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KPI Fixation and the importance of the measures

I observed a roundtable discussion the week before last attended by some very senior finance professions, CFOs and Financial Directors in the main. As I left some one comment to me about how “KPI fixated” they all were.

But then last week I came across the Science and Universities Minister, David Willetts bemoaning how Business Schools were reacting to the REF (the latest research evaluation framework that the government have imposed, see http://www.researchresearch.com/index.php?option=com_news&template=rr_2col&view=article&articleId=1335662 ).He was warning that good quality research can’t be guaranteed from publishing in highly peer rated American Journals. The interpretation was that the research would be more relevant to business in the United States than UK business.

So here are some facts and comments:

1. Those on the REF panel read and judge every paper, so papers are not judged on the journal in which they appear but on the quality of the individual paper. However, no matter how often this is said academic don’t seem to believe this any more than they believe David Willetts.

2. My personal opinion is that very little of what is published in the best academically rated journals is of direct relevance to business anywhere! Some will argue that this is the difference between science and engineering; the best journals are producing the scientific research that will inform future engineered insights for business. But I even doubt that in the case of most business and management research.

3. But most importantly, it shows how important the measures are. Who could object to the goal of business schools in the UK pursuing “Research Excellence”? But how do you define “Research Excellence”? That is where the measures come in. Until you decide how to measure it know one truly understands what the objective is.

Our current research into performance management in Universities led by Dr Monica Franco-Santos and sponsored by the Leadership Foundation has found many consequences of the REF, some more desirable than others. But it is all a consequence of how we are being measured and we should never forget that.

So may be the CFOs and Financial Directors knew something others often forget and they were right to be concerned with the KPIs after all.

Mike Bourne

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