Performance measurement is the process of putting metrics in place that employees need to meet, and then analyzing the actual employee performance against those metrics. While this sort of data can be excellent for determining the efficiency of an employee, problems with performance measurement that a manager needs to consider do exist.
Performance measurement metrics tend to be one-sided and do not give the whole story of the company and client relationship, according to the British Department of Trade and Industry. The employee might be meeting performance numbers as far as your company is concerned, but no measurement for the quality of the service being offered exists. It is only a measurement in quantity. By the time the drop in quality results in a drop in quantity, the relationship with the customer might already be damaged.
Employees might try to manipulate the system and have the metrics work in their favor and that could cause a problem with quality control, states the Association of Chartered Certified Accountants. If no quality control is in place and performance is based solely on achieving performance measurement metrics, then substitutions can be made to reach the numbers that could be inferior. For example, if an inside sales representative is given a metric of having to make 20 outbound phone calls a day, then he might choose to call his friends and family 20 times a day to reach the goal. Rigid quality control of metrics needs to be put in place to help increase the effectiveness of the process.
According to management expert Harry Hatry in his book "Performance Measurement," putting performance metrics on an employee does not gauge how well the rest of the system works. The employee may be achieving his performance measurement numbers, but he may be putting in an extra effort because of an inefficient order-taking system. On the other hand, the employee might be exceeding performance metrics because the system is extremely efficient. The employee could be even more productive in that circumstance, but without a proper measurement of the systems in place, it can be impossible to tell how much of the performance measurement is the employee, and how much is the system.