Misplaced Management Goals: The Surefire Way to Fail Your Business

July 27, 2011

This article is inspired by a recent post on Ben Horowitz’s blog titled “When Employees Misinterpret Managers“. Though it is titled as such, I discovered that it was really about how managers misdirect their employees by setting goals that appear logical on the surface, but deeply misplaced and disruptive when transmitted and executed upon by employees. Managers tend to do this because there always seems to be a set of ready to use “metrics” they can use that they believe will help them succeed. Yet, more often than not, adherence to these metrics actually leads to misplaced focus and dysfunction within the organization.

Ben drew on his considerable experiences managing technology teams and companies to give examples of such mismanagement in managing engineering teams, sales teams and whole divisions of a large technology corporation like HP. The problem, I think, is that when managers set up metrics and goals to manage their organizations, they fail to consider that employees will consider these goals and metrics the end results they need to attain, instead of just proxy measures for performance. Employees will naturally adapt their own internal set of objectives to the stated objective and optimize their behavior to the metrics. Most of the time, though, these apparent management goals do not address the key issues or actual business objectives. And thus you end up with rewarding and encouraging one behavior, while actually hoping for another set of behaviors/outcomes.

But this is not new. In a classic article written in 1975, a management science researcher named Steven Kerr wrote about the myriad variations of these problems in a very succinct title: “On the folly of rewarding A, while hoping for B”. The same thread of the mismatch between actual objectives (which are typically not exactly measurable) and measured objectives runs through his examination of many different fields, ranging from business (consulting, business) to politics, medicine, education and so on. I must emphasize the word “folly” here because upon examination these mismatches are very obvious, and yet people for the most part fail to recognize them and as a result they constantly project misplaced objectives onto their actual goals and reap failures instead of expected success. Just take the business world for example, despite many lessons we have learned about the danger of focusing on short term profits, stock prices are still heavily influenced by quarterly earnings. Until very recently most executives were still compensated for their company’s yearly performance, etc.

So how do we avoid setting misplaced goals and setting our own business back with these goals? Kerr pointed out four main factors, two of which I believe are very pertinent to expansion stage software companies:

– Fascination with an objective criterion – Believe that you need a metric to measure anything well, which is also called the curse of the vanity metrics

– Overemphasis on highly visible behavior – try to manage your business solely through metrics, undue processes and best practices, without looking into less seen business drivers.

I have one more factor to add to the list, one that is specific to expansion stage companies:

– Over management: a growing technology needs just as much leadership as it needs management. Strong leadership provides the impetus and steady management provides the guidance for growth. However, having too many layers of management and having too much focus on managing the operations will misplace the most fundamental goal of the business: To grow and innovate!

Chief Business Officer at UserTesting

Tien Anh joined UserTesting in 2015 after extensive financial and strategic experiences at OpenView, where he was an investor and advisor to a global portfolio of fast-growing enterprise SaaS companies. Until 2021, he led the Finance, IT, and Business Intelligence team as CFO of UserTesting. He currently leads initiatives for long term growth investments as Chief Business Officer at UserTesting.