The Perils Of Measuring, And Rewarding, Performance

It’s important to measure employee performance, isn’t it? By measuring success, and by rewarding it, we can identify superior performers and encourage others to strive for excellence.

Indeed, the logic of this philosophy appears to be self-evident. And yet, in a number of recent cases, measurement and compensation systems appear to have backfired in a dramatic fashion.

Just two days ago, for instance, General Eric Shinseki of the United States Department of Veterans Affairs resigned from his leadership role in the wake of an exploding health care scandal. Apparently, many military veterans have died while waiting for appointments to receive care, although Department employees recorded that they weren’t waiting at all.

And why did those employees falsify their records? Apparently, they knew that the Department did not possess the primary care resources to serve the needs of the veterans. But they also knew that the Department was collecting wait time metrics, and that lower waiting times would be rewarded by higher compensation.

So, lacking the resources to improve the system’s performance, the employees falsified the measurements and collected the compensation. It was a simple, yet effective, scheme.

The case is reminiscent of many other situations in the education sector. Recent laws and programs such as No Child Left Behind and Common Core have heavily emphasized standardized tests. A school with students who produce low scores may lose its funding, and individual teachers who teach low scoring students may be penalized and even publicly shamed.

But public school funding levels have been slashed in the wake of the Great Recession, leaving fewer resources to invest in scholastic activities. So, lacking the means to improve their students’ test scores, many educators have resorted to falsifying those measurements.

An explanation, of course, is not an excuse. There is truly no excuse for falsifying measurements, certainly not with the intention of masking situations where veterans die awaiting care and children fail to receive a satisfactory education.

Nevertheless, when measurements are utilized to determine employee compensation during a period of scarce or inadequate resources, it isn’t difficult to explain why individuals will feel compelled to falsify records. In other words, these recent scandals certainly weren’t unforeseeable events.

How would you establish the right “mix” of performance measurement, compensation, and oversight activities at your organization?