Originally published by RealLeaders, but no longer available online.
(edited excerpt from Measures of Success)
Many organizations embrace the idea of setting objectives and key results (or OKRs). Where we see a performance measure in an organization, we usually see a target. That’s the reality of modern organizations. But, leaders often spend a lot of time debating whether this year’s target should be something really specific, such as the possibly insignificant difference between 34.17 and 34.634.
I’ve seen too many cases where an organization didn’t hit their target one year, only to then set the same target the next. Or, they’ve optimistically set an even-higher target. The implication in most organizations seems to be, “If we choose the right metrics and set challenging targets, then improvement will happen.” If it were only so easy, everybody would be hitting their targets, whether that’s increasing sales in a startup or reducing falls in a hospital. This is why the late quality guru W. Edwards Deming would always ask an important and challenging question: “By what method?”
It’s not enough to set targets and demand better results. Too many people believe that empowerment means setting aggressive targets and then leaving people alone to figure out how to meet them. Collaborating with staff doesn’t mean a leader is micromanaging. Working together to improve our systems and processes will lead to better results.
In the wrong kind of organizational culture, setting arbitrary targets can become very dysfunctional. One of the “14 points for management” from Deming reads:
“Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce.”
I’ve worked in the type of culture that Deming warned about. So, I understand how an “us versus them” environment creates unbearable stress when leaders demand performance that’s unrealistic and then blame employees for not meeting that impossible standard.
An example of an arbitrary target might be “We need to increase sales by 25% this year.” A target is still arbitrary if it’s based on a competitive benchmark, last year’s performance, or an organizational target that has been passed down from senior leaders.
As Brian Joiner wrote in his book Fourth Generation Management, there are three things that can happen when people are pressured to hit a target without having the proper support and an effective improvement methodology. The first two are dysfunctional and are too often easier than the third, and preferred, alternative:
- Distort the numbers
- Distort the system
- Improve the system
We see many examples of this in the news, and we might see them in our own workplaces. In recent years, we’ve seen the CEO of Wells Fargo set an arbitrary target of “eight is great,” meaning each customer should have eight different accounts. Since the target was unreasonable, thousands of tellers signed customers up for accounts they didn’t need or didn’t know about — and then got fired for being “unethical.” Eventually, the CEO was forced out into retirement.
I recently heard a funny story about a fitness center that asked departing customers to push one of four buttons that rated their visit as one of the following:
- a very smiley face
- a somewhat smiley face
- a somewhat frowny face
- a very frowny face
The gym’s manager and staff were promised an incentive if a certain number of customers hit the “very smiley” button each month. They might have feared being punished for not hitting that target. What did the employees figure out? They learned that they could hit the “very smiley face” button a few times each time they walked nearby, which boosted that metric. Problem solved?
However, it’s possible to have a culture where a meaningful goal or target is shared by all. An organization like that tends to have supportive leaders and a spirit of “we’re all in it together.” Effective managers don’t just set targets; they work together with people to hit those targets.
For example, Paul O’Neill, former CEO of Alcoa, set an audacious goal for an important measure: zero employee harm in their workplaces around the world. Such a goal could have been demoralizing if it seemed impossible, and people feared punishment. However, his leadership style made it clear that accountability started with him and that the company would work together toward that ideal, without blaming or punishing anyone for not reaching that ideal target. During his tenure as CEO, Alcoa reduced “lost workdays per injury per 100 workers” from 1.86 to 0.2 (a reduction of 89%). After O’Neill’s retirement, thanks to the culture and methodologies that he left in place, the rate fell to 0.125 by 2012.
As you think about your organization, ask how your important goals or objectives might get gamed or distorted. Ask yourself, “What can I do be a coach and facilitator who helps people improve?” instead of just judging their performance at the end of the year.