Do you measure up?
Performance measurement systems are widespread in the Nordic financial sectors. They are systems that collect, analyse and/or report information regarding the performance of an individual or group and can for example include measurements of sales targets, customer satisfaction and time spent on advising customers. There are of course many aspects to take in to consideration when designing and implementing the systems.
In 2015 the NFU Secretariat launched a survey on performance measurement systems effect on employees work. 126 trade union representatives, covering a total number of 66 companies in the Nordic financial sector, responded and the result is now being published in the new report “Do you measure up? – A study on performance measurement systems in the Nordic financial sectors”.
The result tells us that there are many aspects that should be taken in to consideration when designing and implementing performance measurement systems.
First of all, almost half of the survey respondents state that performance measurement systems are perceived to decrease the quality of employees’ work. This is highly worrying as it could have a negative effect of customer satisfaction, loyalty and trust to the financial sector.
Secondly, 45 % of the respondents’ state that performance measurement systems give incentives to sell or advice one product over another. From a consumer perspective, this is disturbing. If the employees are pressured to premier one product over another, how can we assure that the customer are getting the best opportunities to make informed decisions and that they are provided with the best possible advice for them?
Thirdly, our study on performance measurement systems show that the systems are perceived to have a negative effect on the employees’ work situation. 54 % of the respondents’ state that the employees’ stress levels increases and 42 % say that the administrative work load increases due to the systems. As a result, employees face a tougher work situation. This will have a negative effect on the service provided to customers, as-well as the employees’ health.
Interestingly, the result is somewhat divergent. For example, while almost half of the respondents’ (44 %) state that performance measurement systems decrease the employees’ quality of work, 20 % states the opposite. The same diverging result can be seen when the respondents are asked how performance measurement systems effect the quality of information and advice given to customers. 29 % states that the systems’ have a positive impact on the information and advice given, while 22 % states the contrary. An explanation can possibly be found in the design and implementation of the systems. We can see indications that systems’ that measure customer satisfaction are perceived to be more positive for employees and customers than other types of performance measurement systems, but we can’t say for sure.
But in the end, it all comes down to management and company culture. Performance measurement systems should never replace good and responsible leadership. If used right, the systems can be a useful tool for coaching and give feedback to employees. If used wrong, they will create an unhealthy and stressful working environment. It should be a top priority to ensure that performance measurement systems don’t create a culture where the only thing that matter is if you measure up to excessive and sometimes unrealistic targets or not. This is likely to create a stressful working environment as well as a damaging culture of short-termism.
And after all, employees are key to ensure satisfied customers and to build trust for the financial sector. It is crucial that they are given the best possible opportunities to provide customers with sound advice and information. In the long run, this is essential for a prosperous financial sector that takes responsibility for their employees, customers and society as a whole.
For NFU, the report “Do you measure up?” is only the first step to put performance measurement systems on the agenda. On May 24, we will host a seminar in Brussels on performance measurement systems and its effect on employee well-being and consumer protection. Together with two panels consisting of representatives from the financial sector, consumer organisations, policy makers and trade unions, we will discuss what to consider when using performance measurement systems and their link to well-functioning and responsible financial sectors. I hope to see you there!