Performance Management in complex companies

I was interviewing some executives recently in an organization famous for its strong individual objectives and metrics driven system of management.

The problem with individual objectives and clear measures is that they can drive managers to be ‘one dimensional’ and very focused on meeting objectives. This can cause real problems in a matrix when, for example, functional and business objectives are not aligned or legitimately compete.

When bonuses and careers depend on hitting your own objectives and metrics it can be hard to find reconciliations to the complex trade-offs and dilemmas that are normal in a matrix.

Sometimes competing objectives and metrics are desirable – for example focusing sales people on sales volume and commercial people on risk management to balance each other in large bids. On other occasions conflict is created when insufficient alignment is in place.

At junior levels people can be successful by focusing on their metrics and objectives and working hard. At middle and senior management level in a matrix this can be counterproductive where it is necessary to take other competing priorities and metrics into account and to make trade-offs.

This is a common issue in very results oriented companies with a matrix structure and suggests that we may need a different performance management system for these complex organization structures. One that rewards doing the right thing for the organization rather than the department or other entity.

How is this managed in your organization?.