The Tyranny of Metrics (Book Review)

The Tyranny of Metrics (Book Review)

Helping business leaders to identify the right metrics (key performance indicators) is a core part of my business coaching practice.

Metrics are used to measure the critical success factors that drive your current business model; the things you do every day to create leads, make sales, provide your products and services, keep your customers happy, grow cash and make profits. I call this stuff “Business As Usual”.  Here’s an article I wrote on The Benefits of Having the Right Metrics.

(Note: I use the terms Metrics and KPIs interchangeably – but prefer to use Metrics these days in an effort to reduce the use of 3 letter acronyms).

One of my colleagues referred me to a book called, “The Tyranny of Metrics”. Having read the book, I can say that it showcases the folly of excessive measurement or using poor metric choices in an organization. The content is similar to other articles I’ve read. I also wrote about this phenomenon in an article titled, The Dark Side of Goal Setting.

The book also warns against the practice of tying rewards/punishments to metrics. I’ve previously written about this subject in an article titled, Should KPIs be linked to remuneration? (hint: they shouldn’t).

The side-effects of poor metric choices.

The book gives many entertaining (and troubling) examples of the side-effects of poor metrics choices, for example:

Police officers measured on the number of drug arrests tend to focus on arresting low-level dealers and end-users on the street, because spending time investigating and making a case against the drug lord at the top of a criminal organization would cause them to miss their metric targets.

Police commanders measured on the crime rate ask their officers to not report some crimes, or to reclassify serious crimes as minor offenses to massage the numbers. For example, a house break-in gets recorded as “trespassing”. This practice is called “juking the stats”.

School teachers measured on the percentage of students who pass exams, tend to just teach what is going to be in the exam, rather than teach their students how to learn and how to prepare for life in the real world. This practice is called “teaching to the test”.

Universities measured on graduation rates lower their qualification standards, thus diluting the value of a university degree. Faculty members measured on the number of publications they write, go for volume over quality, leading to poor quality research articles.

In the Vietnam war, the US Secretary of Defense, Robert McNamara championed the metric of “body count” as an indicator of progress and whether the USA was “winning” the war. This led to Generals bombing indiscriminately, exaggerating the body count (not to mention risking soldiers’ lives to go out and search for corpses on the battlefield), and it did not diminish the North Vietnamese army’s willingness to fight.

Trying to make not-for-profit organizations like schools, universities, hospitals, and charities more “businesslike” by creating market-like conditions and offering monetary incentives to staff may be counterproductive and demotivating when people in these industries are more motivated by intrinsic factors like their core purpose and passion for their chosen vocation.

Yes, tracking safety records and infection rates in a hospital might be good metrics, but rewarding staff for cost-cutting might not be, especially if it negatively impacts the quality of patient care, and results in poor patient satisfaction and demotivated medical staff.

Inappropriate metrics can focus medical staff on what is measured rather than what is in the patient’s best interest. Surgeons measured on the success rate of operations refuse to operate on patients with more complex or difficult medical conditions as a way to maintain their success rate. This practice is called “creaming”.

Hospitals measured on 30-day mortality rates post-surgery, keep patients artificially alive for 30 days before “pulling the plug”.

Wells Fargo bank staff who measured on the number of new products they “sold” to customers opened additional bank accounts and issued debit/credit cards their customers did not request or need. (I experienced this fraudulent behavior first hand).

Choose metrics wisely.

Identifying, measuring, and discussing good quality metrics with your staff is key to being able to manage your organization effectively, but not everything that can be measured is worth improving.

Beware of letting measures replace your good judgment of “What is the right thing to do here?”.

Beware of attaching rewards or penalties to metrics lest they incentivize the types of aberrant behaviors described above.

When employee performance is judged by a few poorly thought through metrics, and the stakes are high (keeping your job, getting a bonus, raising the stock price at the time your stock options are vested), of course, people will focus on optimizing those measures, often at the expense of more important outcomes that are in the long-term interests of the organization and its customers.

My recommendation is that for every Metric you come up with, think carefully about the consequences.

Ask yourself, “If we focus on this Metric, what behavior is this going to drive in my people?”

And here’s the interesting one, “Is there a potential dark side to this behavior if it were taken to an extreme?

Think about the consequences of a person doing whatever it takes to achieve their Metric target. Are there any trade-offs or potential negative consequences?

For more information on this topic and examples of excessive measurement or using inappropriate measures, see my related article: The Dark Side of Goal Setting.

Choose wisely.

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Until next time…
Stephen

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