Heffernan: KPIs and targets create “perverse outcomes”

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Employees form high-achieving teams when organisations create conditions where helpfulness is possible

KPIs and targets can create “perverse outcomes” in teams and organisations, according to management expert, entrepreneur and author Margaret Heffernan.

Speaking at the Universities HR (UHR) conference, Heffernan said that “as much as everyone is in love with metrics, we need to recognise that every metric comes with a cost and generates perverse outcomes”.

“People are so focused on targets that the meaning of what you’re measuring sometimes gets lost,” she explained, adding that there is “no evidence” to suggest that performance-related pay enhances performance.

Heffernan went on to warn her audience of HR leaders in the higher education sector of the dangers of using “forced ranking” of employees.

“[This is] where the top minority of employees are identified as high potential and fast tracked, the bottom minority are out, and the middle are just left,” she explained.

Heffernan cited the example of an experiment where scientists studied the productivity of two flocks of chickens – one made up of randomly-selected chickens and one made up of “super-productive” chickens that created a “super-flock”. Productivity of the first flock – measured in egg count – increased; whereas the super-flock’s productivity fell as the chickens killed each other.

“This shows what happens when organisations create conditions in which individuals have to compete for success,” said Heffernan.

“There is a belief that if employees are forced to compete for the top spot then they work harder,” she continued. “But what actually happens is that perverse outcomes come out where people at the top don’t communicate or share. This competition creates aggression, defensiveness and waste.”

Heffernan referenced a shift among the academic workforce at higher education institutes to focusing on algorithms, “data slicing of articles”, and “building citation circles” as a consequence of the intense competition driven by university league tables and research assessment ranking targets.

Heffernan urged HR leaders, instead of focusing on quantitative thinking, not to forget about qualitative thinking; and to consider “what it is that makes a group of people more effective at work”.

She said that the most effective teams “are not the teams where the smartest people are put in a room together”, or where “there are a couple of IQ superstars”. They are teams where everyone “is connected” and “score highly on empathy”, she said, adding: “The answer is in one word: helpfulness”.

She encouraged HR to create conditions in the workplace where “helpfulness” is possible so that employees collaborate to achieve high performance.

Shared breaks, social events where colleagues can get to know each other, and monotasking can encourage this type of environment, Heffernan said, adding: “The only sustainable resource organisations have is humans”.

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