Moving Beyond Performance Measurement Systems: The Case for Experiential Leadership

In the Beginning There Was Russian

Fifteen years ago, I began studying Russian. I was in a small class of eight students who were all in their late teens or early twenties. As young adults, we were coming into our own, but still impressionable. As our studies commenced, we soon became acquainted with the Russian method of instruction. In our case, its vessel was a woman we affectionately came to call the Red Dragon. In her late 60s at the time, the Red Dragon was a stout woman who wore her hair in a bright orange bouffant. Her hair was obviously dyed, but she was so meticulous, I never once saw grey roots. Adding to her red theme, she wore rouge blush on her pale cheeks, and often donned a burgundy leather jacket that was at least two sizes too small. The Red Dragon would take loud, quick, and deliberate steps on the wood deck outside of our classroom to signal her coming. She would enter the room, ruler in hand, as if she were stepping onto a stage, and utter in Russian, “All right, everyone, let’s begin.” Then she would curl her hands into fists, place them knuckle down on her desk, her body hunched over, and begin to conduct drills in rapid-fire fashion, her ruler sharply cutting the air as she pointed to one student and then the next. God forbid you got a question wrong. If you did, she would lower her gaze, give you a scowl and pronounce upon you a Russian “net” (no). Then she would train her eyes on you while you breathlessly tried again and again to get it right. When it came to written assignments, we toiled for hours to get the right answers. Alas, the Red Dragon would hand our work back literally yelling at us about how disappointing our efforts were, as if the sheets of paper stained up and down with red ink weren’t proof enough. Even though we loved the Red Dragon, we feared her. In sum, the Russian method of instruction goes something like this: 1) cultivate students’ affection; 2) work students like dogs; 3) make students feel that they will never be able to satisfy you; 4) withhold praise; and 5) never ever let students think that they have done enough. Our learning was motivated by fear, and our long-term dedication and desire to study and master Russian was not serviced by this fear. Fear is a very ineffective and harmful motivator, even if it sometimes garners short-term results. And it does nothing to develop commitment to purpose and intrinsic motivation.

Some years after my tutelage under the Red Dragon, I myself became a teacher of Russian. I did not have the temperament to pull off the Russian method of instruction. But I was sure to spill plenty of red ink, grade harshly, and reserve praise. In total, I spent five years teaching Russian full time, first for the National Security Agency and later for the University of Texas at Austin. In that time, I developed a very strong opinion about how students should be treated and evaluated, influenced heavily by my experiences studying Russian. I came to believe that the teacher is the holder of all wisdom and knowledge, that wisdom and knowledge flow from the teacher to the students, that students are subordinate, that students will error, and that students must be shown their errors in stark and painful relief.

School for Thought

Fast forward five years to when my daughter was about to start kindergarten. My wife suggested that we put my daughter in a lottery for area charter schools. My daughter got a spot at a very reputable school. However, upon researching it, I learned that students in the school did not get grades, they did not take tests (except for the state-mandated ones), students did not have desks, but communal tables, they did not even have walls to separate classrooms, and all learning was participatory. And as if all that weren’t enough, students also addressed teachers by their first name. I was horrified, and my mind could not conceive how on earth this approach to teaching could be effective. I was adamant that my daughter not attend that school. Thank goodness my wife’s opinion prevailed. The next several months that would be my daughter’s first of her formal education, were every bit as educational for me. My daughter loved to go to school. She loved to learn. She was thriving socially and academically. But how could we know whether she was mastering the material? And more importantly, how could the teacher know whether she was learning? All of my fears were gently put to rest upon our first meeting with my daughter’s teacher. I was amazed at how well my daughter’s teacher knew her. Her assessments of my daughter were not based on test scores or homework grades (tests were not a part of the curriculum for the entire school, and there was no homework to speak of for kindergarteners). The teacher’s in-depth knowledge of my daughter came from doing three things that grades, scores, and student stratification could not replace: observing her, interacting with her, and communicating with her. The relationship that my daughter’s teacher developed with her engendered in my daughter a dedication to cause of learning, and an intrinsic motivation to learn.

My experience as a teacher conditioned me to falsely assume that the best way to evaluate students, and by extension employees, was through alpha or numeric shorthand. However, I submit that this is a false construct that has been woven into our cultural narrative about education and employment. For employees, this shorthand has become a mainstay of organizational life in the form of performance measurement systems. And despite its ubiquitous acceptance as a token of mature organizations, readers have probably invariably experienced an inevitability associated with these systems: they eventually fail to work due to inflation. System inflation leads to one of two outcomes: 1) either the system is scrapped in place of a new one, and later another; or 2) the system continues to exist and eventually becomes a transparent sham that induces cynicism and low morale for all who are subject to its menacing and unforgiving demands.

Two Laws

So why do these systems continue to fail people and organizations? One explanation is based on a law of economics articulated by Charles Goodhart. Goodhart’s Law states that when you target something, the thing you are targeting is no longer a good measure. While this law is usually applied to economic indicators, the principle behind it holds true for performance measurement systems in the workplace as well. Simply put, once a target is set, people eventually figure out how to game the system to meet the target. In the case of performance measurement systems, the indicator for performance is usually reduced to a numeric score or descriptor (e.g. 10 = outstanding performance). Once the target is reduced to a simple indicator, the game is on. In a very short period of time, inflation starts to creep in. If a 7 was good last year, that does not mean it will be good this year. After all, the really good employees are getting 8s this year. So the supervisor and employees target ever higher scores. Eventually the numbers become meaningless. Yes, there are often attempts to beat back the inflation, and there are usually innocent casualties of such crusades. But in the end, all such efforts are in vain, no matter how well-intentioned they are. Per Goodhart, once you start to target something (e.g. a simple numeric score), the metric will be gamed and lose all meaning.

If Goodhart’s Law weren’t enough to explain why performance evaluation systems are doomed to fail, there’s another very good reason. As the workforce becomes increasingly knowledge-based, it is more and more difficult to quantify people’s performance. It is easy to measure the number of tangible widgets made in a day, all other things being equal. However, it is impractical, and I would argue impossible, to quantify the productivity of most knowledge workers. Take for example a software developer, Stacy. You can measure the amount of code Stacy writes. You can measure how many hours Stacy works. You can measure how many projects Stacy has contributed to. However, in the final sum, do all those measurements really represent Stacy’s net contribution? Of course not. There are simply too many variables to consider, and some of those variables are not measurable. Thus, in the case of Stacy, her supervisor will have to rely on a subjective analysis of her work to quantify her performance. I am not arguing that subjectivity is inherently bad. I am, however, suggesting that attempting to quantify performance by reducing it through subjective analysis is at best misleading, and at worst willfully deceptive.

There is a truism that underlies our instinct to have performance evaluations: you cannot measure what you do not track. Therefore, you must track things that are important measures of organizational health, such as employee performance. The logic seems sound. The problem is that performance evaluations are almost always cosmetic and inaccurate representations of performance, and therefore are false and misleading measures. Again, the primary reasons for this are Goodhart’s law and what I call the law of reductive subjectivity, which basically states that the reduction of unquantifiable data to quantified metrics is inherently subjective and leads to unreliable metrics.

So, if Goodhart’s law and the law of reductive subjectivity render unreliable performance evaluations, how can performance be measured? To answer that question, we first need to answer a more important question: what is the point of measuring performance? I can think of myriad reasons why people might want to measure performance:

  • To reward high-performance individuals
  • To help people to know whether they are meeting expectations
  • To identify under-performing individuals so they can be given a chance to correct course
  • To create an incentive for people to perform consistent with expectations
  • To ensure decision-makers and stakeholders know the status of an organization’s level of performance
  • To provide opportunities for people to grow
  • To provide transparency to all parties about how people are being managed, growing, and contributing

This list could go on and on. Regardless of the many good reasons to have performance evaluations, it is important to ask whether there are any reasons to have performance evaluations that cannot be satisfied by some other more effective means. I personally cannot think of one good reason to have personnel performance evaluations that cannot be satisfied by experiential leadership, whereby leaders interact with, observe, and communicate with people in a way that reveals everything that a leader needs to know in order to effectively know and understand people's contributions, needs, wants, strengths, weaknesses, and opportunities for growth. Performance measurement systems actually work against experiential leadership, by giving a false impression that observation, interaction, and communication are happening when they are not. Furthermore, performance measurements systems do nothing to develop the most important attributes in employees: a dedication to the purpose of the organization and an intrinsic motivation to contribute to that purpose. In fact, performance measurement undermines both of these things by creating extrinsic systems of motivation.

A New Approach: Experiential Leadership

While I do not want to be too formulaic, the key to replacing performance evaluation systems and getting real dedication and motivation from people lies in the trifecta of experiential leadership behaviors:

  • Non-judgmental observation: the act of passively gathering information based upon verbal and non-verbal behaviors that is based on facts
  • Authentic interaction: the act of engaging with people in activities and conversation in ways where all parties can participate in the give-and-take of meaningful ideas and actions
  • Open communication: the act of having dialogue where all participants feel safe to express information based upon facts, test conclusions, ask questions, and share opinions with care and respect

At its core, the above behaviors basically make up the foundation of all healthy personal relationships. To say it another way, the key to more effectively answering any question that a performance evaluation system can attempt to answer is by having healthy relationships with those whom you lead. There is no replacement for genuine personal relationships when it comes to knowing someone. Some might feel uncomfortable with the notion of having personal relationships with those whom they lead. Allow me to clarify. I am not suggesting intimacy. Relationships can remain professional in their breadth while being personal in their depth. The scope of a personal relationship with a spouse or partner is going to be both wide and deep, whereas the scope of a relationship with a coworker or subordinate can be narrow (i.e. related only to things having to do with work), but deep in the areas of trust, understanding, communication, care, and respect. Developing healthy professional relationships on the basis of trust, understanding, communication, care, and respect requires an investment of time. If you do not believe you have the time to cultivate such relationships, then you do not have the time to be a leader. If you do not want to cultivate such relationships, then you do not want to be a leader.   

Chaos vs. Control

One additional reason why some might resist experiential leadership and personal relationships of depth in lieu of performance evaluation systems has to do with the process of establishing performance objectives. There is a legitimate case to be made that while having a relationship on the basis of non-judgmental observation, authentic interaction, and open communication can enable leaders to provide accurate assessments of people, it does nothing to address the setting of performance objectives for individuals. Fair enough. But in order to discuss setting objectives, we must return to the question first asked when discussing measuring performance: what is the purpose? What is the purpose of setting objectives? As with measuring performance, there are many reasons to set objectives. But, I think at the heart of every possible answer lies one reason: objectives provide a space for clear direction (i.e. what people should be doing). Here I would make the somewhat unorthodox argument that if objectives need to be established in order for someone to know what she should be doing, you have already failed. The whole premise of setting objectives presupposes that someone is not sufficiently in touch with the purpose of the organization and their role therein that it must be spelled out in bullet points. While I grant that someone brand new to an organization may require more guidance early on, I submit that if the organization’s collective brain is healthy (i.e. the why, the what, and the how that make up an organization’s identity), then it will be self-evident how someone can use their skills to contribute in a way that is consistent with his role in the organization.

The notion of giving up performance evaluations and objectives is bound to cause some angst. After all, they have been a part of organizational life for decades. I know the angst. I thought there was no way my daughter could get a good education unless she was given grades, and papers covered in red ink. But I only thought that because of the story I had told myself based upon my years of experience in education. There is a normal human instinct to believe that without control there will be chaos, and that those who lead are the source of that control. But this is a false dichotomy. Performance evaluations and objectives are two important means of control. However, performance evaluations and objectives are cosmetic, misleading, and give a false sense of control. What a heavy burden to think that all that stands between you and chaos is the control you wield. Without your mechanisms of control, anarchy will prevail, investors will lose money, products and services will not be delivered, people will stop coming in to work, and on and on. Counterintuitive though it may seem, the opposite is true. When you relinquish your mechanisms of control, you free yourself to engage in non-judgmental observation, authentic interaction, and open communication, and ultimately develop the crucial and deep personal relationships with people that engender genuine commitment to purpose and intrinsic motivation.