‘When a measure becomes a target, it ceases to be a good measure’.
That’s Goodhart’s law (named after the economist Charles Goodhart, who first articulated it to explain why private enterprise principles introduced by the Thatcher government hadn’t worked very well).
I thought about it this morning, when I was going through my emails and found one inviting me to ‘The Engaging Employees Conference’ in London.
Of the 32 scheduled speakers, the one that most caught my eye was the HR Director of Wonga, a business that collapsed five weeks ago and is currently being wound down by the administrators.
Since the sub-title of the conference is ‘Optimising Performance’, having a speaker from a failed business is probably inconvenient for the organisers. But it’s also a timely reminder for delegates of what they should really be focused on.
The fetish for measuring employee engagement has been steadily gaining ground since Gallup first pioneered it in the 1990s, with their Q12 Survey. This invited employees to answer (anonymously) twelve different questions about their experience of work. ‘Do you understand what the business is trying to achieve?’; ‘Do you understand what’s expected of you?’; ‘Do you have a best friend at work?’ and so on.
The idea is that, if you keep asking the same questions every six months, the movement in the scores will tell you which bits you’re getting right, which bits you need to focus on and, ultimately, how engaged your employees are.
According to Gallup, businesses with high Q12 scores demonstrate significantly better performance: lower turnover of staff, higher sales growth, greater productivity, better customer satisfaction scores. Which is why nearly every large organisation nowadays carries out some kind of engagement survey.
The problem, as Wonga and others have found, is that improving your engagement score does not necessarily lead to improved performance.
It’s a perfect example of Goodhart’s law in operation.
An engagement survey is useful if it helps you build a true picture of the experience your employees have at work. As soon as you turn it into a target, you’re blurring that picture and encouraging managers to ‘game’ the numbers so that their score always shows improvement, even though the underlying experience may not. It’s the tail wagging the dog.
Now, don’t get me wrong – I’m 100% in favour of engaging employees.
I just think the best way to do it is by focusing on the things that will improve their experience of working in your organisation.
Not asking them the same questions over and over again – and then fiddling the numbers to tell a story they don’t recognise.