Better Software - November 2007 - (Page 24)

budgeting, according to Hope and Fraser, is to abandon the traditional budgeting process and create a different kind of performance management system. This system is based on key performance indicators (KPIs) that establish strategic and tactical outcomes desired by companies and relative performance indicators that measure performance against internal and external benchmarks rather than using fixed budgets or plans. To improve team and individual performance, flawed fixedperformance contracts are replaced by relative improvement contracts that promote self-regulation within organizational units and project teams. whose managers were compensated according to CMMI levels achieved. This is a clear example of measuring not output, but input or process. (This should be interpreted not as a problem with the CMMI, but of its use.) Measuring and compensating staff for process improvement—if not combined with outcome measures that are understood to be more important—is a clear road to dysfunctional behavior. While a focus on process improvement measures may improve efficiency, it will distract people from measuring effectiveness (outcomes); so as the measured performance trends upward (CMMI levels), true performance (outcomes) declines sharply. an intent to increase organizational value. • Place the most emphasis on measuring outcomes, even if the metrics are not easy to obtain or completely precise. • Create outcome metrics whose constraints are as broad as possible (tolerance for variations) in order to encourage adaptation. • Create output informational metrics that support people’s innate, internal, motivational needs, and provide them with aggregate, rather than individual, measures of overall performance. Measuring performance in organizations Performance measurement and management has proven to be much more difficult than people expected. Anyone undertaking the design of a performance management system would do well to read Rob Austin’s Measuring and Managing Performance in Organizations, a sobering look into why measurement systems can go awry. Measurement “systems” are difficult, according to Austin, because “unlike mechanisms and organisms, organizations have subcomponents that realize they are being measured.” In his introduction, Austin states that “if there is a single message that comes from this book, it is that trust, honesty, and good intentions are more efficient in many social contexts than verification, guile, and self-interest.” The intentions of the managers who use the measurement system are what ultimately determine its veracity. Many organizations have dysfunctional measurement systems. In the beginning, a measurement system tends to improve results because people don’t really understand the system. However, under pressure to “improve,” people are forced to subvert good intentions in order to meet the measurement goal. Since there is always a disconnect between the desired outcome and the metrics used to achieve the outcome, over time the “measured performance trends upward; true performance declines sharply,” according to Austin. I recently worked with a company 24 Some project management metrics used today have made this trip from functional to dysfunctional. Earned value analysis (EVA) is one such dysfunctional metric. Its name indicates that it measures value, but the calculation combines schedule and cost into a single performance number completely unrelated to value! Project teams striving to achieve EVA targets have a disincentive to adapt in order to deliver valuable business results. APMS Design Guidelines Drawing from the ideas of Hope, Fraser, and Austin, the following design guidelines were developed for APMS: • Build the measurement system on a foundation of trust, honesty, and www.StickyMinds.com The keys to a successful transition to an agile project, organization, or enterprise are focusing on customer value rather than schedule, building collaborative project communities based on trust and honesty, and learning from good feedback systems. Our measurement systems must support these focal points. The measurement system must ensure that the connection between business drivers (profit, ROI) and project deliverables is transparent. In order to do so, ask two questions. The first question is always “Is the project community delivering a continuous stream of value to the customer?” Ultimately, outcomes can only be determined after the project delivers “running, tested features” and the business impact is assessed. However, the agile focus on BETTER SOFTWARE NOVEMBER 2007 http://www.StickyMinds.com

Table of Contents Feed for the Digital Edition of Better Software - November 2007

Better Software - November 2007 Contents MarkYour Calendar Technically Speaking What’s Happening @StickyMinds.com Code Craft Test Connection Management Chronicles The Measure of a Management System Behind the Scenes A Story About User Stories and Test-Driven Development Product Announcements The Last Word Ad Index

Better Software - November 2007

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