Posted by Steve Wilcox on Fri, May 08, 2009 @ 03:39 PM
In this past week's webcast titled, 10 Must-Have Metrics, Jon Casher, president of Casher & Associates, made a great point about how you need to be very mindful about how certain AP metrics can drive the wrong behavior.
Here was his example. A company based its bonus on a seemingly very simple metric - the number of invoices processed. This is a flawed metric. Here's why -- a very clever AP Specialist realized that if she arrived before everyone else and hand picked the "easiest" invoices such as the simple ones with one line item, she could process more invoices per day. Soon her associates started doing the same thing. Nobody wanted to process the complicated invoices from the "challenging" suppliers.
What ended up happening was that the suppliers who sent in not-so-easy invoices to process weren't being paid! This caused all kinds of problems as you can imagine.
So the lesson learned is that you need to consider the unintended consequences of your metrics - even if the metrics appear innocent.
In the webcast, Jon outlined a complete framework for developing metrics that should prevent these types of problems:
- What should be measured
- Why it should be measured
- When it should be measured
- How it should be measured
-Rakesh Shukla
@rakesh170
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