The Metrics Game

There’s an old saying that goes, “Be careful what you ask for because you just might get it.” It’s a somewhat cryptic warning that I think is a testament to people not really knowing what is best for them.

I have a similar version of that saying that applies to business metrics: “Be careful what you measure because you will definitely get it,” and by any means possible that generates rewards under your incentive system.

What I mean is that is unless there is great forethought and planning, or an effective means to police it, whatever metric is created will either be focused on too much or be somehow “played” so as to give the person (or department or company or whatever) responsible for that metric the most reward for it under whatever incentive system has been put in place.

Some examples might be the following:
Metric: Support calls resolved per day (for a tech support department).
Potential Result: Incomplete resolution leading to premature termination of the support call, hurried attitude of support reps, little follow-up.

Metric: Customer satisfaction scores.
Potential Result: Coaching of customer responses (ever bought or serviced a new car?)

Metric: Number of customer calls made per salesperson.
Potential Result: High volume of semi-real customer contact calls entered in CRM system (left message, etc.), taking time away from real selling.

You may be able to think of more. Without extreme care, metrics incentives can turn into a big game with two sides trying to outwit the other. There are the people who set up the metrics, and the people who are measured by them (Measurers and Measurees?).

The Measurers try to come up with ways to modify behavior or report some insightful piece of business information. They set the metrics and incentive systems to entice people to change their ways.

The Measurees then immediately do what must be done to get the maximum payoff under the incentive system, which may yield results completely different than what was planned yet still “hit the number” of the metric goal. The Measurers eventually figure that out, and change the metric or establish more control. Their opponents then search out another loophole, and the cycle continues. The more unreasonable the metric and the larger the incentive, the more effort will be put in to subverting it.

Does this game ever end? Yes, but only when the metric/incentive is completely controllable and balanced.

Achieving balanced metrics
As soon as you measure and reward something in business, focus shifts to it, and away from something else, possibly something rather important. Take my earlier example of resolving more support calls quickly at the expense of customer satisfaction. You have to assess what can go wrong when people start doing what you’re rewarding them to do, and then figure out how to keep it from happening. A more balanced approach would be to make sure all the bases are covered; both quantity and quality, for example.

It also has to be controllable, or “loophole proof.” If people can massage the metric to skew results in their favor, and it is worth their time to do so, some will very likely do so. This needs to be made impossible to do, or impossible to do without getting caught.

Even though metrics have their inherent problems, they are very important in nearly all parts of business: sales, support, marketing, etc. This is precisely why it is so important that they are used and rewarded properly.

I don’t want to condemn either side. It’s hard out there for a Measurer. They have a tough job with worthwhile goals, and have to fight human nature, one of the mightiest opponents in the world, to get it done. On the other hand, the put-upon Measurees didn’t ask for the metrics. They actually could be in a position of just trying to keep their head above water in the incentive (or punishment) system that has been established, rather than being motivated by a desire to pervert the metric for personal gain. Rather, they may be focusing on what they’ve been told to make a priority and what they’re getting rewarded to make a priority. Still, companies must use careful and intelligent planning to keep their metric incentive system from backfiring and possibly deteriorating into a game of wits.