Strategic and Leadership Barriers to Organizational Performance

 

Lack of Leadership Commitment: Effective organisational performance measurement must be championed from the top. One common reason organizations don’t measure collective performance is that senior management is not truly committed or involved. They might announce high-level goals but don’t follow through on creating a measurement system, sending the signal that it’s not a priority. Research consistently highlights lack of executive support as a major barrier to implementing performance management systems. Without leadership driving the effort, initiatives stall due to middle-management resistance or inaction. Furthermore, if leadership doesn’t routinely review performance data or hold teams accountable for it, any measurement that does exist remains nominal. For example, an academic review by Cunha et al. (2023) found that securing senior management involvement and support is essential to overcome other obstacles in performance measurement. When that support is absent, even well-designed systems will wither on the vine.

Strategic Uncertainty or Change: Some organizations do not measure performance because their strategy is in flux or poorly defined. It’s difficult to measure success when there is confusion about strategic direction or when the goals keep shifting. In cases of frequent leadership turnover or reorganisations, performance metrics may be introduced and then abandoned, leading to a perception that they are not worth the effort. The literature notes that changes in leadership and inconsistencies in objectives can derail performance systems. Organizations may choose to “wait until things stabilise” before investing in measurement but constant change becomes an excuse never to start. Moreover, if a company has a very narrow strategy (e.g. focused purely on quarterly financial results), leaders might consider broad performance metrics (on culture, innovation, sustainability) as outside their strategic scope. This tunnel vision can be a strategic limitation where only financial KPIs are tracked and collective non-financial performance is not measured.

Measuring the Immeasurable: At a strategic level, some organizations face the challenge of how to quantify intangible aspects of performance related to their mission or competitive advantage. For instance, innovation capacity, brand strength or organizational culture are critical to long-term success but hard to measure. Rather than grapple with developing proxies or qualitative indicators for these, leadership might simply avoid measuring them. A classic barrier cited in performance measurement literature is “intangible goals that are difficult to measure.” [8] Many public-sector and non-profit entities, for example, have broad social impact objectives that defy simple quantification, so they end up tracking only inputs and outputs (budgets spent, number of people served) but not true outcomes. Strategically, if leaders are unsure how to set targets for such areas, they may choose not to include them in the performance framework. This results in an incomplete strategy execution, only the readily quantifiable parts of the strategy get measured. 73% of executives say their organizations do not effectively use KPIs to drive strategic decisions [1], reflecting that even when metrics exist, they may not cover all strategic priorities or be integrated into decision-making. In short, a strategic mindset that “not everything important can be measured” while sometimes valid can discourage organizations from attempting any collective performance measurement beyond basic financials.

The next article in this series will focus on the Expert and Academic Perspectives of barriers to the implementation of organisational performance. 

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 
[7] PM'O'Phobia (or: the fear of performance measurement), Mark Hocknell | Customer Value. Business Results (WARNING website flags riskware so no link provided) 
[8] Stacey Barr (2013). “Why Don’t Companies Measure Performance?” StaceyBarr.com  https://www.staceybarr.com/measure-up/why-dont-companies-measure-performance/ 

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.