Learn a new word: Goodhart's Law

Happy 'First-day-of-the-rest-of-the-year'. I suppose every day is the first day of the rest of the year, but for some reason on the Tuesday following the long Labor Day weekend that feeling is much more acute.

Quick shot for your cram five days of work into four week. Another installment of your favorite series here on the blog - Learn a new word, where I share a word, term, phrase, or concept that I had not been familiar with previously, and for some reason seemed interesting/important/cool enough to share.

So here goes - and this one is especially for the 'You can't manage what you can't measure' types out there.

Our submission - Goodhart's Law

(from our pals at Wikipedia)

Goodhart's law is an adage named after economist Charles Goodhart, which has been phrased by Mary Strathern as: "When a measure becomes a target, it ceases to be a good measure." This follows from individuals trying to anticipate the effect of a policy and then taking actions which alter its outcome.

Actually Goodhart himself stated the 'law' just a little bit differently, theorizing that "When a measure becomes a metric, it ceases to be a good measure.”

Either way, the key point by Goodhart is still sound (and pretty obvious, even if you have never heard of our friend Goodhart).

Make a measurement - say time to fill open jobs, percent of new hires who stay longer than 6 months, or even number of new patents filed by the R&D department - doesn't matter, the sole or even a primary metric of success and evaluation and things tend to get a little strange.

The effected people pretty quickly learn how to manage/game the measurement, they start thinking, maybe too much, about how to drive that specific measurement in a manner that is positive for them, and they stop thinking so much about other, perhaps more cross-functional or strategic measurements.

And even worse, too many managers or leaders focusing too much on measurements can sometimes be an excuse for not exercising good judgement, a method that corporate bureaucrats use for CYA and holding on to territory, and an imperfect way to try and describe people and relationships in a numerical manner.

'You can't manage what you can't measure' is a fun thing to say. And sort of easy to agree with. But like Drucker's other widely quoted maxim, 'Culture eats strategy for breakfast' it definitely deserves more and closer scrutiny than it is typically given.

We manage the unmeasurable all the time. And reducing everything to something we can measure, to a number, is probably the fast path to inflexibility, failure to adapt, and a workforce conditioned to respond and behave to the movements of numbers on a spreadsheet.

Have a great week!

PODCAST: #HRHappyHour 294 - Labor Day Special: Talking about Work

HR Happy Hour 294 - Labor Day Special: Talking about Work

Hosts: Steve Boese, Trish McFarlane

Listen to the show HERE

This week on the HR Happy Hour Show, for a special Labor Day 2017 weekend show, Steve and Trish share some of their experiences of work, workplaces, bosses, and more. Bad jobs, great jobs, crazy jobs, great bosses, horrible bosses and more. We also share some of our for the future of work and workplaces as we think about our own kids heading into the workplace soon.

You'll hear stories about horrible promotional trinkets, the pros and cons of working in a cemetery, catching fraudsters at the amusement park, how cold it is in a perishable foods warehouse, bosses that truly cared and made a difference, as well as bosses who left a pair of 16 year-old knuckleheads to run the store.

You can listen to the show on the show page HERE, or by using the widget player below:

Labor Day is a great time to pause, reflect, and certainly to celebrate work and the workforce. We hope you like this fun episode where we share some of our best, worst, and most impactful memories of our work lives.

Happy Labor Day to all the HR Happy Hour fans and thanks as always for listening.

Thanks to show sponsor Virgin Pulse - learn more at www.virginpulse.com.

And subscribe to the HR Happy Hour Show on Apple Podcasts, Stitcher Radio, or wherever you get your podcasts.

Follow the HR Happy Hour on Twitter - @HRHappyHour and tweet the show with your best/worst/favorite jobs and workplaces.

WEBINAR: The Business Value of Employee Wellbeing

Quick announcement and an invitation to join me at my friends from Virgin Pulse next Wednesday, September 6 at 2PM ET for a FREE webinar on The Business Value of Employee Wellbeing.

This is an incredibly interesting topic, one that I have written about previously at HR Executive and about which Trish McFarlane and I did a recent HR Happy Hour Podcast on.

Details for next weeks' webinar are here:

Employees today are working more hours, taking less time off, more stressed, exercising less and falling short of reaching their potential – at work and at home. Successful HR and benefits leaders are smarter and more thoughtful about how wellbeing programs have an impact in driving desired people and business outcomes.

Join "The Business Value of Employee Wellbeing" with Steve Boese (that's me), long-time HR industry influencer and co-founder of H3HR Advisors. Steve will share his unique perspectives from having served in product development, enterprise HR and benefits system management, as an industry analyst, and now a popular industry voice and thought leader. Andrew Jacobus, Vice President of Insights and Data Science at the Virgin Pulse Institute, will share real-life examples of organizations achieving improvements to their bottom line due to the effectiveness of their employee wellbeing programs.

On the webinar you will hear:

What key elements of wellbeing programs drive business results

Which metrics illustrate employee wellbeing’s impact on productivity, performance, and revenue

How to drive engagement through social connections and a personalized experience

And more...

It should be a fun an interesting session and I hope you can join.

Register for the webinar here.

Hope to see you then!

What should an employer do when the state reduces the minimum wage?

While confessing to not knowing any of the back story or local details behind this, I read with interest this piece in the Atlantic about the state of Missouri rollback of the city of St. Louis minimum wage from $10/hour back down to $7.70/hour. The Atlantic piece is solid, if a little long, so if you don't have time to dig in to it the essentials are as follows:

1. The city passed an ordinance which was designed to gradually increase the minimum wage in St. Louis from $7.70 to $11. The wage had hit $10 just three months ago, in May.

2. The state of Missouri, whose governor and state legislature were not in favor of this increase, passed a so-called 'preemption' law, effectively barring cities and other local jurisdictions from setting local minimum wages at a level greater than the state level minimum wage.

3. The preemption law went into effect on this past Monday, reducing or re-aligning the minimum wage in St. Louis back down to the state level of $7.70.

Got all that?

Why this was interesting to me was not because of the politics of it, the local control vs. state level authority issues, or even the economic benefits and/or constraints that minimum wages place on labor markets.

What is interesting is the dynamics at individual employers who just three months ago were forced/compelled to raise wages to $10/hour for anyone earning less than that, and who know are allowed, by virtue of the preemption law going into effect, to cut wages back, as far back as $7.70.

These numbers might seem small, but a cut from $10 to $7.70 is almost a 25% reduction in pay. I don't care what you are earning, if the boss cuts you by a quarter, you are going to feel some pain.

So back to the interesting, (to me) stuff. Employers in St. Louis have three (maybe more, but they would be variations of these), options with respect to the wages of any folks they had to give increases to back in May,

1. Cut everyone who was bumped up to $10 back to their wage level as of May. 

2. Keep everyone at $10 who was given the bump in May.

3. Pick and choose who gets to stay at $10, (the better performers, more essential folks), and bump others back to their May hourly rate, or some other rate less than $10 that better reflects their performance, value, and position relative to their peers.

Options 1 and 2 are the easiest to implement, and for different reasons, the easiest to justify back to the employees. Which is why I would expect that the vast majority of employers will opt for one of these approaches,

Option 3 is harder to effect, requires better understanding of employee performance and value, needs managers that know what is going on and can communicate clearly why decisions are being made the way they are, and could possibly drive better overall performance, as better workers feel more rewarded, and the others see a way to work towards the wages they desire.

Yep, Option 3 is definitely much harder to pull off. Which for some cynical reason seems to me the one that the fewest employers will pursue.

Have a great day!

In the automation era, maybe people are still a competitive advantage

In the last year of so I kind of moved off of the 'robots are taking all the jobs' topic as I had gotten a little tired of it and after reading 17.993 pieces on the subject it is pretty clear that nothing at all is clear about it.

Maybe the robots will take all of the jobs. Maybe they will only take the 'bad' jobs that we don't want to do. Or maybe we will have to someday co-exist with our robot masters.

Or maybe people and our unique ability to connect with other people will continue to be an important competitive differentiator in a world where we seem more and more inclined to develop and implement technology to remove people from business processes. Tale a look at an excerpt from a piece in Fortune last week about how the home improvement and supply giant Lowes is rethinking the importance of real, live employees in delivering better customer service, (emphasis mine)

The company (Lowes) said its adjusted profit was $1.57 per share, below analysts' average estimate of $1.61, according to Thomson Reuters I/B/E/S, while net sales climbed 6.8 percent to $19.50 billion, short of forecasts for $19.53 billion. Comparable sales rose 4.5%, well below the result posted last week by Home Depot, suggesting Lowe's continues to struggle to capitalize on the housing boom compared to its nemesis.

But the home improvement retailer thinks it has found a solution: increasing hours for store workers to improve customer service.

"While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience," CEO Robert Niblock said in a statement. He added: "This includes amplifying our consumer messaging and incremental customer-facing hours in our stores." 

'Incremental customer-facing hours' might be the worst possible CEO-speak for 'putting more employees on the floor' but the real point can't be lost in the gobbledy-gook. If you have ever shopped in a Lowes or similar big-box format store you know that actually finding a customer service employee to help you with a question or to get help locating an item can be a daunting task. It seems so obvious that increasing staffing, hours, and enhancing the knowledge of store associates would likely drive significant increases in customer satisfaction, sales, and longer term loyalty.

But in the last several years most businesses like Lowes have seemed to focus energy and investment in all things digital - better websites and apps, self-checkouts, and even in Lowes case - actual robots that work in the stores.

But maybe, still, consumers see the value, understanding, and empathy that only people can provide. Maybe in a world where it seems like most of your competitors are moving towards ecosystems and processes that remove people and increase automation that actually providing old-school, in-person, and expert customer service, (from human employees), can still be a source of competitive advantage.

Really interesting times we live in where increasing customer service employees to improve a customer service problem seems like a bold, innovative, out of the box strategy.

Have a great week!