Somebody's Law

[RSoles]

There's a law that states whenever a performance metric becomes a payment target it loses its value as a metric.

Anyone recognise this? point to a source?
Ta

[Spacecadet]

There's a law that states whenever a performance metric becomes a payment target it loses its value as a metric.

Anyone recognise this? point to a source?
Ta

Sounds like the law of unintended consequences

[EternalOptimist]

There's a law that states whenever a performance metric becomes a payment target it loses its value as a metric.

Anyone recognise this? point to a source?
Ta

aha, bonus schemes

this is my specialist subject. I am going to love this thread

[bless 'em all]

There's a law that states whenever a performance metric becomes a payment target it loses its value as a metric.

One springs to mind where employee satisfaction is a contributor towards the EOY bonus, along with some other tulip like profitability and sla's.

You have a situation where an 'employee' has to work harder for the company to hit the profit/sla/tulip %age then give a higher satisfaction score as an employee to hit the 'happiness' target or risk missing the bonus.

[Mich the Tester]

One springs to mind where employee satisfaction is a contributor towards the EOY bonus, along with some other tulip like profitability and sla's.

You have a situation where an 'employee' has to work harder for the company to hit the profit/sla/tulip %age then give a higher satisfaction score as an employee to hit the 'happiness' target or risk missing the bonus.

If you're going to talk about corporate cackness, you cannot leave out KPI's.

[EternalOptimist]

I worked as a BA for a large service company, and one of the metrics was cost of parts fitted during servicing and repairs.

The idea was that engineers would love to fit loads of parts because as well as guaranteeing a fix, they are driven to do a prefessional job - they like perfection.
Of course the business cannot afford to spend a hundred quid on a machine that only earns 50 quid a year. So there is a tension there, and the metric is used to make sure the spend is neither too high, nor too low.

Then it was decided to include the metric in the bonus calculation, spending 90% of the budget giving maximum bonus. The idea being that this would provide an incentive for the engineers to toe the management line.

Costs to the business in spare parts went through the roof.

What happened was that the engineers went from having an aspiration to get the spend somewhere between the lower and upper limits, to avoid a bollocking from the boss, to having an imperitive to spend exactly 90% of the budget, to avoid getting a bollocking from the wife.

So in the quiet times, parts would be stored in garages or garden sheds, and booked off as being used. Some of these guys ended up with tens of thousands of pounds worth of gear, all going rusty or mouldy in the damp garage.

Plus every time the guys went off patch, they would book off loads of parts that were not actually fitted, so the target team picked up the costs, often ruining their bonus prospects, causing emnity, ruining and falsifying service histories. Eventually teams would not accept help from each other, so the management had to recruit more heads to cover the busy periods.

A simple little idea, designed to save a few hundred thousand quid, nearly brought that company to its knees

[bless 'em all]

If you're going to talk about corporate cackness, you cannot leave out KPI's.

I forgot about those ... just goes to show you CAN forget what it's like to be a permie.

[vetran]

Nothing wrong with KPIs its the way you implement them that is the issue.

You could do it the right way:

Days on hand + Days to ship joint target= good KPI

or the wrong way

Days on Hand controlled by purchasing.

Days to ship controlled by warehouse.


or you could do it the Six Sigma brown belt way. (they are so full of it you need a belt to keep it in.)

Mark as 100% and de-rate when you get caught.

[Mich the Tester]

Nothing wrong with KPIs its the way you implement them that is the issue.

Isn't that what insultants say about PRINCE 2, T*Map, ITIL, ASL, BISL, TQM and all the other big piles of expensive sounding tulip that occupy bookshelf space in corporate offices?

[EternalOptimist]

Actually bonus schemes and KPI's can work brilliantly well, if they are policed.

No one ever puts a cost on this or implements it (well..not many do)