A major milestone in making the connection between measuring as a human activity and performancewas in 1494, when Luca Pacioli published in Venice ‘Summa de arithmetica, geometrica, proportioni et proportionalita’ (‘Everything on arithmetic, geometry, proportions and proportionality’). It detailed a practice the Venetian sailors had in place to evaluate the performance of their sailing expeditions, which became the basis of the double-entry accounting system.
The subjective nature of individual performance evaluations and the dominance of financial indicators for evaluating enterprise performance became stepstones for performance management in human activities.
The industrial revolution added to this combination the “organization as a machine” metaphor that played a major role in driving improvements in efficiencies and effectiveness. The result was an organizational performance management model based on mechanistic, command-and-control thinking, driven by subjective individual assessments and financial indicators and crowned by pay-for-performance arrangements.
Did it work? To a certain extent, yes. Many organizations flourished and matured based on this model.
Does it have flaws? Many. And while historical circumstances attenuated them in time, today’s environment amplifies and exposes them at an accelerated rate.
Is there a better way? Yes, but it is not simple. It requires a change at multiple levels, from the underlying philosophy of performance, to mentalities and processes. This is not easy.
Over time, the use of Key Performance Indicators (KPIs) became synonym to performance measurement and management. KPIs are the link between the old and the new in performance management. Their use, however, is much richer and rewarding in an environment based on organic performance architecture principles:
Organizations are echo-systems in their own right. They