Productivity Measures in Performance Evaluations

Many professionals are challenged to improve their productivity and provide quantitative evidence to manage and make visible their productivity gains. For accountants, this can lead to a dilemma. On the one hand, they try to establish themselves as strategic advisors and partners for business managers. On the other hand, they’re under increasing pressure to perform their tasks in cost-efficient ways.

Company efforts to streamline accounting processes through automation, augmentation, and the elimination of redundant activities often result in the rearrangement of accounting work through outsourcing or the creation of shared service centers—accompanied by a growing demand for accountants to quantitatively prove their productivity.

In this context, we had an opportunity to explore how accountants designed and implemented a new performance measurement system to assess their own productivity, a phenomenon that hadn’t yet been studied in depth. Our study, “The productive accountant as (un-)wanted self: Realizing the ambivalent role of productivity measures in accountants’ identity work” (Critical Perspectives on Accounting, August 4, 2022), examined the question: How do accountants experience and respond to increasing productivity pressure and a corresponding measurement regime monitoring their work?

CASE STUDY

We traced how accountants in a fast-growing multinational technology company faced the challenge of dramatically increasing their productivity and presenting constant improvements through strict measures. At first, the accountants were open to the productivity challenge and willing to demonstrate their performance through the newly developed metrics. Over time, however, they realized that subordinating themselves to those metrics would downgrade what they do and who they are (i.e., their occupational identity).

The accountants in the case company had developed a business partner identity built on a strong sense of strategically performing important and complex expert work that made a significant contribution to management. Their challenging role implied that they often needed time and flexibility to dive into and solve difficult accounting problems that were relevant for managers (e.g., integrating newly acquired companies or designing complex deals with customers). 

The emerging focus on productivity measures, however, meant that processes needed to be streamlined and ideally standardized to be performed in an increasingly cost-efficient way. The company thus experimented with accounting and control tools (e.g., activity-based costing supported by detailed time tracking). To ensure that the new tools could work properly, accountants needed to meticulously track their activities and tag them according to predefined categories. 

This conflicted with their understanding of their complex and multifaceted role as business partners, which they felt couldn’t easily be expressed in standardized units. To deal with the productivity challenge, accountants engaged increasingly in activities aimed at innovating their work. Thus, endeavors to standardize their tasks resulted in more nonstandard project work. Although their work increasingly shifted toward process innovation tasks, the new productivity measures focused on capturing routine activities. Paradoxically, the increasing productivity pressure caused by the measurement and shift in the nature of work tasks made productivity measurement more difficult. 

Accountants eventually felt increasingly uncomfortable expressing their performance through the new measures. This discomfort was further intensified by accounting managers’ increased focus on productivity as a key performance indicator. The accountants in the case company eventually started to resist productivity measurement and to champion a more qualitative assessment of their work based on performance narratives.

WHAT COUNTS FOR ACCOUNTANTS

While productivity measures have potential benefits, our study demonstrated that predominantly rely­ing on them might have problematic consequences for employ­ees. The measures can produce a false sense of clarity and direction for accountants’ performance. Strong reliance on those measures can in this sense create the impression that what counts for an accountant to perform well is to emphasize productivity over other criteria (e.g., internal customer satisfaction).

Also, productivity measures are incomplete representations of accountants’ performance, making the resulting transparency and comparability of those measures problematic. While highlighting specific criteria that are amenable to quantification, productivity measures disregard performance dimensions that accountants (and managers) might consider more important for the business partner role but are potentially more difficult to measure. Over time, a strict focus on productivity measures thus creates the risk that those performance dimensions lose relevance.

Senior practitioners (e.g., CFOs or accounting managers) must be cautious when designing performance measures for accountants and consider the developments that the accounting occupation has undergone in the last several decades. The accounting profession has worked hard to establish its members as professional knowledge workers who deal with complex strategic and operational issues in organizations.

Drawing solely on productivity measures might not adequately consider those developments and present accountants with challenges that can render fragile their identity as business partners. This can eventually lead to frustration or resistance against performance measures, as the study shows. 

More broadly, the findings of the study have implications for the relationship between the design and use of productivity measures and any occupational identity. As the case study demonstrates, productivity measures are unable to capture the full complexity and variety of tasks. The ability to quantify performance might thus come at the expense of unquantifiable elements that employees consider as meaningful or prestigious work and that motivate them the most.

Even more, performance measurement might crowd out employees’ aspirations to perform such meaningful work. Aligned with the phrase “what you measure is what you get,” the focus of employees might turn to the measurable activities and move away from those strategically and operationally important tasks that aren’t well captured by the measurement system. 

Senior managers should keep employees’ occupational aspirations in mind and remain alert to the limits of measurement. This means creating a performance culture where productivity measures aren’t blindly followed as pure and objective truth but where everyone is encouraged to remain critical of what the measures track, incentivize, and motivate. This is important to avoid dysfunctional countereffects of productivity measures, like employees’ demotivation and perception of being unvalued, unfairly judged, or hindered in their occupational aspirations.