If It Can Be Measured, It Can Be Manipulated

All aboard the metrics-go-round! Ready, managers? Here’s how it works:

  1. You set goals and create measurements (“metrics”) for your people’s behavior. Of course you tie their pay, performance evaluations; indeed their continued employment to hitting your numbers. Of course!
  2. Some of your people dive into hitting these goals with gusto. Some figure out the metrics and decide it’s easier to manipulate them than it is to do the work you want, so they play the system you’ve created to measure their behavior. Cheeky workers!
  3. The compliant ones look at all the praise, bonus pay, and promotions their “cheating” coworkers are getting and they feel envy. Plus, they start to fear for their jobs, because the cheaters have inspired you to raise everyone’s performance expectations.
  4. Now many people are cheating. A few have quit in disgust, or transferred into business units that are less metrics-driven. A minority is working its collective tail off to hit your numbers. They find their jobs too hard, and learn to hate your company, or at least your business unit. The last slice of “ethical” workers, who can’t hit these lofty goals and who refuse to cheat, are now in danger of losing their jobs – or at best, they’re missing out on all the recognition. Strangely, this group comes to hate your company, too. (People are so weird!)
  5. So here you are, with most of your staff playing the system instead of doing what you wanted them to. The gall! So you work up all sorts of creative ways to monitor their behavior more assiduously. You also offer them an ethics course, because clearly their parents screwed up.
  6. That works a little, but your workers sure are shifty, and in no time they’ve figured these new controls out, too. So you scrap those metrics, and introduce a whole new set of behaviors you want them to perform and metrics by which you’ll measure them.
  7. …And we’re off, riding the Metrics-go-round again! (Return to #1 and start reading).

Where do all these crappy, unethical employees come from? Maybe, in addition to your mandatory (of course!) annual two-hour ethics class, you should change the metrics of your recruiters, so they’ll recruit more ethical employees. Or hell, maybe workers just suck, as a class. You can’t trust people to do what’s right, can you?

Does any of this sound familiar? Does all of this sound like exactly what your role as a manager consists of?

I’ve been observing leaders and organizations for a long time now, and this is what I’ve found: leaders basically fall into one of two groups.

In the first group are those leaders who swear by metrics and swear about their unreliable, childish workers who need to be controlled.

The second group consists of leaders who hire mature, responsible adults and treat them as such. These leaders don’t really think much of metrics. They’re more interested in buy-in and results.

Which kind of a leader are you?

 

*The title of this post comes from a recent spontaneous Twitter chat. I wish I could remember who said this; alas, it wasn’t me. I’m not that succinct, I guess. Some day!

 

Read Return on Morale for the first in this series.

 

Photo by Cheesy42

Keynote speaker. Author of A World Gone Social: How Companies Must Adapt to Survive. Three-time CEO. Chairman and Founder of Switch and Shift. Ted Coiné is one of the most influential business experts on the Web, top-ranked by Forbes, Inc., SAP Business Innovation, and Huffington Post for his leadership, customer experience, and social media influence. Ted consults with owners, CEOs and boards of directors on making their companies more competitive by making them more human-focused. He and his family live in Naples, Florida.

  • reply Steve Borek ,

    For me I lean towards #2. Though you do need some kind of metrics to know if we’re on track.

    The ones that get caught up in the numbers game are justifying what they’re trying to do. They’re not leading.

    • reply Martin Fenwick ,

      Your merry go round suggest the need for good metrics as opposed to having no metrics. Unfortunately your option 2 wil always beg the question ‘can you define the results?’. For leaders who are single minded about results the answer is always ‘turnovers’ or ‘sales volume’ or ‘ output’ and of course these are just metrics that drive behaviour too. The other risk in option 2 is that it relies on the leader to see and decide on good behaviour. Unfortunately for most this equates to ‘be like me’ and can also lead to a boss focused culture as they have the power to reward at will.

      Metrics are never the full solution and nor are no metrics. Good managers set metrics for things that need measured to drive business activity. The key is to set good ones and to root out manipulation.

      • reply Jeffrey Armstrong ,

        I love this post. It definitely reminds me of my 10+ years in retail. When I began my retail management career I think I was definitely in group 1. After about 3 years of that style I started thinking more on the lines of group 2. Group 2 is definitely one which empowers their staff and ultimately gives a better experience to the consumer. This group won’t get the accolades from the company that group 1 will; however, they will win the hearts of the consumer. In the end that is all that matters.

        • reply Alan Kay ,

          Two thoughts on metrics (which are very useful, but often abused):

          Be careful about what you measure, especially if you are the leader.

          When people review their measurement achievements ask only what was learned from getting there. This applies to both under and over achievement. Reward both types of achievers on their ability to convert the learning into action.

          • reply Sean Glaze ,

            Hi Ted!

            Enjoying your blog, and appreciate this topic in particular.

            While I would certainly agree that treating employees as untrustworthy children will usually produce employees who are untrustworthy children, I would also suggest that metrics do help to set an expectation for measuring successful process goals.

            Accountability is an external measure of performance and effort. What is difficult to measure (and so VERY important to find and hold onto) are people who claim ownership, which is an internal acceptance of responsibility for the results you mention.

            • reply Peter A Hunter ,

              Why act surprised?
              W Edwards Deming said over thirty years ago, “If you set people targets those targets will be achieved, even it destroys the organisation doing so.

              The only way to avoid this situation is not to set targets.
              So how do we know what is going on or what has been achieved?

              Simple, ask the workforce what they consider to be their optimum performance.

              When we set targets they are rarely achieved.

              When we allow the workforce to set their own targets we invariably find that they set them higher than management ever dreamed possible, and they are almost always achieved.

              Peter A Hunter
              http://www.breakingthemould.co.uk

              • reply Birgit Pauli-Haack ,

                Ted, I just loved your deadly sequence of events It’s exactly what happens.

                And Daniel Pink has written a great book “Drive – The surprising truth about what motivates us.” reporting on the science coming to the same conclusion, as you: Metrics as basis for incentives or as basis of pay won’t work. Pink also offers a clear view into the science to what actually works in terms of employees motivation and improving performance, or at least not undermining it.

                There is a mismatch between what science know and how business works. Carrot and sticks doesn’t work for 21st Century tasks, that require problem solving and creativity in an ever-changing workplace. It is time that corporate world catches up with the science.

                For the short attention spanners (who read books anymore? ) two video links:
                Daniel Pink’s TedTalk http://www.ted.com/talks/dan_pink_on_motivation.html

                Here the link to a summary of his book:
                http://www.youtube.com/watch?v=u6XAPnuFjJc

                • reply Jennifer V. Miller ,

                  Ted,

                  Great post. I used to work for a large service organization that had several call centers. The employees’ work lives were scheduled to the hilt– even their bathroom breaks were timed. It was like, “Too bad if it’s 10:00 AM and you need to pee; your break time is at 10:22 AM and you get six minutes. No more, no less.” Managers often said to me, “Jennifer, you don’t understand the nature of the call center employee; many of them act like immature babies.They need this structure. Besides, this is the way it needs to be; our customers demand that we have this level of response time.” It frustrated me to no end; in my mind, they acted like babies because they were TREATED like babies.

                  • reply Glenn ,

                    Metrics don’t usually measure quality, just “quantity.” For example the object might have been to reach $1 million in sales. The rep does that but totally destroys any future sales by the focus on his goal rather than the customer’s needs.

                    Personally, I’m sick of auto dealers asking me to give them a “10″ on their telephone surveys. They’re just gaming the system.

                    • reply happytoad ,

                      I somewhat agree. I take full credit for the staff that I have hired. There was one in place inherited from a previous “regime”. They were fed stats, they were praised and punished by stats. They learned how to manipulate the stats in order to stay above radar. This wasn’t helpful with austerity measures that didn’t allow for merit increases. I have tweaked the metrics (slightly) and have had more sit-downs with staff, discussing their concerns, my concerns and the direction in which we are heading. If it’s once per week, once per month or once per quarter, I have found that the interaction that you have can be more effective than any statistical analysis of job performance. It’s a frank conversation. It’s a pat on the back. It’s a sounding board for venting frustration about the obnoxious co-worker in the next cubicle. They buy into what you’re trying to do. The more personal accountability, the less they “cheat”.

                      • reply Jason Segedy ,

                        I strongly identify with the second group of leaders. I work in a field that is focused heavily on the creation of the intangible (ideas, public policy, etc.) rather than the creation of the tangible (goods, products, etc.) The HR people in my field, though, tend to ignore this distinction, and, as a result, I am encouraged to approach things that I consider to be quite subjective (like employee performance management) from what I see as an overly-objective point of view. I can’t easily quantify or measure how cooperative or conscientious an employee is. I just “know” it, based on observation and experience.

                        I think the efficacy of an overly quantitative, “objective” approach to management declines precipitously when one is managing people tasked with producing ideas rather than things. I think nearly all of our so-called “objective” criteria are still subjectively constructed, and that an over-reliance on the measurable can sometimes be a crutch to absolve us for the personal responsibility that comes with having to make difficult decisions. Some of my discomfort with the overly analytical, overly-quantitative approach to management is probably due to my marked MBTI preference for iNtuiting over Sensing and Feeling over Thinking.

                        • reply Ishwara Bhat ,

                          Glad to see this post and the comments. As you all mentioned, if metrics are measurable they can be manipulated. The extent of manipulation depends on the stakes involved. When metrics are over-used and stretched beyond its context, people have no option but to manipulation. I think manager should be cautious on the kind of message he sends while using the metrics. Metrics should be used to decide the direction, not as fully objective and universal truth.
                          This is the point I am making in my blog below.
                          http://midmanager.com/4-foolproof-tips-for-effective-metrics-based-management-reviews/

                          • reply Klout And Kred Are AntiSocial. Opt Out With Me. ,

                            […] *…And anyone who knows me knows what I think of metrics, which I sum up here: If It Can Be Measured, It Can Be Manipulated. […]

                            • reply Sheila B Robinson ,

                              Reminds me of a friend’s former employment situation. He was working on a production floor, assembling “widgets.” With a strong work ethic, he assembled each widget carefully, ensuring he used the correct parts and put the widget through all appropriate tests before packaging and shipping it. Needless to say, this took some time. His unethical coworkers assembled, packed and shipped many more widgets than he, and unfortunately, the metric used for employee reviews (and of course, raises) was the number of widgets assembled and shipped. The thing is, the other employees used wrong parts (it was faster), and skipped testing, or simply shipped widgets that did not work. These widgets would later be returned to the company for repairs. My friend, with his lower rate of production, had a 100% record when it came to his units working. Not one was ever returned for repairs. This metric, however, was ignored, and my friend suffered poor reviews and was denied raises, even though the leaders knew his units were perfect! “We can’t help it,” his bosses said. We go by how many units go out the door. Period.” My friend refused to compromise his dedication to quality and eventually lost that job. Ugh!

                              • reply Making Social More Human ,

                                […] and outcomes.  They have to have an ROI.  But as Einstein said, “Not everything that counts can be counted, and not everything that can be counted counts.”  As for us, while it’s not easy to […]

                                • reply Ted Coine ,

                                  I agree, Steve, we do need some indication of how we’re doing. Measuring dollars is a good one: it’s hard to argue with cash. I also like asking customers: “Hey friend, how are we doing?” or even better: “Would you recommend us to a friend or colleague?” Best yet: “HAVE you recommended us, and to whom?” (actions speaking louder than words, of course).

                                  After any of those questions, I believe firmly in asking why. “Why? Tell me more.”

                                  • reply MJ Gottlieb ,

                                    I think before anything we need to look at the words in the article “treat them as such.” … If we don’t include our people within our company culture, it provides no incentive to do anything other than to collect a paycheck on Friday. At least that’s what I have found. I learned the hard way never to treat my employees, LIKE EMPLOYEES. They need to feel they are working ‘with’ as opposed to working ‘for’. I know this can be a slippery slope but if you explain to them up front your respect and kindness will not be taken weakness and tell them this up front, I have found that to be the best formula that has worked for me. If the person takes advantage, well, then they have been warned so I don’t have an issue letting them go. If you have low turnover, then once your people see this happen once or twice they get the point… Just one guy’s opinion :-) Gr8 post Ted…

                                    • reply Ted Coine ,

                                      Martin, I love a healthy debate! That’s where real learning takes place, after all. Heaven protect us all from a life where everyone around us sees eye-to-eye on everything.

                                      Counting or measuring can be helpful. For instance, if one waitress is able to handle 6 tables at a time, and if her customers come to ask for her by name, her manager knows she is a better performer than a waiter who can only handle four tables at a time, even if his customers are also very happy with him.

                                      If two factories produce the same model of car, and one routinely produces more cars each day, and if nothing else is different – same defect rate, same employee sentiment, etc – then again you can tell at a glance which factory is run better.

                                      No standards, no expectations, no leadership guidance at all? That will quickly devolve to chaos and bankruptcy. However, years of observation has led me to believe that modern management is skewed much too far to the left-brained and the controlled, to management by spreadsheet instead of management by engagement.

                                      I guarantee that if the business world were presently run by flakes instead of control freaks, I would be railing against touchy-feely styles and urging leaders to build some processes! Except in the smallest companies, that day is a long way off.

                                      • reply Ted Coine ,

                                        Thanks Jeff! I agree with much of what you write, except for that last part, about the second group not getting the accolades of the company. I am convinced that when local management hires adults and treats them as such, those adults will perform rings around similar stores (or factories, or offices) that are run like military school. If the company gives accolades based on financial performance, group 2 will win nine times out of ten.

                                        • reply Ted Coine ,

                                          I like it Alan – a lot! That is an entire aspect of this discussion I jut plain left out. Yes, “What did you learn? How will it change your performance going forward?” That is where improvement will come from.

                                          • reply Ted Coine ,

                                            Sean, great point. I think it was Drucker who said those things that are impossible to measure are also the most important. (And he phrased it more eloquently as well.)

                                            You can measure dollars earned, and you should. You can measure product created per input of time and raw materials, and you should. Can you measure heart? Not nearly as objectively, I can assure you – but with the right people feeling the right emotional tie to the company… THAT is when great things will happen!

                                            • reply Ted Coine ,

                                              I love it, Peter – I wish I could embellish that, but you said it all!

                                              You know what I love to see? – and it’s so rare to find this. I love when an unexpected crisis hits an organization, and instead of heading for the hills, staff pitches in with reduced pay and long hours, if necessary, to see the org through the dark patch.

                                              Employers, what if a natural disaster hit your company, and all looked lost? How many of your staff would stay to literally dig you out and get your operation back in business? Speaking to employees as well as leaders my entire adult life, I’d have to say I doubt even one in a hundred businesses would achieve this type of loyalty nirvana.

                                              But here’s the thing: there’s no need to wait for a tornado or hurricane or fire to strike to win or lose from this sentiment among your workers. Lack of inspiration will bleed your company dry little by little every day, and leaders: it’s all your fault. We leaders attract the people we deserve, never better.

                                              • reply Ted Coine ,

                                                Thanks Birgit – Dan Pink’s Drive is one of my favorite books (have you read my recent post, The Business Heretic’s Library, vol. 1?). And I’m proud to say, he has generously agreed to write a guest-post for Switch and Shift later this year!

                                                I think the disconnect between 20th-Century management and 21st-Century business needs stems from the reliance of business schools on statistics and finance rather than psychology as the main subjects of study. In short, business people have to work with humans, but too few learn anything about human motivation before the first day of work.

                                                I’ll be posting on this soon. Stay tuned.

                                                • reply Ted Coine ,

                                                  Jennifer, you’re right on the money.

                                                  Leaders: treat your employees like adults, sure, some will prove they aren’t ready to live up to adult expectations. Fire those bad apples. Most of their coworkers, meanwhile, will indeed act like adults, and your job as manager will be easier – and more enjoyable!

                                                  I throw up in my mouth a little every time I hear of a call center run this way (it’s 2012, for God’s sake!!!). If this company’s leadership isn’t pennywise, pound foolish, I don’t know who is. How much does the inevitably high turnover cost these firms, anyway? Oiy.

                                                  You know who benefits from medieval management like this? Their competitors.

                                                  • reply Ted Coine ,

                                                    Glen, that’s absolutely true! I’ve seen this scorched-earth policy so often, it’s stunning – and it’s always leadership’s fault, for managing by numbers and pressure on the sales staff rather than by a more difficult, nuanced, but ultimately profitable focus on the needs of the customer!

                                                    My favorite, of course, is when the leader inevitably says when confronted with the idea that his staff is forcing the wrong products down customers’ throats at the wrong time, just to hit their monthly and quarterly targets. “Well, of course we want them to do what is best for the customer, AND hit their numbers, both.” Sure guys. Keep telling yourself that – and keep being surprised when your customers desert you for a competitor, or when your sales stars leave for a competitor.

                                                    • reply Birgit Pauli-Haack ,

                                                      That is great news! Congratulations! A great collection of recommended reading, indeed: Your Business Heretic’s Library http://switchandshift.com/the-business-heretics-library-vol-1

                                                      You are right: what was missing in my 20th Century business education: Psychology of decision making (Ariely, Predictable Irrational, Pink, A Whole New Mind + Drive, Gladwell: Outliers + Tipping Point just to name a few)

                                                      With any of those information as basis of all economics, a few business could have been saved…

                                                      I always look forward to post on Switch & Swift!

                                                      • reply Ted Coine ,

                                                        MJ, that’s right on the money. Set the ground rules up front, and then when/if someone doesn’t fit in, that’s on them. As you say, the rest of the team will get it.

                                                        • reply Ted Coine ,

                                                          Thanks Birgit! Want to hear something weird? I haven’t read “Predictably Irrational” yet. I have to get on that. Thanks for reminding me.

                                                          • reply Ted Coine ,

                                                            It sounds to me like you agree more than just a little! My question for any leader on any level: who do you have lunch with? My advice: break bread and talk with your frontline staff. The more in touch you are, the less stats you’ll need.

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