The measurement/performance feedback loop causes an addiction to a single metric. The addict will exclude what is really important.

There is a famous adage: you get what you measure. When an organization measures a specific activity or process, people tend to execute so they maximize their performance against that measure. Managers and change agents often create measures to incentivize teams or individuals to perform work in a specific then to generate a feedback loop. The measurement/performance feedback loop causes an addiction to a single metric. The addict will exclude what is really important. Chasing the endorphins that the feedback will generate is the sin of lust in the measurement world. Lust, like wrath, is a loss of control which affects your ability to think clearly. Balanced goals and medium to long-term focus are tools to defeat the worst side effects of measurement lust. The ultimate solution is a focus on the long-term goals of the organization.

How does this type of unbalanced behavior occur?  Usually measurement lust is generated by either an unbalanced measurement programs or performance compensation programs.   Both cases can generate the same types of unintended consequences. I call this the “one number syndrome”. An example of the “one number syndrome” is when outsourcing contracts include penalty and bonus clauses based on a single measure, such as productivity improvements.  Productivity is a simple metric that can be affected by a wide range of project and organizational attributes. Therefore just focusing on measuring just productivity can have all sorts of outcomes as teams tweak the attributes affecting productivity and then review performance based on feedback.  For example, one common tactic used to influence productivity is by changing the level of quality that a project is targeting; generally higher quality generates lower productivity and vice versa. Another typical example of organizations or teams maximize productivity is to throttle the work entering the organization. Reducing the work entering an organization or team generally increases productivity. In our examples the feedback loop created by fixating on improving productivity may have the unintended consequence.

A critical shortcoming caused by measurement lust is a shift toward short-term thinking as teams attempt to maximize the factors that will use to just their performance. We have all seen the type of short-term thinking that occurs when a manager (or an organization) does everything in their power to make some monthly goal. At the time the choices are made they seem to be perfectly rational. Short-term thinking has the ability to convert the choices made today into the boat anchors of the next quarter. For example, right after I left university I worked for a now defunct garment manufacturer. On occasion salespeople would rush a client into an order at the end of a sales cycle to make their quota. All sorts of shenanigans typically ensued including returns, sale rebates but the behavior always caught up one or two sales periods later. In a cycle of chasing short-term goals with short-term thinking, a major failure is merely a matter of time. I’m convinced from reading the accounts of the Enron debacle that the cycle of short-term thinking generated by the lust to meet their numbers made it less and less likely that anyone could perceive just how irrational their decisions were becoming.

The fix is easy (at least conceptually). You need to recognize that measurement is a behavioral tool and create a balanced set of measures (frameworks like the Balanced Scorecard are very helpful) that therefore encourage balanced behavior.  I strongly suggest that as you are defining measures and metrics, take the time to forecast the behaviors each measure could generate.  Ask yourself whether these are the behaviors you want and whether other measures will be needed to avoid negative excesses.

Lust rarely occurs without a negative feedback loop that enables the behavior. Measures like productivity or velocity when used for purely process improvement or planning rather than to judge performance (or for bonuses) don’t create measurement lust. Balanced goals, balanced metrics, balanced feedback and balanced compensation are all a part of plan to generate balanced behavior. Imbalances of any of these layers will generate imbalances in behavior. Rebalancing can change behavior but just make sure it is the behavior you anticipate and it doesn’t cause unintended consequences by shifting measurement lust to another target.