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Incentivizing Leads to Gaming

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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The way you measure yourself is how you measure others, and how you assume others measure you.

If you measure your life by how much you’ve traveled, then you will measure other people by the same standard. 

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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).

Organizational Health

According to a decade long research, the health of an organization is based on alignment with a robust strategy, deep-rooted culture, and a clarity of vision.

The health of an organization can also be defined as the capacity or ability to deliver superior financial and operating performance.