The dangers of management by target setting

"I'm trying to help you hit your targets - my team is always on point, we always meet our targets."

So speaks a manager at one of the UK's largest Housing Associations, as they coach a team member on how to game the system - in this case, taking short-cuts with building safety notices that could potentially cost lives.

Throughout my career I have been able to witness first hand the disastrous effect that "management by target-setting" has on employees, customers and ultimately the organisation itself when things (inevitably) go wrong.

Senior leaders look at KPI dashboards convinced everything is OK, when the truth is far from it. Honest employees who are trying to do the right thing for the customer get punished, while those who game the system get the rewards. Customers' needs come second to hitting the numbers.

It's a way of managing that comes straight from the "Efficiency" playbook, treating people as cogs in a machine. But in service organisations, targets undermine efforts at delivering "Effectiveness" by prioritising activities and speed over good customer outcomes. The natural variation that is inherent in people and customer facing businesses means fixed targets are a blunt and meaningless tool - and often the only way to hit those targets is to cheat.

When someone is caught cheating - as in this case - the organisation is quick to claim it's just a "bad egg." The result? One individual gets sacked, but it seemingly hasn't occurred to the HA in question that this issue might be systemic, or to realise that the real issue is a performance management system that's unfit for purpose.

There is a much smarter way of measuring and managing performance in service organisations that doesn't lead to cheating and actually provides you with useful information that helps leaders to learn and improve. If you'd like to find out more, drop us a line.