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The Proxy for Performance

6 April, 2018 by James Lawther 3 Comments

Did you hit your numbers?

It is a common challenge. You must make your numbers.

  • You must smash your sales target
  • You must slash your budget
  • You must decimate your waiting times

If you’ve hit your numbers then you’ve met your performance goals. Numbers and performance are synonymous.

But the numbers are only a proxy for performance

Performance is multifaceted. To really perform you need to please customers and stakeholders, regulators and employees.  You should reduce costs and reduce time, then increase revenues and retention.  Performance has many aspects.

It is very hard to measure performance, so we use proxy measures instead. These proxy measures help guide us, but they are not the same thing as performance. They only measure performance on a single dimension.

How to hit your numbers:

There are three ways you can hit your proxy target:

Option 1: Distort the data

This is simple.  Take the measure that you want to smash and change the measurement system so it makes you look good. Perhaps you could…

  • Report waiting time to first touch (not completion)
  • Stop the clock, restart a job if you can’t complete it, then report the shortest time (not the total)
Option 2: Distort the system

This is a little more difficult, it involves changing the purpose of the system so that the focus is on meeting the proxy measure, rather than the real aim. Here are a couple of examples that have hit the headlines:

  • GPs offered cash to refer fewer people to hospitals. This was done to reduce waiting times — a proxy for health care
  • Accident and Emergency staff diverted away from seriously ill patients. By treating the less unwell who hadn’t “breached” a four-hour limit, managers could ensure they hit their service level target — another proxy for health care
Option 3: Improve your performance

This is the tricky one, it involves making sure you:

  • Reduce errors
  • Match supply to demand
  • Develop preventive measures
  • Write and use checklists
  • Remove waste
  • Collaborate with your coworkers and suppliers
  • Are brutally honest with your boss

Plus a lot more.  Improving performance is hard work.

Proxies and performance are not the same thing.

Only one way of hitting the proxy number actually improves performance, it is a tough job and it isn’t guaranteed to work. Distorting the system or the data is much easier.

Proxy or performance?

Which is more important where you work? Improving performance, or hitting the proxy?

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Filed Under: Blog, Operations Analysis Tagged With: cheating, Goodhart's law, key performance indicators, measurement, objective setting, performance management, systems thinking

About the Author

James Lawther
James Lawther

James Lawther is a middle-aged, middle manager.

To reach this highly elevated position he has worked in numerous industries, from supermarket retailing to tax collecting.  He has had several operational roles, including running the night shift in a frozen pea packing factory and carrying out operational research for a credit card company.

As you can see from his C.V. he has either a wealth of experience or is incapable of holding down a job.  If the latter is true this post isn’t worth a minute of your attention.

Unfortunately, the only way to find out is to read it and decide for yourself.

www.squawkpoint.com/

Comments

  1. Spencer Kennedy says

    6 April, 2018 at 3:33 pm

    Distort the system – Such as a certain train company knowing that my train is running late, so stop it calling at my station so they can call it cancelled? and thus avoid paying compo for me having to catch a later and far busier train which is officially on time, regardless of whether it means I stand on a platform for 45 minutes.

    Yes I’m looking at you SOUTHWEST TRAINS!!!!!

    Reply
    • James Lawther says

      7 April, 2018 at 11:54 am

      That way they don’t have to “delay repay”. Cunning eh… Never happens on East Midlands Trains, unless of course it is snowing.

      Reply
  2. Annette Franz says

    9 April, 2018 at 2:28 am

    What is it that you just commented on a recent post of mine… something about Goodhart’s Law. Perhaps we just do away with metrics and focus on doing the work! ;-) I know… it’s hard work… easier to fudge with the numbers.

    Reply

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