Using Spreadsheets for Performance Management: Why They Work and Why They Don’t - Part 4

If you’ve been following my previous posts in this series…and also know me and/or ActiveStrategy, you may have been wondering: Why is he praising Excel? Wasn’t ActiveStrategy created to replace Excel and other manual tools for performance management?

Yes, that’s true. And it’s also true that Excel is a great tool for the specific reasons and applications I blogged about.

But if you’re really trying to drive results at an enterprise level – trying to achieve the strategic outcomes your organization needs (and who isn’t?) – Excel is simply the wrong tool for that job. When it comes to performance management, Excel has a tendency to lead you down a swirling rat hole of bad data and missed opportunities, or help you build a performance management framework that will collapse under its own weight. I know. I’ve been there.

Why do I say this? Because although Excel is good with data, it is terrible for tracking action, ensuring accountability, and supporting a community of users that are trying to march together toward better performance and results.

Let’s first look at how Excel falls down when it comes to driving action.

As I’ve discussed before, data is only one ingredient for successful performance management. Another critical ingredient is action. The actions people take to learn why performance isn’t hitting targets. The actions people need to take to get performance back on track. Even the mundane actions people take to collect and report data and explain performance in one place. All of these actions are critical to improving rather than reporting results. And it is here that Excel begins to fall down.

Excel is, by its nature, a single file of data. You can open it and run some macros that do things, but in general it isn’t going to actively move people along to complete actions. For example:

• Excel won’t email a person and/or the boss when he/she needs to explain why a measure didn’t hit its target.
• Excel won’t capture the complete history of a portfolio of initiatives/strategic projects as they relate to the performance of a measure.
• Excel doesn't make it easy to capture action items during performance reviews or offer reminders and easy ways to follow up to make sure those action items get done.
• Excel doesn’t understand the organization’s reporting hierarchy, so it won’t provide managers with a simple view of what their teams are working on.

These are just a few examples -- some of which might be beyond what you're currently thinking about doing in a spreadsheet-based Scorecard or performance management framework. But support for these and other actions is critical if you really want to drive results. So here are some early warning signs that your performance management framework is starting to outgrow Excel:

• If you’ve started to think your single line “status” cells are not doing the trick, you are approaching the danger zone.
• If your users are adding a paragraph or two of explanation to a cell and making the spreadsheet unwieldy, you may be in trouble.
• If you are spending hours trying to format workbooks to print nicely, you are starting to feel the pain. 

Trying to create additional workbooks to hold longer explanations or to hold project milestones and status updates won’t solve the problem – it will make it worse. Maybe a very smart Excel administrator could overcome some of these problems. But, as you will see in my future posts, Excel's inability to drive action is only the tip of the iceberg.

Comments

[Business Scorecard]

Yes I agree with you that data is only one ingredient for successful performance management. We should also take proper action in order to target our goals. Business scorecard will be an important tool in this regard. It is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy.