Sunday, August 12, 2012

Myths of Measurement: Talent Measures Have No Side Effects

Medication and medical procedures have side effects. Side effects can be harmless (too much niacin can cause blushing) or serious (statins can cause muscle damage). These medications work within the complex chemistry of the human body, and how a person will experience a side effect is unpredictable.

Talent measures are not that different. They work within complex human social systems, and they alter these systems—often in unintended ways. In other words, they have side effects. The side effects most often affect motivation.

There are many ways to increase organizational performance. Many are effective, few are ineffective. And a few can actually damage the organization. Measurement falls into this last category. Because measurement can have negative outcomes, it is worth knowing how these results come about and how they can be managed

When We Measure, We Expect Results

Talent measurement often has the goal of understanding, motivating, or directing workforce performance.  This idea is summarized in the phrase what gets measured gets managed, which is sometimes attributed to Peter Drucker. This phrase is universally framed in a positive light—just measure and results will improve.  

The challenge is that this catchy phrase doesn’t consider the complexity of human performance in organizations. We often measure to get a reaction, but we expect the workforce to react in predictable ways. In reality, measurement can have the intended, positive effect—increased motivation, aligned effort, and focus—or it can have unintended negative effects that result in counterproductive changes. 

Every Measure Motivates

It’s important to remember that every measure has the potential to motivate someone, somewhere. When you review marketing data to decide which product should receive more investment, someone is motivated to receive the investment. 

Consider balanced scorecards. Kaplan and Norton developed the scorecard as a strategic learning and steering tool. The scorecard is presented as a network of hypotheses that reflect strategy, referred to as a strategy map. The scorecard’s measures are intended to reveal whether the strategy and operations are working. Essentially, the measures test the validity of executive hypotheses and assumptions. 

As with many measurement systems, the intent of scorecards, at least initially, was to make decisions. Because each scorecard measure reflects directly on a different function within the organization, however, every measure will also motivate someone, somewhere in the organizational structure. In fact, a balanced scorecard is a motivational system. 

Regardless of incentives, balanced scorecard measures are scrutinized at the highest levels of an organization. Part of the motivation associated with scorecards is simply that people don’t want to look bad. 
Some organizations have gone so far as to link scorecard measures to individual executives. Simply reporting the measure makes the executive responsible. Other organizations have formalized this motivation system by developing cascading incentive systems that link the strategy of the organization to departments down and across the organization.

I’ve helped organizations use scorecards this way, and generally I see it as positive. It’s better to be deliberate in setting up motivation systems, because allowing random motivation systems to emerge can be damaging.  

Too often, organizations often proceed as if measures intended to be used for decision making won’t have a motivational effect. In other cases, organizations create measures with the intent to motivate, but assume that the measure will only have the intended effect. It’s important to remember, regardless of intent, that any measure will have motivational properties.

Strange Motivations

There are endless examples of the unintended motivational effects of measurement, also known as perverse incentives. One well known example is called the “Cobra Effect.” In British-controlled India, the government’s reward for every dead cobra—a reward intended to reduce the number of deadly snakes—resulted, of course, in people breeding cobras for income. A similar situation happened in Hanoi, under French colonial rule. In this case, the government paid a bounty for each rat pelt. Again, a program intended to exterminate rats instead led to rat farming.

But don’t think we’ve gotten smarter. IBM faced a similar problem when it decided to pay its programmers by the line. The programmers responded, predictably, by increasing the number of lines they wrote in each program. Instead of producing more programs, faster—the intended effect—the programmers simply wrote more complicated, and less elegant, code.

In some colleges, professors are rewarded for high scores on student evaluations. More often than not, this leads to easy courses and inflated grades, rather than improved accountability. Academic researchers are rewarded for a large number of publications. While the intent is to improve research productivity, the result is often incremental papers and little innovation. 

In the K–12 world, teachers are being rewarded for increased student test scores. Rather than improving education and teacher effectiveness, the effects have been teaching to the test and an emphasis on short-term learning.

Motivation and Measurement Are Personal and Social

The key to understanding these strange motivations is remembering that each employee, manager, and executive experiences his or her own context. Employees make meaning out of measures and measurement data, and they come to their own conclusions based on personal comparisons, context, and connotations

Personal conclusions and insights can be difficult to predict. All sorts of dysfunctional behavior can be observed in complex organizations. There are always challenges: What matters to one individual is often not what matters to the organization. It’s foolhardy to proceed under the assumption that all the people involved—measure developers, the executive team, employees—have the same worldview.

Many talent professionals assume that formal incentives, such as pay and advancement, are the primary motivators for employees. But there are other motivation systems have huge effects in organizations. These shadow incentives exert a powerful force on individuals. Personal relationships and social structures matter in organizations. This is the important conclusion of the Hawthorne studies, which showed that employee behavior, and organizational productivity,  is strongly related to social contexts.

A Shadow Incentive System

About a decade ago, a large telecommunications company started a program that encouraged repair technicians to develop their troubleshooting skills, in part by pursuing an associate’s degree in telecommunications technology. The company assumed that highly skilled technicians would be better at fixing problems, and that their increased skill would reduce the number of repeat service calls.

Despite the multi-million dollar price of the training initiative, repair technicians never repaired more than three phones a day. The company’s management, understandably baffled, hired a team of researchers to look into the problem.

The problem turned out to be shadow incentive system. An anthropologist joined the technicians in their trucks, watched their interactions, and found that the technicians had simply established a norm: three phone repairs per day. Anyone who worked faster was punished and shunned—serious disincentives. One technician who broke the rule had a tool dropped on his head by another worker on a pole above him.

This was the social element—team norms were strictly enforced. There was also a financial incentive. By reducing the number of repairs, the technicians were able to nearly double their income with overtime. The formal compensation and reward system simply didn’t matter. The shadow incentive system was much stronger. Ultimately, the program was discontinued.

What’s also interesting is that some workers weren’t consciously aware of the enforced repair limit. It took an anthropologist—an outsider—to see what was really happening. People often aren’t aware of the basis for their actions.

Understanding and building motivation systems requires insight on an individual and organizational level.

The Side Effect of Surveying Engagement

Many organizations now measure employee engagement with surveys, share the results, and hope the information will encourage managers and teams to improve. This feedback process is potentially positive and powerful.  

But conducting a survey—asking employees what’s wrong and how to make things better—can raise expectations. If the organization fails to make improvements based on survey feedback, the result can be the opposite of what was intended: lower morale. In these situations, survey results do little more than give dissatisfied employees something else to complain about.

In addition, managers and employees react to surveys and measurement according to their idiosyncratic worldviews. While one manager may work to improve engagement and expect her team to respond honestly, another manager may simply ask the team to rate survey questions higher, as a personal favor.

To manage the unintended side effects of surveys, we need to be aware of the expectations, strange motivations, and personal connotations that will inevitably come into play at different levels of the organization. 

If we’re aware of these different contexts, and the survey is framed in a forward-looking agenda, the results can help management focus employees on the positive aspects of improving the organization

In practice, it’s best to formally assign executives responsibility for the measures. Assigning accountability is going to happen anyway. Formalizing this effect increases transparency and openness across the organization.

Must We Measure Everything?

One of the challenges in measuring employees is that good measures are hard to find. If we’re going to evaluate a proofreader’s work, for example, the only way to measure the quality of the work would be to ask another proofreader. And who is going to evaluate the proofreader’s evaluation? Obviously, we can’t have a perfect measure of everything.

The lesson here is, don’t measure for the sake of measurement. A bad measure can create a bigger problem than not measuring at all.

If you can’t find a good measure, it might be worth looking for another way to monitor and motivate performance. In the case of the proofreader, you could consider surveying customers, who will have a sense of the quality of work. 

It’s worth asking the question: Do you really need a measure for this, or are you measuring because that’s what people do? 

Reducing Negative Side Effects: Managing Measures

As we have seen, measurement can lead to misalignment and malfunction in an organization or, for that matter, a country. Perhaps we should think about this differently: What gets measured needs to be managed. To be successful, we need to manage both the measure and its meaning.

If we can be deliberate in setting up motivation systems, being aware of the possibility of perverse incentives, it’s less likely that random motivations or shadow incentive systems will undermine the organization.

For measures to have their intended effect, it’s necessary to manage the meaning and the context. As always, communication is the key to successfully using measures.

I’ll write more about building shared meaning with measures in the next post.

1 comment:

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