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Plan - Perform - Score

Management Resource Library

Be Careful How You Keep Score!

Does your score keeping drive desired performance? Or does it produce individual and group behavior that conflicts with your primary goals and objectives? Finding the right metrics is not always an easy task. Be aware of the pitfalls that can happen if they are not the right ones.

Famed management guru Eli Goldratt said it best: "Tell me how you'll measure me and I'll tell you how I'll behave."

People can and do change their behavior when they are measured, but it's not always in the desired direction. Let me share with you a few related stories I've heard over the years:

The Russian Nail Factory:

In the days when the Russian economy was centrally managed from Moscow, a soviet bureaucrat was sent out to instruct a "nail factory manager" on its production goals for the next year. In his innate wisdom, the bureaucrat told the plant manager that his performance would be based on the tonnage of nails produced. After the bureaucrat departed the plant manager thought a bit. The next morning he informed his staff that they would be making railroad spikes.

A year later after Russia had enough rail spikes to last 1,000 years, the bureaucrat returned determined to rectify his mistake. His new instructions were that plant performance would be based on the number of nails produced. Again, the plant manager pondered his goal over a few glasses of vodka. The next day he informed his staff that they would now be making thumb tacks. The moral here is make sure you anticipate how specific metrics might change behavior and to watch things closely whenever you make a significant change in your measurements.

The Military Supply Model:

A new base commander in the Mediterranean area was assessing the status of his new assignment. One of his early directives was to order a detailed inventory of the base food supplies. To his amazement he discovered they had a three year supply of canned asparagus in the warehouse. The commander called in his food service manager and instructed him to drastically reduce the supply of asparagus. Over the next month, the service men had asparagus omelets for breakfast, asparagus soup for lunch and a side of asparagus with every dinner.

The men were a pale shade of green by St. Patrick's Day. Well, the inventory did go down and now all seemed right with the world. But alas, systems often betray their users! What the base commander didn't know was that part of the reporting routine was to send a food consumption list to the European regional supply depot. A bubbling future general looked at those consumption reports and exclaimed, "WOW, those guys love asparagus" and then he doubled that amount for an expedited shipment to the base. The moral here is to know who else might be using your information and what they might do with it.

In summary, key performance metrics are great as long as they don't drive behavior in the wrong direction. Make sure you score with metrics that work as intended!