competed additional undergraduate and graduate studies at the London School of Economics.
Morris: So much has – and hasn’t – happened in the world since our last conversation several years ago. Of all of the changes in the global marketplace, which do you consider to be most significant? Why?
Spitzer: The economic crisis, which reinforces the point I made in Transforming Performance Measurement and some of my other books: that if you measure and reward the wrong things, you will inevitably get undesirable results. Most of the irresponsible risk-taking by financial institutions was due to the high personal rewards given to traders for achieving high returns, while there were no negative consequences for inappropriate behavior. As I explain in my book, measurement underlies every other system in an organization, including the reward system. If you measure the wrong things, ultimately bad things will happen.
Morris: Given your response to the previous question, what has been the impact of this change on performance measurement?
Spitzer: The response has been inadequate. Although there is an effort to moderate the rewards for excessive risk-taking, I don’t see anything has been done to improve the measurement systems – and that is the root causee.
Morris: During exit interviews of highly valued workers who have decided to pursue their career objectives elsewhere, one of their most frequent complaints is that the criteria for measuring their performance were never made crystal clear to them and/or that the criteria were not applied fairly and consistently during all performance evaluations. What specifically must supervisors do to correct these separate but related problems?
Spitzer: You do a good job of articulating the major problem with performance appraisals. Most of the time performance appraisals are poorly linked with goals and other expectations. The first thing an organization must do is to make sure that there is clear alignment and line-of-sight between what is expected and what is reviewed. Most performance reviews at the end of the year are a complete surprise to employees – often because they are based on political considerations (including a forced distribution), rather than true performance. The most important things a supervisor can do is (1) make upfront expectations clear and measurable, (2) create the performance appraisal criteria at the same time the expectations are established, (3) adjust and adapt expectations and criteria throughout the year, and (4) have frequent performance discussions and feedback sessions throughout the year.
Morris: Here’s a question you are probably asked all the time. When an organization conducts a 360º feedback program, should the providers of the feedback be transparent or anonymous? Why?
Spitzer: If there is trust in an organization, then everything should be transparent. I refer to this in my book as the “context of measurement.” There is fear that transparent feedback sources will be manipulated…but that will only happen if there is fear. “Drive out fear,” as Deming advocated, and everything changes. At IBM, there was a 360 degree feedback system for many years, but HR found that some people were getting their friends of be their raters and expecting “tit for tat.” Rather than fixing the root causes, they eliminated the system. They reacted to the symptoms, rather than to the root causes of the problem. Incidentally, this system had, for many years, been one of the most powerful sources for stimulating collaboration in the company. As I say in my book, there are always opportunities for manipulation of measurements (especially of subjective measurements), but if the content (climate) is positive and open, manipulation doesn’t need to happen.
Morris: To what extent can intangibles such as emotional intelligence (however defined) be accurately and consistently measured?
Spitzer: You can measure any intangible construct very consistently and well. The first thing you must do is create a common operational definition. You do this by identifying the characteristics of the construct you want to measure. Then you either find an existing measurement instrument or develop one. The key is to use a good rating scale and validate the instrument across raters. It would take me a long time to explain the details but, suffice to say, it can, and is being done.
Morris: The last time I checked, Amazon offers 302,688 books on business management. Obviously, there is no shortage of information and advice available. Nonetheless, voluminous research by the Gallup organization and others suggests that a substantial percentage of managers (somewhere in the 25-40% range) are ineffective. Based on what you have observed, what is the single most serious mistake that managers make?
Spitzer: They don’t know how to use measurement data well. The voluminous literature on management reflects a desire to be more fact-based. Unfortunately, too much of the literature simply feeds intuition. Most organizations have thousands of measures but do nothing to improve the measurement literacy of their managers and employees. Most managers don’t have a clue about what variance is and what is means, don’t realize the dangers of aggregating (e.g., averaging) data, and don’t understand the relationships and trade-offs among the numbers they make critical decisions on.
Morris: How to avoid or correct that mistake?
Spitzer: Every organization should have at least one course, but probably a sequence of courses, on measurement and how to use measurement data to improve the quality of decision-making. I believe that this should include how to use measurement for learning and improvement, rather than just for monitoring and control.
Morris: In your opinion, what is the one area in greatest need of immediate improvement in the MBA programs at prestigious U.S. universities such as (listed in alpha order) Chicago, Dartmouth, Harvard, Michigan, Northwestern, Pennsylvania, Stanford, USC, and Yale?
Spitzer: Sorry, but there are two areas of equal importance: (1) improving measurement literacy and (2) building a climate of trust and transparency in organizations.
Morris: For those who have not as yet read Transforming Performance Measurement, in it you urge your reader to re-think how to measure and drive organizational success, whatever the size and nature of the given organization may be. “Perhaps the most surprising truth covered in this book is that the ‘context of measurement’ [i.e. ‘an optimal environment for its effective use’] will largely determine its effectiveness.” Please explain what you mean by “context of measurement.”
Spitzer: I already touched on that earlier, but let me elaborate a bit more. The “context of measurement” is all those things that the measurement system is embedded in: employee attitudes, organizational climate, expectations relating to measurement, measurement leadership, resources devoted to measurement (including measurement education), etc. Bottom line, people experience measurement according to the way it is used. The example I give is how different measurement “feels” when it is used in sports for positive feedback, as opposed to at school and work, where it tends to be used more against people. My passion is to improve the context of measurement in organizations, which will change so much else that is wrong.
Morris: In the book, you offer a number of performance measures and ways of measurement that can have a “transformational impact” on the way people in organizations view their work, their products, their associates, and their customers. Here’s my question: Given the fact that most change initiatives fail largely because of the resistance they are unable to overcome, is it possible to measure the nature and extent of probably resistance prior to launching the transformation process?
Spitzer: Yes. In my book I provide both a short and comprehensive Transformational Measurement Maturity Assessment. That instrument will give a good indication of how successful measurement transformation is likely to be. However, I advocate using it as a continuous improvement/feedback tool – to create a dialogue around measurement transformation and help monitor progress during the transformation.
Morris: You urge your reader to begin to view measurement itself “through a new lens” when correlating the material in this book with her or his own organization. OK but what about those who haven’t read the book, and never will, but whose active and productive engagement in the transformation process is absolutely essential to its ultimate success? How will they acquire a “new lens” and the skill to use it properly?
Spitzer: What I recommend is to adopt one, just one, new measure. In the book, I give a lot of examples. But let me share an example for those who are reluctant to read the book. Consider this: Innovation is one of the most important constructs in organizations today. Every organization espouses the importance of innovation, but few manage it well. Why? Because they look at innovation wrong. Many organizations view innovation as research & development or as new product development, which causes them to focus on innovation solely in terms of new projects. In fact, most organizations don’t even have an organizationwide definition of innovation. I believe innovation has to be measured and managed differently through its various phases and must be viewed as a flow, rather than a set of discrete activities, functions, or outcomes. Many organizations focus their measurement on number of patents or new product launches, or sales revenue from new products. In most organizations each function measures and manages innovation in an idiosyncratic way that suboptimizes the end-to-end process. This causes them to focus on the end of the game or the score for a particular function and they do very little to nurture new ideas, a positive climate for innovation, constraints to innovation, or the continuous flow of innovation across phases and functions. The way you measure innovation will determine how you manage it, and ultimately how successful you will be at nurturing too innovation. By measuring innovation differently, the entire approach to innovation will change and the organization will become much more innovative.
Morris: You suggest that transformational measurement doesn’t require a major change in a business structure or systems, “but only in how you think about measuring your organization; moreover, “on those occasions when measurement is used for the purpose of improvement rather than to make judgments or place blame, and when it is focused on the right measures, its true power is revealed.” Please explain the reference to “true power.”
Spitzer: True power from measurement comes when people seek feedback from measurement and use measurement for learning and improvement. Earlier we talked about performance appraisal. Can you imagine how much power would exist if employees looked at performance appraisal as a key enabler of their success, rather than as an annual or semi-annual ritual that they fear and despise? Can you image how great it would be if sales people were measured on holistic customer-centric measures, rather than how to maximize their own incentive pay? Can you image the power that would exist if organizations were truly transparent, and measuring and managing trust and empowerment? Can you image how wonderful it would be if there were mostly cross-functional measures that united people, rather than functional ones that divided them?
Morris: Before concluding, here are a few additional questions of a more general nature. Can those who are either unemployed or underemployed strengthen their résumé with evidence of outstanding performance? If so, how to do that?
Spitzer: Yes indeed. Write your resume to focus on measurable accomplishments, rather than vague clichés.
Morris: Why do so many organizations devote so little time and attention to the orientation process for new hires? What are the major consequences of such neglect?
Spitzer: Because they don’t know how important it is to get employees off to a good start. They figure that they can correct the problem downstream. However, there is nothing like a first impression and nothing like giving people a good start.
Morris: To what extent should those whose performance will be formally evaluated be directly involved in the process of determining the criteria for that evaluation and how the criteria will be applied?
Spitzer: Those being measured should understand the measurement criteria and have input into the expectation clarification (goal-setting) process. If measurement and evaluation are transparent, and, as I mentioned earlier, regularly discussed throughout the year, this should not be a problem. One of the major messages in my book focuses on the importance of open dialogue about measurement. But this is a good chance for me to correct you a bit, Bob. You, and most others, seem to use the terms “measurement” and “evaluation” interchangeably. Measurement is the effort to capture performance objectively in quantitative and/or qualitative terms. Evaluation can be decomposed into “e-value-ation,” which means “to place a value on.” It is vital to separate the two. When people feel that their performance is being fairly measured, then there is little fear of evaluation.
Morris: Should they also have the opportunity to evaluate the process by which they were evaluated and the competence of the person who conducted it?
Spitzer: Measuring the performance appraisal process should be part of any organizational climate or employee satisfaction/engagement survey.
Morris: Long ago, I became convinced that when the performance of a supervisor is evaluated, one of the most important criteria should be that person’s competence when evaluating the performance of those for whom she or he is directly responsible. Your own thoughts about that?
Spitzer: Yes, people doing measurement should be competent to perform the measurement task. I would not want to measure the flying skills or performance of the pilot of my flight. However, there are some aspects of pilot performance that I could measure, like in-flight announcements, avoiding turbulence, greeting passengers on disembarkation, etc.
Morris: Informal feedback should be constant, consisting of constructive criticism as well as encouragement. Certain skills are needed to do this effectively. Can supervisors be trained in these skills?
Spitzer: Yes, of course. Unfortunately, as I explain in my book, very few people in organization are skilled in dialogue or organizational learning.
Morris: To what extent (if any) should an organization’s performance measurement program be a “work in progress”?
Spitzer: Absolutely. That’s why I describe it as a “transformation process.”
Morris: Which question had you hoped to be asked during this interview – but weren’t – and what is your response to it?
Spitzer: What are the four keys to transforming performance measurement? In my book, I discuss four factors that are crucial for beginning the transformation. They are (1) Context, which we already discussed; (2) Focus, making sure your organization is measuring the right things, especially the difficult-to-measure intangibles; (3) Integration, increasing the linkage between performance measures, especially bridging the divides between functions, in which each function has its own measurement system and all the different functional measurement systems are not connected; and (4) Interactivity, the importance of increasing the dialogue around performance measurement, especially in this era. Organizations are now investing so much in performance measurement technology, but don’t know what to do with the data once they collect it, much less how to turn the data into knowledge and wisdom.
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