General management

Performance targets considered harmful

Earlier this week I was involved in a discussion about staff compensation, and one of our number said, in response to someone who was struggling with the issue, “Does your team have targets? Get rid of ’em.” I couldn’t have agreed more.

One major problem with targets comes about when they are different from the core thing the company is doing. For example, the number of features delivered by a software team may be a rough guide to their productivity, but is the team’s productivity really helping the customers get their widgets? As soon as you target the team members on this figure they will aim towards it to the exclusion of the end goal. You also end up creating or reinforcing a silo — suddenly the team is no longer interested in helping customers get widgets, it’s a team whose purpose is productivity, divorced from anything else.

A key phrase to watch out for is “is a proxy for”. For example, in a call centre: “Call duration is a proxy for resolved problems”. As soon as people are motivated towards a proxy the real target is forgotten.

At Øredev 2010 John Seddon gave an example of a service team whose managers thought they were meeting 100% of their targets, closing all their cases in 25 days or less. But the real work was not about closing cases; it was about resolving their customers’ problems. When they looked at the real activity that went on, they found that a single customer’s problem might be broken into four or more cases precisely because the staff were motivated by a 25 day case-closure time. From the customers’ point of view their problems were really taking 50 or 100 or 150 days to resolve. False targets obscured the reality and let an failing system remain in place. John says (at the 33:34 point):

If you hold people to account with arbitrary measures they learn to do anything to meet the arbitrary measures, and that is not the same as serving the customer.

There are other problems with performance targets, but that’s enough to be going on with.

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