From the July/August Issue...
There is an adage in management that asserts “You can’t manage what you don’t measure.” By and large, it is hard to argue with that sentiment. Good metrics that accurately reflect the phenomenon of interest and are actionable can be very useful for organization leaders.
Nevertheless, that metrics mantra has some darker corollaries that need to be kept in mind. Let us consider three of them.
- Corollary 1: People will manage to their metrics—and maybe little else. If there is a single metric that drives a unit’s performance evaluation or revenue generation, it will be the focal point of the people who work there. In addition, they will frequently ignore other activities that might make a unit more effective or efficient. Work-arounds that compromise quality but keep things on schedule are a classic example. The truly good systems have multiple metrics that reflect multiple aspects of the processes and outcomes that lead to success for all.
- Corollary 2: We will manage to the metrics that are readily available, regardless of their true representation of our strategy. The classic joke that illustrates this point is one about looking for your car keys under the lamppost at night because that’s where the light is. It is occasionally difficult, if not impossible, to collect data points or metrics that would be desirable for management purposes. It turns out that the tendency to replace strategy with metrics—a practice called surrogation—is quite pervasive. The most common case of surrogation involves consumer satisfaction metrics. This is especially true in sectors where the customer lacks the education and experience to make a comprehensive assessment. Healthcare is a good example of that. In fact, patients fall back on surrogate metrics such as organizational reputation as they try to evaluate the service they received.
- Corollary 3: Metrics will be gamed. When metrics are tied to incentives or compensation, they will invariably be gamed for advantage over time. In health insurance, we see this in the form of upcoding procedures. In the delivery space, gainsharing occurs in referring patients to other services that providers benefit from financially.
Metrics have their downsides, but they are not going away. Luckily, the Journal of Healthcare Management receives many fine manuscripts that identify the metrics that matter and help managers factor them into operational strategies. We publish the best of those manuscripts in JHM, and this issue is no exception.
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