Overly-relying on tangible metrics is a common trap that many companies fall into when evaluating performance. Using metrics to measure performance will, at best, tell an incomplete story; at worst, this method can lead to fraud and intentional dishonesty.
I love baseball. I played it as a child from when I was 6 to 16 and it’s always been my favorite sport to watch. To me, there is nothing I’d rather do than relax with a cold beverage and watch the Boston Red Sox. And no, the games aren’t too long!
However, there is one baseball trend that bothers me: the consistent gaming of performance metrics to make points about a player or team. Those moments when ‘talking heads’ use very specific metrics and manipulated sample sizes to make arguments and paint pictures that don’t tell a full story.
Let’s look at an example using two pitchers, Pitcher A and Pitcher B. The metrics measured are ERA (earned run average), Opp BA (opponents’ batting average), strikeouts per 9 innings (K/9), and hits per 9 innings (H/9).
While Pitcher A averages more strikeouts, he also gives up more runs and more hits. Using the presented metrics, any reasonable baseball manager would prefer Pitcher B, especially in the playoffs.
The two players? Chris Sale (Pitcher A) and Drew Pomeranz (Pitcher B) of the Boston Red Sox. If you follow baseball, you’d know that no reasonable person would take Pomeranz over Sale. And yet, by using a very specific sample size (each players’ 5 best starts in September 2017) and set of metrics, you can make a convincing argument for it, right? The old saying “statistics don’t lie, but you can lie with statistics” rings true; by consciously “gaming the metrics” I am not telling the whole story.
Overly-relying on tangible metrics is a common trap that many companies fall into when evaluating performance. Using metrics to measure performance will, at best, tell an incomplete story; at worst, this method can lead to fraud and intentional dishonesty. In his piece “The Five Traps of Performance Measurement” in the Harvard Business Review, Andrew Likierman runs through five common mistakes leadership makes when using metrics to measure performance. Likierman discusses five specific “traps” that companies often fall into:
Measuring Against Yourself
Putting Your Faith in Numbers
Gaming Your Metrics
Sticking to Your Numbers Too Long
Let’s look at the “Gaming Your Metrics” specifically. Going back to the baseball example, a ‘talking head’ could make the argument that Drew Pomeranz is a better pitcher than Chris Sale. However, if we were to expand the metrics, you would see this isn’t a strategic choice. Here is that same set of statistics, but across the entire 2017 season:
Seeing the full spectrum, the statistics speak for themselves; Chris Sale (who finished second in 2017 Cy Young Award voting) is by far the better pitcher. If your sole argument is to present the facts that only meet your agenda, you are cheating the metrics. Likierman writes,
“THE MOMENT YOU CHOOSE TO MANAGE BY A METRIC, YOU INVITE YOUR MANAGERS TO MANIPULATE IT. METRICS ARE ONLY PROXIES FOR PERFORMANCE.”
Think about performance reviews. If an employee inflates their metrics (maybe claiming they closed more sales than they did) to obscure actual performance, then that person is ultimately damaging the company. A company may set false budgets or punish other employees for not making similar sales numbers. It’s too risky to measure performance through metrics entirely.
There are many options companies can take without wiping out metrics measurement completely. Here are three things to consider.
Increase the number of metrics. One of the best ways to keep employees from gaming a performance metric is to increase the number of metrics used to evaluate performance. It’s easy to cheat one number; it’s a lot harder to cheat ten.
Stop focusing on just the financials. Financial metrics do not usually tell the full story of a project, and many times don’t even apply to certain situations. For example, a marketing manager working on a brand recognition project may find it difficult to determine the campaign’s ROI. How can you put a financial number on a project related to something intangible like “Brand Awareness”? By putting less emphasis on tying performance to metrics like budget goals or ROI, leadership can reduce the risk of employees trying to game those metrics; there’s no incentive to cheat on something that doesn’t have a large impact on your performance evaluation.
Measure the intangibles. Companies can’t measure things like integrity and work ethic and still, they are important factors to consider in employee performance. In sports, you might hear something like the “Clutch Factor” when discussing a player. For a final comparison using Chris Sale, we’ll compare his stats to current Chicago Cubs Pitcher (and former Red Sox great) Jon Lester, but this time in the playoffs, and using Win Percentage instead of Opponent’s Batting Average:
Lester’s regular season stats may not be as good as Sale’s, but when the lights are brightest the two are incomparable. Lester has been an integral part of three World Series wins; Chris Sale has yet to win one playoff game. In the same way, an employee who has good rapport with customers and can work through concerns is someone you want to applaud. People can game ROI but not their work ethic.
Gaming performance metrics will always be an unfortunate side effect of their use. Whether it’s a sports writer making an argument in a column or a finance director trying to increase their bonus, someone somewhere will be trying to cheat. By increasing what you measure employees on – the tangible as well as the intangible – you will help create a deep bench for your organization.