How Bad Performance Metrics Make Employees Stupid

Last Wednesday, I bring a part of my family (i.e. four persons) to a pizza restaurant we are used to go. It is 8:10 pm and the first wave of service has already begun. The waiter asks us how many people we are, and when he hears that we are four, he tells us that the restaurant is full. We would have to wait another 45 minutes as a minimum before having dinner. Unpleased, we move towards the door, when we hear the same waiter attending a group of people who was waiting after us. “How many are you ? “. “Five”. “Did you make a reservation ?”. “No.” “OK, come with me”. One woman from the group stares at us with a very surprised face…

What happened ? One key performance of this restaurant is obviously the occupancy rate. With only 4 persons at a table of 5, this waiter has the feeling he would be doing a poor job. Now, by refusing to serve us and accepting just after us a group of five, he made an enormous mistake : I will never come back to a restaurant where I feel that I am considered only as a revenue source and not as a human being with the desire to offer a good meal and evening to my beloved ones ! This behaviour is not only absolutely shocking in terms of respecting your customer, but it does not make business sense at all : can you afford to lose maybe 2, 3 or 5 years of revenues from what used to be a loyal customer, just because you want to maximise for one night your occupancy rate ? By the way, this company states in its Website that their employees are dedicated to “earn customer trust and satisfaction”…

Why does this happen day after day in so many stores, restaurants, call centers… ? For one single reason : people who design management systems are not the ones who manage daily operations. So, when it comes to make choices, people at the shopfloor are not supposed to think nor to use their common sense. Systems, metrics, processes are precisely designed to avoid human wisdom – and human variability – to come into account. At the same time, in most organizations obsessed by short term financial results, there is no room for making the distinction between “profitability of a transaction” and “profitability of a relation” with a customer. Finally, decades of “Management by objectives” ideology have distracted people at all levels from the only thing that really counts : delighting customers day after day. It is high time to discover that outperforming companies have developed an alternative system : “Management by Means” where measurement of the activity is designed to help each worker to make good decisions – not to report figures to some people in the Headquarters. This type of management would have allowed me to eat my favourite pizza yesterday… but since we ended in a fairly good restaurant, the evening was saved 😉

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2 Responses to How Bad Performance Metrics Make Employees Stupid

  1. Bourgeois says:

    Hi Laurent !
    Thanks for having shared with us this fairly interesting experience.
    I don’t know if you have had the chance to read (sorry it’s in french) “L’entreprise d’après la crise” – from Les cahiers d’Entreprise et Progrès but it’s very close to what you are teaching us through your post.
    Shall I wish you and your family to find, in 2011, a new Pizza restaurant managed more cleverly ?
    Warm Regards

    • Thank you Xavier. No, I didn’t know this text, though I am aware of Entrerpise et Progrès excellent work. Thank you for mentioning this very rich document (It is available for download here) I think too that this is a “hot topic” for all companies, especially in crisis times (or post-crisis as the authors say ???) .
      Warm regards.

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