Caution: Measurements and Accountability May Be
Hazardous to Your Health!

by Dave Garwood

Beware: performance measurements and holding individuals accountable for performance may drive people to the wrong behavior and backfire on you. At this point, you could reach the wrong conclusion ... Don't measure and you make the business a free-will, no-responsibility environment. Pass the sandals and incense. Wrong conclusion! Let's take a closer look at two varieties of accountability and how to use performance measurements to get positive results.

Accountability: Heartfelt or Gun-to-Head?

Suppose you're walking to work early one morning. Just as you get ready to step into the building you look into the street and to your horror a small child is wandering into the busy traffic intersection. What do you do? Of course you get the child out of the intersection. You don't care about the chain link fence or that your new suit might get ripped. You don't worry about destroying your pantyhose by climbing over traffic barriers. You don't think about the day's reports in your briefcase, left behind on the curb. Why do you take action and the risks? The child isn't yours. You are not responsible for her. No accountablity or measurements in this case. The answer is simple. It's the right thing to do!

That's heartfelt accountability -- doing what is right, not motivated by any measurement.

Sure, that's an extreme example. But, generally, people will take corrective action and get results if they feel the action is the right thing to do. It doesn't take measurements to enforce performance.

Sometimes we forget this basic fact when we're moving our company toward the high-speed manufacturing environment of the future. I hear a lot of words about "executive mandates" and "100% commitment." The operative phrase becomes, "do this ... or else." The "or else" is usually unstated, but our people aren't dumb. In a world of "rightsizing" and other popular acronyms for "you're fired," people clearly understand the concept of a gun to their heads, aka Gun-to-Head accountability.

The actual gun itself is usually the measurement systems we put in place and how they are used. It's an old saw in the quality movement that, "You can't manage what you can't measure." It is also a usually unstated truth that measurements drive actions and shape behavior. For example, we can hold a gun to our people's head for productivity. But unless there is a heartfelt accountability, all you're going to achieve is people who become expert at reporting high productivity (not to be confused with high productivity performance) or shifting the blame somewhere else ... the CYA syndrome!

Measurements: Be Careful!

Often, the measurements we put in place hurt our cause of heartfelt accountability. For example, we may measure our purchasing function on purchase price variance. But are lowest prices what we're really looking for? No. We also need on-time delivery, quality without inspection, frequent deliveries, short lead times, sharing of technical ideas -- that proverbial supplier partnership. But what message does emphasis only on the purchase price variance measurement send?

Another example: We can measure on-time delivery from the plant floor or a supplier and assign accountability for 100% on time performance ... or else. However, if people don't believe the schedules, they won't work to the schedule ..... and for good reason. They know they must work on what's really needed. Their innovative minds will focus on developing informal systems, not meeting the schedule, to figure out what is really needed, despite the new, expensive, Y2K compliant ERP software. Measuring performance to the schedule will be meaningless.

We often measure things that are easy to measure, not necessarily what reflects the expectation of the business process we are managing. When asked why we measure direct labor efficiency (as opposed to total productivity), the Industrial Engineer and Cost Accountant replied, "Because we can!" It reminds me of an old-time manufacturing manager who told me he could tell how things were going in his factory by the noise level -- quiet was bad. Too many factories still measure machine utilization, even though it sends the wrong message to the troops. The expectation from the plant floor is to make only as much as the customer wants, when they want it and spend as little total dollars doing it as possible. Efficiency and utilization do not measure the performance to that expectation. Yet utilization is easy to measure and creates the false illusion that high utilization results in larger profits!

Given that measurements drive behavior, how do we best assure both heartfelt accountability and correct measurements? First, we need to foster an environment where heartfelt accountability can grow. We want people to take action because it's the right thing to do, not because they feel threatened. Secondly, we need to insure the performance data is used constructively. Here are a few critical elements that insure the measurement system is effective:

1. Measure processes, not people. The single key insight on which the quality movement is rooted is that processes, not people, are almost always the culprits in performance not meeting expectations. Measurements are made to find out what went wrong, not who messed up.

2. Measurements are to be used to stimulate corrective action, not inflict punishment. The question is what went wrong, not who. And remember, employees often have a different view of "punishment" than management.

3. Clearly state your expectations when the performance data is bad news. For example, the non-negotiable actions when the expectation is not met are: 1) correct the problem, 2) be looking for root causes of the problem, or 3) have a hand in the air asking for help. All three of these actions get an equally high individual job approval rating. Ignoring the problem or sweeping it under the rug is equivalent to making a career decision!

4. Measurements should always evaluate what's expected of the process; not what's easy to measure. Wrong or meaningless measurements are nonvalue-adding activities. Discuss and clearly define the expectations of the business process being measured. Then establish a measurement that measures performance to that expectation.

Making the correct measurements is crucial to effectively managing any business. Carefully evaluate your measurement systems. Are they encouraging heartfelt accountability? Or are they the crosshairs of a gun sight?