One key, structural barrier is the absence of clear, agreed-upon strategic objectives to measure. If senior management cannot reach consensus on goals, it becomes impossible to define meaningful performance metrics [2]. Surveys show 58% of organizations struggle to set clear and measurable goals, which leads to ambiguity in what to track. Additionally, 43% of companies have difficulty aligning performance measures with their strategic goals [1], often because different departments pursue siloed objectives. The misalignment goals means that even if individual departments measure something, the organization lacks a coherent picture of collective performance.
Siloed Systems and Data Challenges: Many organizations are structurally not set up to collect and integrate performance data across departments. In a McKinsey survey, 42% of business leaders said their companies lack the necessary technology or tools to effectively gather and analyse performance data [1]. Inadequate IT systems and fragmented data sources make it hard to measure outcomes that span the whole enterprise. Companies may end up tracking only what is easily available (often operational or financial data) and neglect harder to measure areas. As one U.S. government report noted organizations often get “trapped into measuring what is easy rather than what needs to be measured.” [2] The result is an incomplete view of performance and no comprehensive measurement at all.
Complexity and Lack of Methodology: Designing a balanced performance measurement system can be complex. Organizations may be daunted by the technical challenge of developing the right indicators and analytics. Research finds that high complexity and unclear measurement systems are frequent obstacles, especially when companies have an excess of metrics with no clear framework to tie them to. In many cases, businesses lack a formal methodology for creating good measures. Performance measurement initiatives often fail because the system design has poor metrics that are poorly defined or there is no “cause-and-effect” logic linking measures to outcomes. Implementation can also stall if there is no infrastructure or process to regularly review and act on the data. Indeed, around 70% of Balanced Scorecard implementations fail to deliver hoped-for results, often due to design flaws or implementation difficulties. Without a simple, teachable process to develop and use metrics, teams become overwhelmed by complexity and may abandon the effort all together [6].
Resource Constraints: In smaller organizations, dedicating time and resources to measurement is seen as burdensome. Setting up performance dashboards, data collection processes and analytical capacities requires investment. If leadership doesn’t allocate budget or personnel, any performance management system will never get off the ground. Even in larger businesses, launching a new measurement initiative competes with other priorities. A recent study notes that some managers perceive building a performance measurement system as time-consuming and resource intensive a “nice to have” rather than essential. This mindset can lead organizations to postpone or avoid implementing proper metrics, especially when short-term pressures dominate.
In the next article we will explore Cultural and Behavioural Barriers blockers and barriers.
References
[1] What are the key challenges in measuring and evaluating organizational performance? https://humansmart.com.mx/en/blogs/blog-what-are-the-key-challenges-in-measuring-and-evaluating-organizational-performance-57020
[2] Office of Personnel Management (OPM) (1999). “Good Measurement Makes a Difference in Organizational Performance.”https://www.opm.gov/policy-data-oversight/performance-management/measuring/good-measurement-makes-a-difference-in-organizational-performance
[3] Examples & Success Stories, Balanced Scorecard Institute https://balancedscorecard.org/bsc-basics/examples-success-stories
[4] Bain & Co. survey Ivey Business Journal (2004). “The Balanced Scorecard: To Adopt or Not to Adopt?” https://iveybusinessjournal.com/publication/the-balanced-scorecard-to-adopt-or-not-to-adopt
[5] Balanced Scorecard: How Many Companies Use This Tool? https://bernardmarr.com/balanced-scorecard-how-many-companies-use-this-tool/
[6] WHY MEASUREMENT INITIATIVES FAIL EconBiz https://www.econbiz.de/Record/why-measurement-initiatives-fail-neely-andy/10014930511
Disclaimer:
Please note that parts of this post were assisted by an Artificial Intelligence (AI) tool. The AI has been used to generate certain content and provide information synthesis. While every effort has been made to ensure accuracy, the AI's contributions are based on its training data and algorithms and should be considered as supplementary information.
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