I exchanged emails with a manager I know today who was concerned that her company might be heading toward the Otis Redding Problem in its compensation system. As I said in my post last week, “ We call this The Otis Redding Problem. Recall the line from his old song: Sitting By the Dock of the Bay, “Can’t do what ten people tell me to do, so I guess I’ll remain the same.” That’s the problem with holding people, groups, or businesses to too many metrics: They can’t satisfy or even think about all of them at once, so they end-up doing what they want or the one or two things they believe are important or that will bring them rewards (regardless of senior management's strategic intent).”
There are lots of reasons that this problem happens in organizations, but – at least based on those I’ve studied and worked with – four jump-out:
1. There are too many groups that have medium power – so everyone gets a metric to show that what they do is important, but no one has the power to kill a metric.
2. Senior management does not understand its strategy, especially is strategic priorities. So they treat everything as moderately important – the result is that employees can justify virtually anything they do as important.
3. Senior management does not really understand what the organization’s actual business model is or what it should be. This means that they can’t figure out the few key elements that drive many things, so they keep adding more and more items to the list in hopes that they will figure it out eventually.
4. Senior management can’t say no. Even if they can articulate their priorities, senior management lacks the courage to make enemies. So they cave-in when people act hurt or threaten to leave the organization unless metrics are added that make them and their kind look important. The result is that everyone ends-up being unhappy. At one organization I worked with, there was endless argument over compensation because each general manager would focus on the subset they performed well on and ignore those metrics where performed did poorly. Everyone seemed to be #1 at something and everyone used that as argument that they deserved more compensation.
Leaders who lack such courage might recall the old Bill Cosby quote: “I don't know the key to success, but the key to failure is trying to please everybody.” Otis Redding’s solution was to “remain the same” because he couldn’t please 10 different people. That is a rational response to a bad system. Things get even worse when you try to please everyone – at least Otis pleased himself!