Question

What is the result of holding business managers accountable for metrics which they cannot control?  Should a plant manager be held responsible for sales volume?

Answer 1

A metric is used for evaluation of performance. It is a measure used to see how organisation grows. It helps in evaluation of employees’ performance during a specific period and giving feedback to them based on the performance. For example metric can be working capital management, Conversion cost, Cash flow, etc.

If metrics which cannot be controlled is given following are the impacts

• · Since the metrics are uncontrollable the employees cannot drive the same and they cannot be held accountable for it
• · Performance appraisal based on the uncontrollable metric is not meaningful
• · It does not help in growth of the organisation
• · It will lead to lack of purpose and redundancy in the organization

Managers and employees should be held accountable for metrics only which they can drive. It helps in ensuring the business performs and the organization grows. For example Plant manager should be held responsible for metric say Cost of production, manufacturing overheads budget control, Inventory control. In other words only metrics within their control should be given at the beginning of the beginning. Metrics which cannot be controlled should not be given for example sales target.