Implementing performance measures of any kind, let alone ethical ones, can face a number of challenges. There may be concerns about uncomfortable truths being discovered. Some see performance measures getting in the way of ‘doing business’. Others think they’re a waste of time because the problem is already clear and its solution self evident.
There does of course need to be a balance between measuring performance and delivering performance, yet the old adage that ‘what gets measured gets managed’ has survived for a reason. Operating a business on a string of hunches and assumptions may work for a while, but will invariably create difficulties when unforeseen risks are encountered or opportunities lost.
The case for measuring those ethical issues of importance to your firm has been made in previous posts. In this post, I want to highlight some of the pitfalls that measuring ethics can encounter and I’ll organise them into the three phases of performance measurement: design, implementation and use.
Pitfalls during the design phase…
- adopting too narrow a scope for the ethical issue being monitored (for example, by what you take to be a conflict of interest or a privacy concern);
- choosing to measure something that you’re comfortable with, rather than what is important to the firm or its key audiences;
- choosing to measure inputs around an ethical issue, rather than on the more important outputs or outcomes (for example, measuring how many people have read your code of ethics, rather than how many understood it or how people have put it to use);
- making the process of compiling the measure so cumbersome that it proves difficult to implement;
- trying to measure the forest, when it may be better to start off by measuring just a couple of trees;
Pitfalls during the implementation phase…
- a lack of visible sponsorship from a senior person in the firm creates the impression that it is not important enough, resulting in middle management giving it inadequate attention;
- those responsible for the measure are in too strong a conflict of interest to ensure its proper implementation;
- the measure is perceived as too strongly owned by one particular person, creating the danger that the message becomes ignored because of perceptions about the messenger;
Pitfalls during the use phase…
- inadequate attention from key decision makers to what the measure is saying, perhaps because it may not be measuring something financial, or it’s in conflict with another measure thought to be more important;
- it proves difficult to translate what the measure is telling you into an action plan embedded within the firm’s management systems, resulting in an inadequate response from the firm, as well as underperformance;
- the measure becomes labelled as out of date or irrelevant, due to operational changes or wider market developments.