3. IF YOU USE PERFORMANCE METRICS,
MAKE THEM WIDE-RANGING, RELEVANT, AND
HARD TO GAME
Imagine you’re a product manager and your pay depends largely on reaching a particular sales goal for the next quarter. If you’re smart, or if you’ve got a family to feed, you’re going to try mightily to hit that number. You probably won’t concern yourself much with the quarter after that or the health of the company or whether the firm is investing enough in research and development.
And if you’re nervous, you might cut corners to reach your quarterly goal.
Now imagine you’re a product manager and your pay is determined by these factors your sales for the next quarter your sales in the current year the company’s revenue and profit in the next two years levels of satisfaction among your customers ideas for new products and evaluations of your coworkers. If you’re smart, you’ll probably try to sell your product, serve your customers, help your teammates, and, well, do good work. When metrics are varied, they’re harder to finagle.
In addition, the gain for reaching the metrics shouldn’t be too large. When the payoff for reaching targets is modest, rather than massive, it’s less likely to narrow people’s focus or encourage them to take the low road.
To be sure, finding the right mix of metrics is difficult and will vary considerably across organizations. And some people will inevitably find away to game even the most carefully calibrated system. But using a variety of measures that reflect the totality of great work can transform often counterproductive “if-then” rewards into less combustible now that rewards.
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