“What metric are you using to incentivize your people to perform?”
“Every day we compile who processed the most orders, the winners are broadcast every day – as are the losers.”
“Hmm, and how is that working.”
“People love it, they are all working as hard as they can to process orders.”
It didn’t take long to verify that, rather than creating an environment to process orders, it instead had fostered an environment where everyone was angry. High performers thought low performers were lazy. Low performers knew that high performers were cherry picking. People in the middle just felt lost in the shuffle.
This can be attributed to something called “The Tiger Woods Effect”.
As we are put into competitive systems with clear winners, the actual performance of other players actually decreases. When we set up competitive games in our organizations, we unleash all sorts of cognitive biases – this being one. The goal becomes winning (or losing) the game (satisfying the metric) and not providing value for the company or the customer.
The team processed less orders because they were playing the game to individually process the most orders. Golfers shoot worse when under direct pressure to perform better.
Note: The Modus Press ebook Why Plans Fail, examines how cognitive bias impacts our decision making at the office.
(And Bloomberg needs to have better video embedding.) For the video click here.