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Against metrics: how measuring performance by numbers backfires - Jerry Z Muller | Aeon Ideas
Incentivizing Leads to Gaming
The rewards of the metric performance measurement can be as a form of a monetary bonus, stocks or just an enhanced grade or designation, leading to competition among employees. This leads to many employees gaming the system to affect the bottom line of their metrics.
Example: Surgeons can refuse to treat patients having a complicated condition, as it may affect their failure rate.
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Metric Fixation
Metric Fixation, an epidemic in most of the world's biggest companies is a way to measure employee performance primarily by numbers, counted, tallied, compiled and analyzed in daily, weekly or monthly intervals.
Ignoring Real Values
Metric fixation can make employees ignore the real values and goals of the company and focus on their short-term weekly or monthly goals so that they keep their jobs, get a pay raise or have their stock options out at the right time.
Millions of Hours Lost
On a macro level, metric fixation can lead to companies focussing on the quarterly report while ignoring any real R&D work, that takes years to provide any result.
Companies also suffer millions of hours of productivity loss due to employees maintaining performance records, a lot of expenses spent on recording and tracking tools, and the time it takes to read or analyze the numbers.
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Extensive Data studies have found a link between the health of an organization and its performance.
Robust health is crucial to an organization's long term success.
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Why We Judge Others
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The way you measure yourself is how you measure others, and how you ...
Judging Mindfully
Traits we will not tolerate within ourselves, we will not tolerate in others. It is a choice we make. We should make those choices consciously and not without thinking.
It’s why corrupt officials choose to be corrupt: because they assume everyone else is as corrupt as they are. It’s why cheaters choose to cheat. It’s why those who can’t trust are the ones who can’t be trusted.
Recognize our own fixation
Recognize how you measure yourself and consciously choose your metric. Also, realize that everyone has their own criteria that will not be the same as yours.
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The Peter Principle
It refers to an observation wherein people who perform well in their job gets promoted until eventually, they will reach a stage where they are incompetent for that job.
The Evidence for the Peter Principle
A study looked at promotions and performance of some 40,000 sales workers across 131 firms.
It showed that the best salespeople as measured by sales revenue are more likely to be promoted (top figure) but their value added as managers actually declines in their sales revenues (bottom figure).
The "Purpose" of Promoting Workers
- To assign the suitable person to the managerial role.
- To motivate workers excel in their current roles.
However, If firms promoted workers on the basis of managerial potential rather than current performance, employees may have fewer incentives to work as hard.
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