The results that you measure drive action & behavior June 10, 2008
Posted by Darth Sidious in Managing Employees.trackback
Excuse me, what does that mean?!
Glad you asked! Along the lines of unintended consequences, when you measure or monitor certain metrics or performance indicators, you’re affecting employee behavior. You may want staff to achieve Y, but are getting X, and it may not be their fault- it may be yours.
If the staff are hardworking people, but the results that you’re getting isn’t congruent with what you were expecting; take a step back and evaluate how and what you evaluate. For example if your compensation system is based on rewarding people for speed, but product or service quality is severely lacking for some reason – even though you’ve mandated quality, it doesn’t make a difference what you mandate if what you’re measuring doesn’t support that goal (or even worse, is opposite to it).
That may seem like an obvious example, but it’s more common than you think. For the Clone Wars we ordered 100M Clones, and we wanted them ready in time to trick Obi Wan, so the Clone factory sacrificed on quality and what we ended up getting was 35% of the Clones being totally useless.
Now here’s the real issue; you become aware of this nature of life, so you adjust your measurement to factor in quality aiming to improve that metric. What results is something unintended, where instead of improving how things work, you’ve distorted it.
Well as Management you need measurement, otherwise you have no idea what’s going on. So one solution is to use measurement to quantify results, but reward on the outcome. Track quantity and quality, but make the raises and bonuses based on what came as a result (customer satisfaction, reduced costs, etc…), not the measurement itself.
The cool thing, is you can use this to your advantage. You can alter people’s actions and their behaviors by simply changing what you’re measuring. Personally I like to electrocute people using The Force, but not everyone has this skill.
Sith Sigma 
[…] this essay on how performance metrics impact employee behaviour, Darth Sidious cites a recent example …if your compensation system is based on rewarding […]
Interesting, but the perhaps most significant thing to talk about when discussing measurement is that some things are difficult to measure. Of course the Sith wants the pilots to grow and learn more, but measurements usually tend to favour “hard” targets such as Number of Rebel Vessels Shot Down, or Fuel Cost. However, it is the “soft” aspects that they need to improve to be competitive in the long run, like Flying Skill and Experience from Dog Fights. These factors are the important ones, but are difficult to measure. Therefore an analysis must be made to figure out measurable stuff that leads to improvements of above aspects. Then, all that stuff must be measured and every other factor not measured, so that the long-run performance will be maximized.
@Henrik – Totally agree.
It’s very easy to measure the quantitative stuff, and it’s important stuff too. At the same time the qualitative stuff is just as important, but like you mention are difficult to measure.
BUT, if you do measure it, even if it’s subjective (some type of scoring system), it will affect peoples behaviors purely because you’re measuring it.
The key thing is – is the change in behavior a good change or a bad change? If you go for raw output, people will increase their widgets per hour, but their quality may tank. And quality is one of those qualitative things that is hard to measure, but to your point, if you don’t measure it – there’s negative consequences.