The Problem with Traditional Management Assigned Metrics
For as long as I can remember the conventional wisdom in business has been that employees need to know how they are being measured in order to thrive. It definitely ‘feels’ right and it seems to make perfect sense. If employees do not know what are the standards for their work they won’t meet or exceed them, and they will end up guessing what they should be working on. More often then not, it is argued, they will guess incorrectly and will focus on the wrong things hurting the business and themselves in the process.
I would agree that for many, or perhaps even most workers this is probably true, however, I would also argue that there is another subset of employees for whom metrics may do more harm then good, and can end up becoming a straightjacket that stifles their growth. Not only can the employees be negatively impacted by metrics in these situations, but, just as critically, so can overall business performance. The employees most vulnerable to the downsides of metrics tend to be the higher performers, the more naturally gifted, the more creative, the ones most people want on their teams. Give a highly driven, motivated, and talented individual a set of metrics and you can bet they are going to do everything they can to meet or exceed them. They will focus on the metrics with a laser like intensity, often to the exclusion of all else. Generally this is thought to be a good thing, but it can actually be a detriment to the overall success of the endeavor. The problem lies in the unspoken assumption at the heart of metric design, that the designer(s) is/are smart enough to know which are the optimal metrics for the business in question. In many cases, especially for highly complex or technical businesses, that is not true and by focusing the most talented persons on what are perhaps the wrong targets they miss any chance they might have had to see things a different way.
Of course one may argue that if that’s the case then one is simply using the wrong metrics. A more clever person or management team could see or devise a measuring system that would always lead to successful outcomes and never result in the unintended consequence I describe. I would agree this is possible but suggest it is unlikely. In highly complex businesses and even some simple ones it is not possible to know all of the factors that do or could contribute to success. Without that knowledge it is impossible to design appropriate metrics to gauge a given employees contributions toward them. The only way around this is to suggest very broad metrics that allow for flexibility but still give at least the appearance of specificity. However, this is very difficult in practice and metrics that are too broad/fuzzy are basically no metrics at all. The question ultimately becomes what percentage of people and businesses fall into the camp where metrics are needed and valuable, and what percentage the other where they are counter-productive and stifling to growth? I don’t know they answer but believe it is much higher than the conventional wisdom would suggest.
Alternatives to Traditional Metrics
Self and Peer Designed Metrics
Are there any strategies that might be employed as alternatives to traditional metrics set by management? One possibility is allowing the employee(s) themselves to determine how their performance is to be measured. Obviously this is a risky strategy and requires the employee(s) in question have a very solid understanding of the goals of the business, both financial and societal. They must be able to “see” how their individual contribution fits into the bigger picture and overall strategy of the business. Knowledge of the philosophy of the business and its overarching goals required of such an approach can be shared and/or taught. However even armed with such knowledge not all employees will have the ability to think strategically in the manner required to make it work. Fortunately, the employees who would most benefit from this approach should be the highest performers who also tend to be very good strategic thinkers. A variation of this method would be to allow the close peers and colleagues of the employee to establish the metrics and then be responsible for assessing performance against them.
Non Metrics Based Systems and Conclusions
Though the alternatives I suggest shift responsibility for design to either the employee(s) or their peer(s)/colleague(s) they still both require the establishment of metrics. Because of this they both still can fall victim to the design problem I described for traditional systems. What about evaluation systems not based on measure driven outcomes? At first blush the idea seems ridiculous, a bit like asking how to measure a distance without a measuring stick. I think the key here is to recognize that their exists at least two distinct styles or flavors of performance evaluations. Those that are metrics based are (purportedly) objective and not subject to any interpretation. The employee either hits their goals as defined by their metrics or does not. Non metrics based evaluatory systems are by their very nature much more, or arguably even, totally subjective. In this type of system a given employees performance is judged not by accomplishment (or not) of specific tasks or goals with measurable outcomes, but rather by other less tangible qualities and non measured results/outcomes. Obviously this type of system is rife with potential for abuse and misuse, and I do not suggest it be attempted in just any business and with just any employee(s). The things that tend to fall in this category are often mushy and soft and hard to define. They may be people/communication related such as how well they “get along with” or “inspire” their co-workers or how well they “fit with the desired business culture” or they can be more financial/business success oriented such as “what was their overall impact on results for the year.” Remember though in a case like this you are not measuring this “impact” in any direct way but only indirectly through what you know of their role in various business transactions of financial importance. It should be obvious just how difficult it would be to fully and fairly implement an evaluation system of this type so in practice most non traditional evaluation systems tend toward a combination of traditional management defined metrics, peer and self designed metrics, and peer and self non metrics based approaches. Flexibility is key and I would suggest if you find high performing employees not living up to their potential taking a hard look at one’s employee evaluation system a good place to start to look for reasons why this might be the case.