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Managing to metrics because they are easy to measure instead of because they actually reflect the outcome you want is a very common mistake, but it seems like a

Managing to metrics because they are easy to measure instead of because they actually reflect the outcome you want is a very common mistake, but it seems like a particularly destructive problem to design our economy around that. It's probably why so many companies treat their employees like disposable punching bags: they can't easily measure the payoff from investing in employees so it must not be worth doing, right?

dcolkitt 7y ago
> It's probably why so many companies treat their employees like disposable punching bags Contrary to what you posit, the empirical evidence shows the opposite. The firms with the best management practices tend to have the highest rates of employee satisfaction [1]. And the surest way for a firm to wind up poorly managed, is for shareholders not to hold management accountable with tangible targets and transparent monitoring. [1] https://www.nber.org/papers/w17850.pdf https://www.nber.org/papers/w17850.pdf
- roguecoder 7y ago
  Do you have a citation for the second part? It seems a huge leap from the first part, for which you have a citation, to "hedge fund activism makes companies treat employees better". Particularly given that good governance is linked to long-term outlooks (https://hbr.org/2017/05/managing-for-the-long-term https://hbr.org/2017/05/managing-for-the-long-term)
lotsofpulp 7y ago
There are many businesses with margins so low that treating employees better than your competitors mean you go out of business. In my opinion, the root cause of the economic divide in the US (and rest of the developed world) is the very fact that certain types of human labor are worth much less than in decades past, due to automation and cheaper labor in other countries. Computers allow one person to do the work of many, and they’re owned by capital, so the spoils go to the owners of capital. And the owners of capital now have a surplus of labor, and so can pay the labor less and whoever succeeds can offer the lowest prices and survive.

dcolkitt 7y ago

> It's probably why so many companies treat their employees like disposable punching bags Contrary to what you posit, the empirical evidence shows the opposite. The firms with the best management practices tend to have the highest rates of employee satisfaction [1]. And the surest way for a firm to wind up poorly managed, is for shareholders not to hold management accountable with tangible targets and transparent monitoring. [1] https://www.nber.org/papers/w17850.pdf https://www.nber.org/papers/w17850.pdf

roguecoder 7y ago
Do you have a citation for the second part? It seems a huge leap from the first part, for which you have a citation, to "hedge fund activism makes companies treat employees better". Particularly given that good governance is linked to long-term outlooks (https://hbr.org/2017/05/managing-for-the-long-term https://hbr.org/2017/05/managing-for-the-long-term)

lotsofpulp 7y ago

There are many businesses with margins so low that treating employees better than your competitors mean you go out of business. In my opinion, the root cause of the economic divide in the US (and rest of the developed world) is the very fact that certain types of human labor are worth much less than in decades past, due to automation and cheaper labor in other countries. Computers allow one person to do the work of many, and they’re owned by capital, so the spoils go to the owners of capital. And the owners of capital now have a surplus of labor, and so can pay the labor less and whoever succeeds can offer the lowest prices and survive.