How Metrics Can Be Used and Abused by Management

Metrics Ecosystem

How do you hold workers accountable? How do you hold yourself accountable? How can annual reviews based on concrete results and bonus models still be logical in an ever-changing world of metrics and working styles?

In his book, Managing for Happiness, Jurgen Appelo says that the way people measure performance in organizations is often “just plain wrong”.

We measure to understand how to live a better life, both mentally and physically. For organizations it’s no different. As managers we want to know: ‘Do we take the blue pill, or the red one, or the colorful ones with the letter M on them?’ Such decisions require insight and insight requires measurement.

Jurgen Appelo, Managing for Happiness
Lightbulb People

But some of us hate numbers and others struggle with charts. Most people actually have no idea how to measure well. Many companies measure very little, operating with scant insight until they hit a roadblock (or a tree) and are forced to reevaluate.

Not only is measurement one of the most important activities, it can also be easy, fun and motivating. The more you do, the more you’ll want to do and don’t forget that what gets measured gets managed and what gets managed gets done.

So what can we change?

Hone in on the 12 rules of good metrics if you want to establish a culture where people see measurement as a way to learn, improve and create an organization where all workers participate in the metrics ecosystem.

12 Rules for Measurement

Rule #1: Measure for a purpose: You must always understand why you are measuring. The metric is not a goal in itself. Never forget that it’s just a means to an end. It all starts with why.

Rule #2: Shrink the unknown: A metric is just a surrogate for what you really want to know. Don’t jump to conclusions. Always try to reduce the size of what is still unknown.

Rule #3: Seek to improve: Don’t only measure things that will make you look good. There is plenty of data around, but you must focus on what enables you to do better work.

Rule #4: Delight all stakeholders: Your work depends on others, and others depend on you. Never optimize for just one stakeholder. Instead, measure your work from multiple perspectives.

Rule #5: Distrust all numbers: Observers usually influence their own metrics, and they suffer from all kinds of biases. Have a healthy, skeptical attitude towards any reported numbers.

Rule #6: Set imprecise targets: When people have targets, they have an inclination to focus on the targets instead of the real purpose. Avoid this tendency by keeping your targets vague.

Rule #7: Own your metrics: Everyone is responsible for their own work, and metrics help us improve that work. Therefore, everyone should be responsible for their own metrics.

Rule #8: Don’t connect metrics to rewards: Rewards often kill intrinsic motivation and lead to dysfunctional behaviors in organizations. Don’t incentivize people to do work they should like doing

Rule #9: Promote values and transparency: Human beings are smart and able to game any system. To prevent gaming, be transparent about values, intentions, and the metrics everyone is using.

Rule #10: Visualize and humanize: Numbers tend to dehumanize everything. Replace digits with colors and pictures, and keep the measurements close to where the actual work is done.

Rule #11: Measure early and often: Most people don’t measure often enough. Measure sooner and faster to prevent risks and problems from growing too big for you to handle.

Rule #12: Try something else: It’s rarely a good idea to do the same things over and over. The environment changes all the time. The same should apply to how and what you measure.