Friday, August 26, 2011

Doing what one is inspected to do instead of what one is expected to do

Lou Gerstner, the now mythological CEO of IBM that many still miss,  wrote an excellent book about his tenure as IBM's CEO, much of it is dedicated to his organizational culture battles.    The most famous quote from Gerstner's book is:  people are doing what they are inspected to do, not what they are expected to do. 

This is indeed true in IBM until today, but IBM is just a reflection of the western culture, in which anything is weighed and measured,  the metrics are intended to achieve some goals,  but get a life of their own, often not keeping close contact with the original goals.   Furthermore, people find creative ways to satisfy the metrics in ways that have nothing to do with the original goals, since satisfying the metrics become the goal.

Some examples:  In Israel the traffic police guys are measured by the quantity of traffic violation ticket they get credit for.  I remember many years ago that I've committed some traffic violation (turned left in a place in which turning left was forbidden between 7-9am, it was indeed a few minutes before 9am),  a police car that was quite far saw me, and then started a movie-style chase, the police car not only turned in the forbidden way, but traveled in the opposite side of the road, turning the traffic to stand in the side, and drive in a way that was very dangerous to the traffic, and when they caught me they wrote on the traffic violation ticket" -credit  XXX(name)".    Hope that the reward for the credit was worth the effort! 
Other examples:  One of the previous "legal advisers to the government", a position that in Israel is among other things that head of the state prosecution, wrote in his autobiography that he had again and again to remind the prosecutors that their goal is to ensure justice, however, since they are measured by the percentage of conviction, while they have decided to prosecute a person, they cannot back off, it will spoil the statistics.   More examples from the education system:   I have talked once with somebody who dealt with admission of graduate students in one of the best business schools in the USA,  he told me that sometimes they miss students that some indications (and faculty members) show they can be exceptional, but their score in the GMAT is not that great,  it is virtually impossible to pass these candidates through the admission committee, since it would spoil the statistics of minimum and average of the admitted students, and this is a metric that the business school measures itself against other business schools.  More in the educational system -   My long term observation is that for many of the students the goal is maximize the GPA, and gaining useful knowledge becomes secondary,  thus elective courses popularity is often determined according  to the past statistics about grades distribution.  One of my students had a special talent to know how to learn to exams, get very high grades, and not remembering much a week later.   According to the metrics he won -- he was on the president list.  This talent still helps him in his life.   Getting to the business world,  the fact that corporations that are traded in the stock market, are measured by Wall Street analysts quarterly on accounting measure (Earning per Share) has a major impact on how the business world behave,  first considerations are often short term (due to the quarterly metrics), and second, accounting thinking is not always consistent with economic thinking, furthermore, it enforces some low common denominator in the behavior of the business world and reduce variance in goals and natures of companies.
While metrics are not necessarily bad,  there are two observations about them:

  1. There should be constant check whether the metrics still reflect the goals, and whether those who satisfy the metric do it in a way consistent with the goals - and adjust the metrics (or the goals) to avoid misuse (same kind of thinking as "fraud detection").
  2. There are cases in which goals are not translated well to metrics, or there are exceptions that are consistent with the goals, but not with the metrics -- people should be brave enough to stick to the goals and ignore the metrics (or handle them later).  

I started with quote from Lou Gerstner --- which I see as one of the cornerstones of my own behavior, over the history I had several times "motivation talks" with people instrumented by metrics to advise me how to behave,  and I'll end with another phrase I like , which I use for this people:  My behavior is driven by a  a compass and not by a weather wane"

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