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>As a result, we would stop logging progress at ~80% of our goals, which was the threshold to qualify for your bonus I feel like you're stating this as "Look h

>As a result, we would stop logging progress at ~80% of our goals, which was the threshold to qualify for your bonus I feel like you're stating this as "Look how silly KPIs are!", but your CEO is correct. The issue isn't the KPIs; it's the team members who are willing to intentionally game a system in conflict with overarching company goals. There's nothing magical about KPIs. It's data. How you apply it matters. If your team wants to take advantage of it for selfish reasons, there's nothing stopping them.

bicijay 3y ago
Someone gamed a system created to be gamed? :pikachu_face:
- bluGill 3y ago
  The real failure is the CEO didn't make a system where by gaming it you made things better for the company. This is a hard problem - but CEOs are paid big bucks to solve hard problems like this.
  - bonoboTP 3y ago
    There's basically always some kind of monkey's paw shortcut to any formalized metric passed top-down. The converse is that there are also always novel ways to differentiate yourself bottom-up from the mere shortcutters. This is basically how fads form. Something novel appears that is first a great signal for honest quality work, then it gets formalized and imitated and it becomes less predictive, so those who are in the business of creating true value must come up with new ways to demonstrate this.
    - gemstones 3y ago
      This is why you should switch up criteria you give bonuses by on a bi-annual basis. People who game your system only get 6 months of time to enjoy it. You’re left with people who can game every metric or people who are just so good they look good no matter what metric you pick. The first group is hard to deal with, but they would be hard to deal with anyways.
      - bonoboTP 3y ago
        Or you could keep the metrics secret before evaluation. Except secrets are hard to keep and non-transparent. One also has to consider whether the people who define the KPIs are themselves properly incentivized. How are they evaluated? Could there be some perverse incentive to set gameable KPIs that get hit easier? Maybe the KPI setter is in some sense in on the game and complicit? Very complicated stuff. What if the business gets destroyed in the process? Who does that hurt in reality and how much?
    - creer 3y ago
      There's a difference between a shortcut that has the interest of the firm in mind. And sabotage. I'm always surprised how little sabotage is recognized / repressed in corporations. Certainly there is the issue of recognizing the one from the other. But still sabotage seems to be frequent - as part of "empire building", as part of gaming the compensation metrics. And "boys will be boys" is not the a response that steers toward the desired behavior.
KyleJune 3y ago
If you create a financial incentive for a behavior, you're telling your employees you want to see that behavior. If it was a problem and KPIs work, they should have changed them to make them align more with the business needs.
- bonoboTP 3y ago
  > If you create a financial incentive for a behavior, you're telling your employees you want to see that behavior. And it's not just individual people modifying their behavior to game things, but more of an evolutionary process that the people who tend towards gaming things will get better bonuses, better reviews, better CVs, hence better next jobs, in perpetuity. "Don't game it" can't be a simple solution. If there are people who game things, and they accumulate rewards for it, you will just see them out compete the nongamers. You are basically telling people to sacrifice their and their family's financial position for the sake of the corporation. Everything can and will be gamed. But at the same time if many game it, managers will really want to see evidence of nongaming, so employees are also incentivized to signal their honesty, but this must be given some kind of channel too. If managers myopically focus on gameable metrics, then their loss. You must alwas leave a door open for receiving honesty signals through some kinds of side channels. These must always be somewhat amorphous because the moment you define them, they become gameable. In other words, no recipe, stay alert, try to cooperate but don't be a pushover, etc.
- itsoktocry 3y ago
  >If you create a financial incentive for a behavior, you're telling your employees you want to see that behavior. What a cop-out. Everyone should want the company to succeed. So why not say "Hey, boss, this KPI won't work, here's what might happen..." instead of literally working less than needed to prove some point? It's dishonest.
  - smif 3y ago
    I feel like that's where most people probably start, and then get some response like "we can't change the KPI's because blah blah" or get the runaround. Once you have established that you have no agency to change the system is when you are sort of incentivized to let it fail in hopes that a better system replaces it one day. You also don't wanna piss too many people off that may be invested in the current system because you want those references for your next job.
ppseafield 3y ago
>> if you achieved 100% of your goals every quarter, you weren't being ambitious enough The CEO directly created the perverse incentive: actually hitting your goals only meant more work. > How you apply it matters. The CEO applied KPIs in a way that disincentived hitting your targets, and the team responded accordingly.
- smachiz 3y ago
  Yes and no. There's another view where employees set actually ambitious goals and only get 90% of the way there and are still rewarded and the company also wins. If you are hitting your goals every quarter, that is a great thing - but I tend to agree, at the other end of the spectrum you have people setting easily achieved goals to check a box. The real issue is weeding out people just there to check a box when you're small, and when you're large, it's designing a system that internalizes a lot of your employees are there to check a box.
  - nonameiguess 3y ago
    This is the "I swear communism works, you just need people who actually care about worker life quality and aren't tyrants to lead the revolution" school of org theory.
    - smachiz 3y ago
      I mean, that's also probably true. Best form of government is a benevolent dictator and all that... More that you have to have realistic expectations when you structure an org, that people doing the work are going to pad and sandbag in successive tiers up, and people in charge of outcomes are going to push for bigger and more down.
    - 93po 3y ago
      Does capitalism work?
      - mitthrowaway2 3y ago
NTDF9 3y ago
> I feel like you're stating this as "Look how silly KPIs are!", but your CEO is correct. The issue isn't the KPIs; it's the team members who are willing to intentionally game a system in conflict with overarching company goals. The real issue is - KPIs are used to incentivize or PIP employees. Why are you setting the employees in a game that is in conflict with your company's overarching goals?
snarf21 3y ago
Goodhart's Law says this will never work. That is the problem. Upton Sinclair — 'It is difficult to get a man to understand something, when his salary depends on his not understanding it.'
makeitdouble 3y ago
The CEO doesn't have a grip on the employees' motivation, couldn't set convincing evaluation standards, and couldn't come up with a system that doesn't conflict company goals. I'm not sure where you see the correct part.

bicijay 3y ago

Someone gamed a system created to be gamed? :pikachu_face:

bluGill 3y ago
The real failure is the CEO didn't make a system where by gaming it you made things better for the company. This is a hard problem - but CEOs are paid big bucks to solve hard problems like this.
- bonoboTP 3y ago
  There's basically always some kind of monkey's paw shortcut to any formalized metric passed top-down. The converse is that there are also always novel ways to differentiate yourself bottom-up from the mere shortcutters. This is basically how fads form. Something novel appears that is first a great signal for honest quality work, then it gets formalized and imitated and it becomes less predictive, so those who are in the business of creating true value must come up with new ways to demonstrate this.
  - gemstones 3y ago
    This is why you should switch up criteria you give bonuses by on a bi-annual basis. People who game your system only get 6 months of time to enjoy it. You’re left with people who can game every metric or people who are just so good they look good no matter what metric you pick. The first group is hard to deal with, but they would be hard to deal with anyways.
    - bonoboTP 3y ago
      Or you could keep the metrics secret before evaluation. Except secrets are hard to keep and non-transparent. One also has to consider whether the people who define the KPIs are themselves properly incentivized. How are they evaluated? Could there be some perverse incentive to set gameable KPIs that get hit easier? Maybe the KPI setter is in some sense in on the game and complicit? Very complicated stuff. What if the business gets destroyed in the process? Who does that hurt in reality and how much?
  - creer 3y ago
    There's a difference between a shortcut that has the interest of the firm in mind. And sabotage. I'm always surprised how little sabotage is recognized / repressed in corporations. Certainly there is the issue of recognizing the one from the other. But still sabotage seems to be frequent - as part of "empire building", as part of gaming the compensation metrics. And "boys will be boys" is not the a response that steers toward the desired behavior.

KyleJune 3y ago

If you create a financial incentive for a behavior, you're telling your employees you want to see that behavior. If it was a problem and KPIs work, they should have changed them to make them align more with the business needs.

bonoboTP 3y ago
> If you create a financial incentive for a behavior, you're telling your employees you want to see that behavior. And it's not just individual people modifying their behavior to game things, but more of an evolutionary process that the people who tend towards gaming things will get better bonuses, better reviews, better CVs, hence better next jobs, in perpetuity. "Don't game it" can't be a simple solution. If there are people who game things, and they accumulate rewards for it, you will just see them out compete the nongamers. You are basically telling people to sacrifice their and their family's financial position for the sake of the corporation. Everything can and will be gamed. But at the same time if many game it, managers will really want to see evidence of nongaming, so employees are also incentivized to signal their honesty, but this must be given some kind of channel too. If managers myopically focus on gameable metrics, then their loss. You must alwas leave a door open for receiving honesty signals through some kinds of side channels. These must always be somewhat amorphous because the moment you define them, they become gameable. In other words, no recipe, stay alert, try to cooperate but don't be a pushover, etc.
itsoktocry 3y ago
>If you create a financial incentive for a behavior, you're telling your employees you want to see that behavior. What a cop-out. Everyone should want the company to succeed. So why not say "Hey, boss, this KPI won't work, here's what might happen..." instead of literally working less than needed to prove some point? It's dishonest.
- smif 3y ago
  I feel like that's where most people probably start, and then get some response like "we can't change the KPI's because blah blah" or get the runaround. Once you have established that you have no agency to change the system is when you are sort of incentivized to let it fail in hopes that a better system replaces it one day. You also don't wanna piss too many people off that may be invested in the current system because you want those references for your next job.

ppseafield 3y ago

>> if you achieved 100% of your goals every quarter, you weren't being ambitious enough The CEO directly created the perverse incentive: actually hitting your goals only meant more work. > How you apply it matters. The CEO applied KPIs in a way that disincentived hitting your targets, and the team responded accordingly.

smachiz 3y ago
Yes and no. There's another view where employees set actually ambitious goals and only get 90% of the way there and are still rewarded and the company also wins. If you are hitting your goals every quarter, that is a great thing - but I tend to agree, at the other end of the spectrum you have people setting easily achieved goals to check a box. The real issue is weeding out people just there to check a box when you're small, and when you're large, it's designing a system that internalizes a lot of your employees are there to check a box.
- nonameiguess 3y ago
  This is the "I swear communism works, you just need people who actually care about worker life quality and aren't tyrants to lead the revolution" school of org theory.
  - smachiz 3y ago
    I mean, that's also probably true. Best form of government is a benevolent dictator and all that... More that you have to have realistic expectations when you structure an org, that people doing the work are going to pad and sandbag in successive tiers up, and people in charge of outcomes are going to push for bigger and more down.
  - 93po 3y ago
    Does capitalism work?
    - mitthrowaway2 3y ago

NTDF9 3y ago

> I feel like you're stating this as "Look how silly KPIs are!", but your CEO is correct. The issue isn't the KPIs; it's the team members who are willing to intentionally game a system in conflict with overarching company goals. The real issue is - KPIs are used to incentivize or PIP employees. Why are you setting the employees in a game that is in conflict with your company's overarching goals?

snarf21 3y ago

Goodhart's Law says this will never work. That is the problem. Upton Sinclair — 'It is difficult to get a man to understand something, when his salary depends on his not understanding it.'

makeitdouble 3y ago

The CEO doesn't have a grip on the employees' motivation, couldn't set convincing evaluation standards, and couldn't come up with a system that doesn't conflict company goals. I'm not sure where you see the correct part.