Tuesday, May 8, 2012

Motivating with Measures: Accountability, Incentives and the Dark Side

The benefits and risks of using measures for motivation are amplified when employees are made accountable or incentivized.

Measurement and Accountability

Measurement is at the heart of accountability. In the dictionary, accountability has a neutral meaning: an obligation or willingness to accept responsibility for one’s actions. This is the denotative, or literal, meaning. In a work setting, the denotative meaning of accountability is a goal that defines who will do what by when.

Accountability in this sense is the basis of management by objectives  (MBO).  While MBOs were popularized in the 1950s, they remain a central element of most organizations’ annual performance appraisals. 

While some objectives are task-based, the best objectives are measurement-based. We have found that the most effective examples of accountability-based motivation use SMART goals—goals that are Specific, Measurable, Agreed upon, Realistic, and Time-bound. Describing expectations in terms of measures at the beginning of a project motivates performance. 

Accountability is a word often loaded with connotations. How would you feel if you were told in a business meeting that you will be held accountable? Queasy? The phrase suggests that you’re in trouble. This isn’t actually accountability—it’s scapegoating. This is a connotative meaning, and the connotations of accountability are negative. The fear of negative consequences can lead to all sorts of dysfunctional behavior.

If the meaning of the measures isn’t managed, then accountability is more likely to instill a culture of fear than it is to motivate employees and support the organization’s strategic goals. 

To motivate with measurement-based accountability, the meaning of the measure must be managed. Use measures to describe expectations before the employee works to achieve results.  Articulate both the formal, denotative meaning (how the measure works) and the connotative meaning (the implications for the employee).

  • If you’re building a measurement system, remember that the connotations are probably more important than the measures. Consider how the measures will be seen by employees. Develop a list of actions employees could take to influence the data.  Be sure to include actions that the system intends to encourage as well as unintended actions. Adapt your system accordingly to especially encourage the intended and discourage the unintended.
  • If you’re managing employee accountability with measures, be sure to talk with employees about both the denotative and connotative meanings. It’s important to develop a shared vision: This is a true leadership communication task.  If there is clear agreement on the meaning of the measure as well as the level of performance expected, accountability can be positive. 

Accountability is simply responsibility. Measurement can help top build responsibility for results and the rewards or consequences of the results.

Incentives and Measurement

If goal setting and accountability work, why not add incentives to make them work even better? Why not juice the motivation system? Many of us have worked, or currently work, in an incentive system. Sales people work on commission. Managers get bonuses and stock options.

There is a whole industry of compensation consultants trying to create incentives that work. Since the industrial revolution, we’ve been trying to get incentives right—and some of us are starting to wonder if incentives are just wrong.  

Research summarized by Daniel Pink suggests that incentives lead to lower performance in completing tasks that are complex or involve creative thinking. I’m sure we’ll find that this relationship is true in many circumstances. 

I am also sure there are many circumstances in which incentives lead to improved performance, even in complex and creative tasks. As with many aspects of human performance, there are complexities.
Life isn’t one-size-fits-all; there are individual differences and nuances of context that influence how incentives affect performance. Long-term goals, which are difficult to study experimentally, may work better with incentives.  Mr Pink presents the world in black and white; i am confident there are many shades of gray.

There is a bigger problem with linking incentives to measures, however.  Incentives, or consequences, have the tendency to put the focus exclusively on moving the needle—on affecting the data and the measure rather than addressing the underlying goal. Too much focus on the connotations of the measure, as opposed to the meaning of the measure, leads to gaming.

The Dilbert comic strip may seem ridiculous, but as is always the case in Scott Adams’ cartoons, absurdity reflects reality to an uncomfortable degree (many of his cartoons are based on real-life examples submitted by readers). Incentives can have unintended consequences, often encouraging employees to behave unethically. For example, if you were earning a subsistence wage as a packer for Green Giant, and the company announced that a bonus would be paid to every employee who could find and remove insect parts from packages of frozen peas, what would you do? Possibly what many of the employees did—bring insect parts from home to earn the incentive.

There are, of course, more troubling examples of the dark side of measurement-based motivation. In the sad story of system-wide cheating in Atlanta Public Schools, 178 employees, including both teachers and principals, are now suspected of inflating scores on standardized tests to earn the significant rewards that come with rapid improvements in school performance. Outright swindles, such as Bernie Madoff, are all too common.

In sales departments there are more subtle examples of gaming incentive systems. Sales departments have been known to count all sales in the current quarter toward commissions—even though many of the sales are not actually closed. 


It’s dangerous to rely too much on measures for motivation: The more you emphasize measures, the more apt the measures are to cause dysfunctional, even unethical, behavior.  If you need to use measures for accountability and incentives, be careful.  Measures can’t replace management; they are a management tool.  It is necessary to make sure that the measures are reasonable – not gamed – and that accountability is understood and positive. 

No comments: