Target Setting, Cause and Effect

During the 1990’s and early 2000’s the UK government relied heavily on target setting as a way to manage the public sector.  We had:

No doubt we had targets for the target setters as well.  UK PLC was run by setting targets and expecting the managers to hit them.

Did it work?

Here is a very interesting paper that answers that very question.  Unfortunately it is the sort of paper that takes 30 minutes, your full concentration and a strong cup of coffee to read.  If you don’t have those let me give you a taste…

There were 3 clear effects from all this target setting:

1. Ratchet effects

The ratchet effect happens as target setters progressively make the target harder and harder to hit, gradually ratcheting up performance year on year.

The problem with ratcheting up the target is that if you make 101% of the target one year you will be asked for 105% the next, so nobody in his right mind would knock the target over and hit 150%, after all what chance would you stand the following year?

You might think this is cynical, so let me ask you…  Did you make sure your spent all of your budget last December just so it wasn’t taken away from you this year?

Yes?  I did, and that is what causes the ratchet effect.

2. Threshold effects

The threshold effect happens when the target creates a step in performance.

Instead of a spread of results performance clusters around the target.  Those who are below the target strive to hit it (by about 101%) where as those who are performing far above the target take their foot off the gas and coast down to it.  Why invest your resources in something you won’t get thanked for?

Once agin you can challenge me with cynicism so let me ask another question…  If you were a teacher with a target to get your children through an exam where would you focus your efforts?

  • The children who could easily pass the test
  • The children who will never pass the test
  • The children who might just pass the test

Which did you chose?  Targets create thresholds in performance.

3. Output distortion

The last effect of target setting is to distort the output, a politically correct way of saying to cheat — to make the numbers by fair means or foul.

Of course you or I would never cheat, we are fine upstanding members of society.

Let me give you a couple of examples of how fine upstanding members of the medical profession behaved when faced with targets:

  • Doctors were told that patients shouldn’t wait more than 48 hours to see a General Practitioner.  This was an easy target to hit.  They  simply stopped taking appointments to see anybody more than 2 days in advance — goodbye waiting list.
  • Hospital managers were given a target that emergency admissions should be given a bed within 12 hours.  Once again this was an easy target to hit.  They took the wheels off the gurneys the patients were lying on, converting them into “beds”.

So targets have effects, just not the ones you would expect

Still not convinced?  Then let me leave you with a final thought…

The more taxing government targets were nicknamed P45 targets.  (P45 is the reference code for the UK tax form entitled “Details of employee leaving work”.)

How would you behave if your children’s welfare depended on hitting a target?

Let me ask again, did the targets work?

Don’t ask me, I am horribly biased, you will have to read the report and draw your own conclusions.

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Comments

  1. James,

    I’ll take your word for it.

    Annette

  2. James,
    I’m pretty sure that we haven’t weaned ourselves off our penchant for targets yet, especially in government.

    However, what’s the alternative? Fewer targets? More targets? Better targets? No targets?

    Adrian

    • James Lawther says:

      I think targets are fine Adrian, it is our penchant for shouting at people if they don’t hit them rather than working out what to do about it that is the problem.

      James

      • If we just knew how to manage people better, wouldn’t that be great?

      • I would say it goes far beyond that, as Maz mentions the number focus creates gaming (even without shouting at people).

        http://www.curiouscat.com/management/deming/management_by_target

        Targets are much worse in dysfunctional organizations – they are also more likely to be given more importance by dysfunctional organizations, that is a bad combination. In a great organization with an strong understanding of systems, respect for people, no pay based on “performance,” an understanding of data and variation… they damage managing by targets does is much smaller. But the number of those organizations is not huge.

        • Thanks for the link John, I particularly like…

          Results can be improved by:

          1. Distorting the system
          2. Distorting the data
          3. Improving the system (which tends to be more difficult though likely what is desired)

          James

  3. Hello James,

    The standard mantra is “whatever gets measured gets done”. To which my response is that only fools, sitting in their ivory towers, would come up with this. Those of us, like you and I, who spend time in the hurly-burly of operational life know that “whatever gets measured gets gamed” if rewards or punishments are attached to the measures. Thanks for providing some great examples.

    All the best,
    maz

  4. James Lawther says:

    Whatever gets measured gets gamed

    A quote I will use Maz, thank you.

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