The Otis Redding Problem

The strong reactions to Marge's Asshole Management Metric not only got me thinking about the difficulties of managing nasty people (and the times when there might be a need for people to get nastier to defend themselves, an excellent if unfortunate point that Marge made), it started me thinking about metrics.  I have also been thinking about metrics lately because one of my doctoral students has been struggling with the problem of how to measure the effectiveness of user-centered design practices.

Both Hard Facts and The Knowing-Doing Gap review a lot of research about metrics. I confess that wading through the "best practices" claims, theory, and evidence in this area isn't easy. There is so much written and so many strong beliefs about how performance should be measured and how to motivate people (most unaffected by evidence) that figuring-out how to design an optimal  measurement and incentive system is tough, perhaps impossible.  We've even had compensation consultants tell us that it is such a great area to work in because clients always call you back for more work -- because no matter what kind of system you help them design or that they install, it never works quite right.

I can't claim to have any magic answers either (and don't believe anyone who tells you they do, like the authors of Topgrading or The War for Talent). But there is one guideline that few companies follow, even though they nearly all know they should (there is a reason we wrote a book called The Knowing-Doing Gap): If you measure and reward people on too many different dimensions, they are pulled so many different different directions (since different criteria are often unrelated or negatively related), that it is simply impossible to adjust 10 -- or in some cases -- 100 diverse behaviors in response to the system.  The result is that that your measurement system becomes useless or worse.

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). Yet many organizations fail to implement this well-known and common sense principle.

And the rise of balanced score cards –- which have many virtues when done right -– have made this problem even worse. As we say in The Knowing-Doing Gap “In principle, the balanced scorecard makes a great deal of sense. Rather than just measuring and evaluating managers on the financial performance of their units, which largely reflects what has happened in the past, the scorecard emphasizes getting ready for the future.” But one of the most common unintended side-effects is that people are assessed and rewarded with an absurdly long list of metrics. This happens because so many different groups in the organization want “their” metric to be measured and linked to incentives and because the groups that design and implement these systems (often in HR) often don’t have enough power or will to say “no.” Although HR certainly doesn't deserve all the blame. I once went to a talk at Stanford where a supply chain consultant and his client proudly announced they had just added their 100^th metric to the performance evaluation system (and this was just for supply chain performance).  I gently asked the executive who was trying to use the system if it created problems and he admitted that it was confusing and he ended-up focusing on just one or two. 

Similarly, we describe another example of the Otis Redding problem in The Knowing-Doing Gap:

A Harard Business School Case study reported that branch managers at Citibank [now part of Ctigroup]faced the following scorecard measures in 1996:

Financial:

Revenue

Expense

Margin

Strategy Implementation:

Total households

New to bank households

Lost to bank households

Cross-sell, splits, mergers households

Retail asset balances

Market share

Customer Satisfaction

Control:

Audit

Legal/Regulatory

People:

Performance Management

Teamwork

Training/Development

Self

Other

Employee Satisfaction

Standards:

 Leadership

Business Ethics/Integrity

Customer Interaction/Focus

Community Involvement

Contribution to Overall Business

Each component of the Scorecard was scored independently into one of three rating

categories: “below par,” “par,” or “above par”.

Pfeffer and I did an interview with a New York-based Citibank branch manager around that time -- we met him because bank executives reported that he was one of their best managers. The manager told us that, although it required a lot of time to fill-out all the forms and go to all meetings held under the balanced score-card system, he viewed it as a flavor of the month. He described it as just another program that he had to pretend to care about until management tired of it and became enamored with the next fad (which he would have to pretend to care about as well). This manager also told us that – despite all of the hype from executives about the importance of the new balanced-score card system – he believed that only one thing still mattered at the bank was generating short-term profits. So that was what he focused on doing, which was why he was so highly regarded.

Part of the problem was that he didn't believe that management was committed to the system, because he had endured one internal program after another.  But this program also wasn't taken seriously because, when a system tries to measure and link rewards to everything, it means nothing because human beings can only think about and do so many things at once.   

The upshot of all this is that I don’t know the secret to designing a successful performance management system and I am not sure that anyone else does either. But I do know that if you fall prey to the Otis Redding problem, your system is doomed to fail. 

 

Comments

[Jerome Alexander]

When will they learn that all management fads have a limited life! There are no "silver bullets" and no substitutes for good smart work. Worse yet is when some consultant tries to evangelize the workforce into believing in some "new religion" replete with its own rituals, icons, and Bibles. It's all intended to convince the masses that their attitudes about pay cuts, grueling schedules and idiot managers are wrongminded. God forbid (the real one)that anyone ever gets on the wrong side of one of these "prophets" by having an original thought or by daring to question the doctrine. Remember the Spanish inquisition? What an insult to the intelligence of employees and good managers.
Successful organizations innovate. They are honest with their workforce and respect divergent opinions. They do not need to use goofy gimmicks and play games with employees' psyches.
In fact, there is really only one thing that all successful organizations have in common - they are successful. Excerpted from "160 Degrees of Deviation: The Case for the Corporate Cynic."

[Dave Sovde]

The secret is a communication system that involves people more than surveys, software, studies, graphs, charts, etc...

I have had a highly-effective performance management system for over thirty years. Until last week, when I received a copy of the "You could be a genius..." article written by Simon Caulkin from an annonymous source, I had no idea what Performance Management and Performance Leadership could be about leading and managing people.

I was about to self-publish a book, but I am back to the drawing board as I realize the market is much larger than I had previously estimated.

It should be ready about the time "The No Asshole Rule" is published. One of the twenty "Team Achievement Truths" is "No Time For Jerks."

You book sounds very interesting. I am looking forward to its release.

My system, the OneByOne Team Achievement sytem is a combination of lessons learned in my business administration minor in college, as a member of a college football team, the Army, and the JC Penney company where the 80% of my program was structured.

JC Penney died the second year I was employed. Until then, it was a company focused, every day, day after day, one by one, on being the best of the best. Best of the best, step one in an effective PL system.

What would the best of the best do?

Does anyone know a better way than the best of the best way?

Apply those two questions to every issue, situation, everything!

I am amazed at how difficult the corporate bottom-line mindset, HR functions, and the never-ending search for great software has taken businesses away from motivating, educating, and appreciating employees face-to-face.

Radio Schack brags about the efficiency of firing 400 staff, many who worked in the same complex, with an e-mail. "Oh, they knew it was coming." A total disconnect from any awareness at all of the damage that did to a struggling company. I wonder how much extra-effort their employees perform for the company?

I've read a lot about Performanmce Leadership, Performance Management, and Performance management Leadership in the past few days. Thank you for being a part of what I have learned.

Fo me it is simply a matter putting every employee into a team. Train the team leader to be a LeaderManagerCoach who can create, energize, lead, and retain an entire team of exceptional employees.

HR is a support function with no power over the team. They are in charge of recruiting and orientation if they exist at all.
In my system the team is a part of recruiting and orientation. I have never advertised for an employee, yet I had ne problem making s=certain everyone was a positive producers.

A simple communication that just makes sense.

People support what they hep create.