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Key Performance Indicators: Developing, Implementing, and Using Winning KPIs, 3rd Edition by David Parmenter

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Chapter 3Unintended Consequence: The Dark Side of Measures

Measurement initiatives are often cobbled together without the knowledge of the organization's critical success factors and without an understanding of the behavioral consequences of a measure.

Every performance measure can have a dark side, a negative consequence, an unintended action that leads to inferior performance. I suspect well over half the measures in an organization may well be encouraging unintended negative behavior. The importance of understanding this dark side and the careful selection of measures should never be underestimated. The frequency with which measures are set to fail by at best naïve or at worst corrupt management is breathtaking.

The importance of understanding this dark side and the careful selection of measures should never be underestimated. How performance measures can go wrong can be illustrated by these examples.

Example: City Train Service

A classic example is provided by a city train service that had an on-time measure with some draconian penalties targeted at the train ...

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