HACKING PERFORMANCE MANAGEMENT THE BLUE-GREEN GAME

Transcription

1 HACKING PERFORMANCE MANAGEMENT THE BLUE-GREEN GAME

2 Before we start A QUICK POLL (WRITE YOUR ANSWERS DOWN)

3 1. Performance measures: a. Have little or no impact on behavior b. Have a moderate impact on behavior, but are not a major factor c. Determine how individuals behave

4 2. It is most important that performance measures should: a. Accurately reflect past performance b. Correctly influence future behaviors

5 3. Performance measurement should focus on the department level and encourage optimal departmental performance. a. True b. False

6 A Quick Primer GAME THEORY PRIMER: THE PRISONER S DILEMMA

7 Source:

8 Stay Silent (Cooperate) Prisoner Bob Confess (Defect) Prisoner Alice Stay Silent (Cooperate) Confess (Defect) (-1, -1) (-3, 0) (0, -3) (-2, -2)

9 COMMON QUIPS ABOUT PERFORMANCE MANAGEMENT

10 Kerr (1975) argues that formal reward systems should positively reinforce desired behavior, and not constitute an obstacle for the organization and its employees to overcome. Johnson and Kaplan (1987) expose the inherent flaws of traditional management accounting systems and describe dysfunctional behaviors from traditional performance measures. (Management Accounting) Kaplan and Norton (1992, 1996) further highlight the weaknesses of traditional measurement systems that lead to inappropriate behaviors such as short-term thinking, lack of strategic focus, failure to reinforce continuous improvement, and the resulting suboptimal system performance. (Balanced Scorecard) Copied and formatted from Umble & Umble (2012).

11 Goldratt (1990) wrote Tell me how you measure me, and I will tell you how I will behave. AND If you measure me in an illogical manner, do not complain about illogical behavior. (The Goal) Chenhall and Langfield-Smith (2007) argue that the effectiveness of performance measurement systems depends on how they impact individuals behavior. Radnor and Barnes (2007) suggest that performance measurement systems should promote appropriate behaviors. Copied and formatted from Umble & Umble (2012).

12 Before we play the game ANY EXAMPLES OF POOR PERFORMANCE MANAGEMENT?

13 AND NOW, ON TO THE GAME!

14 RULES Let s play the Blue Green game (Umble & Umble) and win some coffee! Split into FOUR TEAMS. Elect a manager! If a department cannot reach a consensus on the color of chip to submit, the manager is authorized to make the final decision Team with the best score wins! Every member of the winning team wins a $5 STARBUCKS GIFT CARD! Yes, they actually work, and I m not messing with you.

15 THE BLUE-GREEN GAME Distribution of Chips Number of Points Won/Lost 4 Blue, 0 Green Each department wins 1 point 3 Blue, 1 Green Blue Departments Green Departments 2 Blue, 2 Green Blue Departments Green Departments 1 Blue, 3 Green Blue Departments Green Departments 0 Blue, 4 Green Each department loses 1 point Lose 1 point Win 3 points Lose 2 point Win 2 points Lose 3 point Win 1 points Fiverounds of play. Notes: Points DOUBLE in Round 3 Points TRIPLE in Round 5

16 Submit a chip! ROUND 1

17 SCORING Distribution of Chips Number of Points Won/Lost 4 Blue, 0 Green Each department wins 1 point 3 Blue, 1 Green Blue Departments Green Departments 2 Blue, 2 Green Blue Departments Green Departments 1 Blue, 3 Green Blue Departments Green Departments 0 Blue, 4 Green Each department loses 1 point Lose 1 point Win 3 points Lose 2 points Win 2 points Lose 3 points Win 1 point

18 Submit a chip! ROUND 2

19 SCORING Distribution of Chips Number of Points Won/Lost 4 Blue, 0 Green Each department wins 1 point 3 Blue, 1 Green Blue Departments Green Departments 2 Blue, 2 Green Blue Departments Green Departments 1 Blue, 3 Green Blue Departments Green Departments 0 Blue, 4 Green Each department loses 1 point Lose 1 point Win 3 points Lose 2 points Win 2 points Lose 3 points Win 1 point

20 Submit a chip! ROUND 3

21 SCORING Distribution of Chips Number of Points Won/Lost 4 Blue, 0 Green Each department wins 2 points 3 Blue, 1 Green Blue Departments Green Departments 2 Blue, 2 Green Blue Departments Green Departments 1 Blue, 3 Green Blue Departments Green Departments 0 Blue, 4 Green Each department loses 2 points Lose 2 points Win 6 points Lose 4 points Win 4 points Lose 6 points Win 2 points

22 Submit a chip! ROUND 4

23 SCORING Distribution of Chips Number of Points Won/Lost 4 Blue, 0 Green Each department wins 2 points 3 Blue, 1 Green Blue Departments Green Departments 2 Blue, 2 Green Blue Departments Green Departments 1 Blue, 3 Green Blue Departments Green Departments 0 Blue, 4 Green Each department loses 2 points Lose 2 points Win 6 points Lose 4 points Win 4 points Lose 6 points Win 2 points

24 Submit a chip! ROUND 5 FINAL ROUND

25 SCORING Distribution of Chips Number of Points Won/Lost 4 Blue, 0 Green Each department wins 3 points 3 Blue, 1 Green Blue Departments Green Departments 2 Blue, 2 Green Blue Departments Green Departments 1 Blue, 3 Green Blue Departments Green Departments 0 Blue, 4 Green Each department loses 3 points Lose 3 points Win 9 points Lose 6 points Win 6 points Lose 9 points Win 3 points

26 Each group announce their points AND THE WINNER IS.

27 Have things changed? A QUICK POLL (WRITE YOUR ANSWERS DOWN)

28 1. Performance measures: a. Have little or no impact on behavior b. Have a moderate impact on behavior, but are not a major factor c. Determine how individuals behave

29 2. It is most important that performance measures should: a. Accurately reflect past performance b. Correctly influence future behaviors

30 3. Performance measurement should focus on the department level and encourage optimal departmental performance. a. True b. False

31 Let s debrief before the next slides. WHAT DID WE LEARN?

32 RESULTS Silos promote bad behavior, allowing each organization to attempt to maximize their payoffs. Rational players act to maximize their payoffs, even at the expense of others Poor transparency of goals and performance promotes bad behavior Given the opportunity, individuals will take advantage of poorly constructed plans Pro tip: TEST performance management systems after you construct them. See what would happen if you aim to maximize a particular payoff. Reward systems are effective, at times to a determent!

33 TYING TO SECURITY Organizational metrics are often not optimized to allow employees to contribute to global optimum. Security metric of most closed vulnerabilities Security metric of most blocked attacks (which is sketch to begin with) Number of systems moved into compliance with X standard Better Options: % of systems that meet X Length of security patch deployment, by severity

34 GAME THEORY FUN People often take aggressive postures that lead to mutually bad outcomes even though mutual cooperation is mutually preferable. Even if everyone agrees that an outcome is everyone s favorite, they might not get that outcome. Closing roads can improve everyone s commute time. Everyone might mimic everyone else just because two people chose to do the same thing. You shouldn t try to maximize your score in Words with Friends/Scrabble. As drug tests become more accurate, they should be implemented less often. Source:

35 References Chenhall, R. H., & Langfield-Smith, K. (2007). Multiple perspectives of performance measures. European Management Journal, 25(4), Goldratt, E. M. (1990). The haystack syndrome: Sifting information out of the data ocean. Crotonon-Hudson, NY: North River Press. Johnson, H. T., & Kaplan, R. S. (1987). Relevance lost: The rise and fall of management accounting. Boston, MA: Harvard Business School Press. Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard measures that drive performance. Harvard Business Review, 70(1), Kaplan, R. S., & Norton, D. P. (1996). Using the balanced scorecard as a strategic management system. Harvard Business Review, 74(1), Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), Poundstone, W. (1992). Prisoner s dilemma. New York, NY: Doubleday. Radnor, Z. J., & Barnes, D. (2007). Historical analysis of performance measurement and management in operations management. International Journal of Productivity and Performance Management, 56(5/6), Umble, E., & Umble, M. (2012). Illustrating the Impact of Performance Measurement Systems on Organizational Performance: The Blue-Green Game. Decision Sciences Journal of Innovative Education, 10(3),

36 That s it, that s the brw@brandenwilliams.com