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Measuring performance: How KPIs came about

30 May 2019
In a data-driven world, what does it mean to measure performance?
In this age of big data, we look at the emergence of KPIs and performance measurement in organisations.

I am often met with quizzical looks when I tell people my primary research topic is performance measurement. So what is performance measurement and why would a cultural studies scholar research it? Let me explain.

As an undergraduate student of literature I was interested in what, over time, allows language to change and genres to develop. In asking this I was really moving into cultural studies, because I was examining how humans communicate about and make sense of the world.

As a postgrad, this shift into cultural studies allowed me to combine theories of the sociology of knowledge and cultural economy to work out how and why new languages, or “discourses”, emerge.

But performance measurement? It seems to fall well beyond the sphere of popular culture and cultural studies. It’s vital to analyse popular culture, where expressive forms and sense-making occur – after all, watching TV is the most popular pastime in human history. But it’s equally fascinating to analyse other influential discourses rarely considered for their cultural and social significance; in particular, ones that involve numbers.

Measurement in modernity

Modernity itself would be impossible without the various ways we measure – how we enumerate and quantify allow our institutions of economy, government and science and technology to function. Like other languages, they emerge and change in time and place.

While pure mathematics is its own fascinating realm, measurement practices take on social significance when they create information about the world we share. For instance, science would be nothing without metrology – the study of measurement and the instruments necessary to conduct it. From the cracking of longitude to the confirmation of the Higgs boson in a particle accelerator, metrology is the hidden foundation of many scientific breakthroughs.

Government bureaucracies as we know them only became possible with an 18th century innovation: statistics. This is the collection of data about populations to intervene in population groups through government policies.

Economics, too, uses numbers to evaluate the production and allocation of resources in society. Within organisations, accountancy is its equivalent: it specialises in ways of giving account of the financial value of what’s going on in enterprises.

Neoliberal agenda

The late 1980s is when performance measurement came in. But it didn’t come from the social sciences. Despite attempts among “organisational effectiveness” researchers, nobody could articulate a convincing theory that could be backed up by universally agreed measures of what makes organisations succeed or fail.

So why do we now live in a world of endless KPIs and performance metrics? In short, it is driven by neoliberal economic theory and new styles of management that demand ever greater performance on behalf of shareholders (or taxpayers and citizens in the public sector). Accountants were asked to measure almost anything that might tell managers how well units or workers are fulfilling organisational aims – even in the absence of established quantitative methods for doing this.

There is much to question about this new use of numbers, not least of which is whether we can truly ever define or measure performance accurately or fairly, given the many actors and factors that shape what happens in continually changing organisations.

But are accuracy and fairness are even the aim? As one practitioner put it, the practice is about “getting more for less” by encouraging workers to maximise performance ratings. It seems inseparable from the expectation of “continuous improvement”.

But again, is this a recipe for organisational success? It raises a whole host of critical issues about institutions and the ways they are governed in the contemporary world.

Guy Redden is an Associate Professor in the Department of Gender and Cultural Studies and author of Questioning Performance Measurement: Metrics, Organizations and Power (Sage Publishing, 2019).