“Tell me how you measure me and I’ll tell you how I’ll behave.”
This famous citation states an inherent conflict between the individual and the organization. The individual, according to Goldratt, behaves according to the way he is measured, which is not necessarily to the good of the organization.
Why would an organization measure its employees???
Do you measure the performance of your spouse, children or close friends? You have certain expectations, which are not always met, but do you look for ways to quantify your expectations?
What is the gain from performance measurements?
One real and important gain is to know whether you need to analyze much deeper how come the results deviate from your initial expectations. In order to get that objective you need recorded expectations. Now – expectations are never one clear number – are they?
As a father I expected from my children to achieve good grades from school, say B and above. Getting a low grade did not call for punishment, but we tried to understand the reason and what can be done next time. Other parents push their children much more. Is the push valuable? Certainly, treating the grades as performance measurements that invoke positive and negative reactions would improve the grades. The more important question is: would they improve the life of the children?
Do performance measurements improve performance?
Goldratt has shown us how flawed measurements could reduce global performance. There are three different causes for a performance measurement to radiate the wrong message:
- They are the wrong measurements.
- Dependency – the measurement depends not just on my performance, but also on other factors, like the performance of others.
- Variation. My performance varies. Some of the causes for the variance can be explained by external factors (like headache) and some have no clear explanation.
How significant is the variation factor? I like to watch sport on TV in order to spot the unexplained variation in the performance of the players. It is most noticeable in Tennis how the number of “unforced errors” and the “first serve percentage” fluctuate within one game. It demonstrates that the variation in our ability to do things is quite significant.
When the performance measurements ignore the impact of dependency and variation, the employee distrusts the measurement and is led to do whatever he can to manipulate them to his own sake.
See what we have got so far: ignoring complexity (dependency), ignoring uncertainty (variation) both are direct consequences of lack of trust.
Trust, or the lack of it, is a critical factor in life as well as in business and most certainly in managing organizations. The fact that the organization does not trust its employees and thus uses performance measurements actually causes the employees to distrust their bosses and pushes them to plan carefully their behavior – against the interests of the organization.
It all starts with the relationships between the CEO and the owners (shareholders and possibly the board). Every CEO likes to make sure the organization achieves the results that please the owners and makes him/her a highly appreciated CEO.
An obvious difficulty for the CEO is to make sure all other employees do whatever they need to do to achieve the results. Thus, when possible, they impose performance measurements to push their subordinates to make more efforts. Do they really make more efforts? Or do they just manipulate their available capacity according to the specific measurements and nothing else is important?
A simple cause-and-effect tree to showing the rush for using performance measurement on employees
Is there anything wrong with the above logic?
What do you think of entity 2.3 – is it really valid in reality? Let’s discuss it further to lead us to the direction of a solution.