Gaming Goals Can Kill Businesses

Targets must match an organization’s actual objectives

The presiding deity over executive target setting and pay for performance is Loki, the god of mischief. Most performance management and incentive systems assume SMART and equitable target setting an accurate and honest measurement of the results actually achieved. But what if the targets could be achieved without actually making the effort the end objective actually demands? Any worthwhile objective is too complex for its achievement to be measurable by one or two quantitative measures but (for reasons of practicality) we end up doing precisely that. We thus set up a system that is open to gaming and, when linked to high variable compensation and other rewards, it becomes extremely tempting to do so. Let me pick an almost trivial example with which every reader of this column is familiar. Whenever we are asked to lecture about training evaluation, we trot out the Kirkpatrick model1 or one of its more recent avatars. Yet, the number of training days per person (an eminently gameable statistic, which can be raised without imparting much worthwhile training) is still the most frequently used KPI for training managers in India. Obviously, at the level of the organization, both the temptation and the impact of manipulation are of a much higher order of magnitude. This is where gaming skills are at a premium and their use leads to great divergence between the lofty original purposes of organizations and what they actually land up doing – and for which their people are munificently rewarded.

Games People Play – With Goals