Dean R. Spitzer is a leading consultant and researcher in the field of business and performance measurement associated with IBM’s Almaden Services Research group. He has over 30 years of experience in helping individuals and organizations achieve superior performance by integrating performance management, motivation, and organizational change methodologies. Spitzer earned his Ph.D. with honors from the University of Southern California, his M.A. from Northwestern University, and completed further studies at the London School of Economics. He has published seven books including the award-winning book SuperMotivation, The 1001 Rewards & Recognition Fieldbook (co-authored with Bob Nelson), and, most recently, Transforming Performance Measurement: Rethinking the Way We Measure and Drive Success.
Here is an excerpt from the interview. To read all of it, please click here.
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Morris: Before you specifically discuss your latest book, here are a few general questions. First, much has been said and written about the importance of measuring “only what matters.” How best to determine that “what”?
Spitzer: It isn’t what matters; it is what matters most. Everyone thinks that what he or she is measuring matters. The key criterion for what matters most is to determine what drives competitive advantage. In particular, I recommend that all measures be closely aligned with and support a company’s business model (the basic logic of how the organization creates value for itself and shareholders by delivering value to customers) and strategy (the specific plan for applying the business model to create “competitive advantage” in a particular marketplace at a particular time). But one must determine the most important measures from the vantage point of the organization as a whole. Most organizations, and especially the functional silos, don’t really understand what drives value creation…and what doesn’t, so making that “what matters most” determination is difficult. Also, what matters most in organizations today is intangible and challenges the traditional forms of measurement, but more about that later.
Morris: Based on your extensive experience with all manner of organizations, what seem to be the most common mistakes made when designing, introducing, and then implementing a performance measurement program?
Spitzer: It is really closely related to my answer to the first question. The biggest problem is that most organizations don’t really have a single, integrated measurement system but a plethora of functional measurement systems that promote what is best for the function without reference to what is best for the organization as a whole. Most organizations are a battleground of competing functions trying to optimize their own measures, which almost inevitably sub-optimizes the organization as a whole. This is allowed to happen because there is no one in charge of the organizational measurement system, although the CFO sometimes takes on that role by default, and too often the budget becomes the de facto strategy.
Morris: Given your response to the previous question, presumably change initiatives encounter cultural barriers that include what James O’Toole has aptly characterized as “the ideology of comfort and the tyranny of custom.” In your opinion, how can cultural barriers be avoided or overcome?
Spitzer: That is an excellent quotation. The measurement system is a prime example of that. Almost no one wants to make significant changes in the measurement system, because it is so deeply ingrained in the organization’s DNA (or culture), and the incumbents have benefited so much from it; it is the “golden goose.” In addition, very few people understand performance measurement and therefore are unwilling to take on the challenge of changing it. The best way to at least start changing a culture is to demonstrate how dysfunctional the current one is. One of the key principles of change management is that, because of the effort required to change, there must be sufficient pain to justify the effort. Most of the dysfunctions of performance measurement systems are hidden, so it is important to bring them out into the light. I show key leaders just how much the current measurement system is hindering the organization’s progress. I help to make the pain more visible – even if it hurts!
Morris: Opinions seem to be divided as to whether or not it is possible to motivate someone else or inspire that person to become self-motivated. Is this merely a matter of semantics or is the distinction valid?
Spitzer: Various research studies have consistently shown that all people are self-motivated, but that intrinsic motivation must be tapped. The classic example are workers who go through their daily work activities with little or no enthusiasm, but ‘come alive’ when they are involved in the leisure activities they love. That is why I wrote SuperMotivation, to describe what should be done to make organizations motivating, not just try to change leadership habits, which is very difficult and tends to, at best, affect individuals on a one-off, rather than on a systemic, basis.
One of the things I stress is that rewards tend to overwhelm intrinsic motivation. The United States is a reward-driven culture, which explains why there is so much self-interest and greed. We have conditioned people to ‘follow the incentive’ and ‘get what is rewarded.’ In my books I talk extensively about the problems of the excessive use of rewards. I see many people who are intrinsically motivated to do the right things do the wrong things because they are doing what is rewarded. And, because measurement systems are such a mess, it is not easy to determine the right things to reward.
By all means inspire people and reward them, but establish an environment that has many of the characteristics of sports and games that excite, engage, and energize people. It is important to reduce the “demotivators” in the work environment (such as “organizational politics”) that frustrate people, and build in “motivators” (such as “fairness”) that energize them.
Morris: Based on what you have observed, what are the best strategies for driving effective performance measurement throughout an entire enterprise?
Spitzer: It can’t be done unless the organization is willing to take an honest look at what kind of behaviors its existing performance measurement is promoting. It is very easy to identify major measurement dysfunctions and conflicts, which, as I said earlier, will cause any reasonable executive to realize that there is a serious problem that needs to be addressed. But unless there is someone at or near the top to sponsor the effort, it won’t happen and won’t be successful. It is possible to determine functional measures that are not aligned with organizational goals, but real measurement transformation can’t be done function by function – although there is a lot of room for improvement everywhere.
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To read all of the interview, please click here.
Bob Morris is an independent management consultant based in Dallas who specializes in accelerated executive development. He has interviewed more than 100 business thought leaders and reviewed more than 2,200 business books for Amazon. Each week, we will also add to the Networlding Business Bookshelf abbreviated reviews in which he discusses a few of his personal favorites. You can contact him directly at [email protected]dspring.com.