When Employees Misinterpret Managers(bhorowitz.com)
bhorowitz.com
When Employees Misinterpret Managers
http://bhorowitz.com/2011/07/20/when-employees-misinterpret-managers/
9 comments
It's more like simple user error than a compiler error. "Aaaagh, why did the computer do that?" "Because you told it to." s/computer/employees/
Also, in his retelling, he skipped the part where the employees pointed out situations where they would be punished for making the right decisions, asked for assurance that doing the right thing for the business would be rewarded (or at least not punished) regardless of the official "goals" and "incentives", and were told not to expect any such consideration. I guarantee that happened, but for some reason he doesn't remember it as an important part of the story.
Also, in his retelling, he skipped the part where the employees pointed out situations where they would be punished for making the right decisions, asked for assurance that doing the right thing for the business would be rewarded (or at least not punished) regardless of the official "goals" and "incentives", and were told not to expect any such consideration. I guarantee that happened, but for some reason he doesn't remember it as an important part of the story.
I hope that we can more widely spread the news: power makes you stupid. I wouldn't say 'for some reason' - I would say 'because of cognitive biases that would afflict any other ordinary human being in his situation'.
Power makes you stupid, a summary: http://www.washingtonpost.com/wp-dyn/content/article/2007/11... - the article in question cites work by Adam Galinsky of Northwestern University and Dacher Keltner of Berkeley.
"Keltner and others have shown that power exacerbates many cognitive biases. People who lack power turn out to be more accurate in guessing the opinions of those around them, whereas those in power tend to be inaccurate. Because subordinates are also hesitant to tell superiors things they do not want to hear, the problem gets worse, with powerful people having even less input and perspective about how others think and feel."
So I believe that that's a cause of a great deal of bad management - I also believe that's part of why the 37Signals folks have done so well with a minimal-management strategy, they're consciously trying to avoid the way that information becomes tainted when it travels vertically in a hierarchy.
Power makes you stupid, a summary: http://www.washingtonpost.com/wp-dyn/content/article/2007/11... - the article in question cites work by Adam Galinsky of Northwestern University and Dacher Keltner of Berkeley.
"Keltner and others have shown that power exacerbates many cognitive biases. People who lack power turn out to be more accurate in guessing the opinions of those around them, whereas those in power tend to be inaccurate. Because subordinates are also hesitant to tell superiors things they do not want to hear, the problem gets worse, with powerful people having even less input and perspective about how others think and feel."
So I believe that that's a cause of a great deal of bad management - I also believe that's part of why the 37Signals folks have done so well with a minimal-management strategy, they're consciously trying to avoid the way that information becomes tainted when it travels vertically in a hierarchy.
I don't think the employees misinterpreted at all. I think they knew exactly what they were doing.
I think instead, the manager simply failed to realize what his actions would do. He gave them different incentives, and they reacted to them.
Employees are there to work for the company, but they will not promote the company at their own expense. If your incentive plans incentivize the wrong things, you'll get the wrong things.
'Clever' incentive plans are rarely actually clever.
I think instead, the manager simply failed to realize what his actions would do. He gave them different incentives, and they reacted to them.
Employees are there to work for the company, but they will not promote the company at their own expense. If your incentive plans incentivize the wrong things, you'll get the wrong things.
'Clever' incentive plans are rarely actually clever.
It'd be really nice if people read Freakonomics before sitting down to design workplace incentives. I know it's not the most rigorous treatment of economics but it does a great job of hammering the point home with some memorable and accessible anecdotes.
do you think people that design "workplace incentives" can read? ;)
This Wikipedia page is the best piece on incentives of all time:
"The term 'Cobra effect' stems from an anecdote set at the time of British rule of colonial India. The British government was concerned about the number of venomous cobra snakes. The Government therefore offered a reward for every dead snake. Initially this was a successful strategy as large numbers of snakes were killed for the reward. Eventually however the Indians began to breed cobras for the income.
When this was realized the reward was canceled, but the cobra breeders set the snakes free and the wild cobras consequently multiplied."
"The term 'Cobra effect' stems from an anecdote set at the time of British rule of colonial India. The British government was concerned about the number of venomous cobra snakes. The Government therefore offered a reward for every dead snake. Initially this was a successful strategy as large numbers of snakes were killed for the reward. Eventually however the Indians began to breed cobras for the income.
When this was realized the reward was canceled, but the cobra breeders set the snakes free and the wild cobras consequently multiplied."
I heard a version about an archeologist paying per-piece for shards of ancient pottery. So the locals broke the artifacts into little pieces to get more money!
I'd heard the version about the French paying a bounty for dead rats, both are great examples of how difficult it is to incentivize an behavior when all you can reward is a concrete outcome.
At our work we sometimes have unofficial rewards for reaching goals (e.g., as a team if we reach X number of bugs we get doughnuts).
I joke with my co-workers that we should immediately stop finding bugs once we reach X, since anything further than that is wasted effort (and sets the bar higher when the next doughnut offer comes around).
I joke with my co-workers that we should immediately stop finding bugs once we reach X, since anything further than that is wasted effort (and sets the bar higher when the next doughnut offer comes around).
Great story, but from the briefest of googlings, it seems poorly sourced. References to business literature are unreliable. Are there good historical sources for this?
The story itself reminds me of John Gall's classic book on systems (originally Systemantics, now The Systems Bible).
The story itself reminds me of John Gall's classic book on systems (originally Systemantics, now The Systems Bible).
Similarly if you start measuring LOC (lines of code) on your developers and rewarding or penalizing as such. You are guaranteeing that the number of LOC increase. Same applies to things further up in the stack - # bugs fixed, # tickets closed, etc.
Scott Adams (Dilbert cartoonist) had a similar example of a company that paid its testers and developers a small bonus for each bug found and fixed. So of course the developers started intentionally coding bugs just so they could get paid for fixing them.
"In all three cases, managers got what we asked for, but not what we wanted. How does this happen? Let’s take a look."
So, the managers failed to communicate what they wanted to the employees, but this is spun in the headline as the employees' fault.
So, the managers failed to communicate what they wanted to the employees, but this is spun in the headline as the employees' fault.
The title is "when employees misinterpret managers". Anybody who thinks that phrase implies it's anything but the manager's fault is either not a manager or is a bad manager.
In that sentence, employees is the subject, and managers is the object. It's the employees who are doing the misinterpreting of the managers. Only a manager would think that the title sounds like owning up to a mistake. :)
I reinforce this comment. The title "When Employees Misinterpret Managers" at best very weakly implies that the managers are doing something. It plainly states, in normal English, that employees did something (they misinterpreted) to managers. Only by the most convoluted thinking could you remove that plain meaning and substitute in "managers gave instructions excessively prone to misinterpretation" or something similar. `bryanlarsen`'s point is absolute bullshit.
Now: reading the article, that does indicate that it's the managers' fault, and it's a bang-up job of doing that. But the headline - oy!
Now: reading the article, that does indicate that it's the managers' fault, and it's a bang-up job of doing that. But the headline - oy!
In business communications the onus is usually on the speaker to frame things in such a way that the audience can understand them. When employees misinterpret managers then it can be assumed that managers misspoke.
"When managers fail to communicate" would be a better way of framing the topic.
Except you're missing out the crucial employees part, and it's hard to add without making the headline long and unwieldy. And misinterpret has fairly significantly different loading than "fail to communicate". I still think the original headline is better than yours. The target audience is managers, and will implicitly understand that a it's the managers fault when an employee misinterprets the manager.
Headline writing is hard.
Headline writing is hard.
The headline could've been better, no question.
It is my experience that employees who hear it phrased that way, though, will from painful experience assume that they're about to be blamed for something.
Yes, a good manager takes responsibility when something like this happens (as the author does). But how many good managers are there? It should be more clear on who's at fault, maybe the bad managers will turn around about that.
I saw an old work training film about management with Jon Cleese as some sort of angel (god?). He keeps explaining over and over again to the manager that it's his responsibility for everything. It's at least the starting point for a manager to figure out what went wrong.
I saw an old work training film about management with Jon Cleese as some sort of angel (god?). He keeps explaining over and over again to the manager that it's his responsibility for everything. It's at least the starting point for a manager to figure out what went wrong.
It's worse than that. The Manager communicated their BAD IDEA very well, and the employees obeyed. It's more of a bad manager situation, NOBODY is misinterpreting orders. Managers are just not understanding what they want (my only problem is the title).
This. When I read the article, I was actually surprised that he didn't want his sales team to generate a smaller overall revenue, distributed over the month - I assumed that the distribution would drive down costs and lead to greater profit.
One thing that I think would have worked better is ask his sales team "why do most of our sales come at the end of a quarter?"
One thing that I think would have worked better is ask his sales team "why do most of our sales come at the end of a quarter?"
> One thing that I think would have worked better is ask his sales team "why do most of our sales come at the end of a quarter?"
Yes, why? It seems to be that case in lots of organizations. My current theory has to do with negotiation positions: Salespeople want bonuses, they get bonuses per quarter. As the quarter ends, the customer can drive harder for bargains as salespeople get more desperate to make a sale. Consumer just exploit that.
Anybody with a better theory, or some reasons why my theory would be right or wrong?
If my theory was right and the primary cause, then remodelling salespeople's incentive to be independent of quarterly boundaries should remove the hockey stick.
Yes, why? It seems to be that case in lots of organizations. My current theory has to do with negotiation positions: Salespeople want bonuses, they get bonuses per quarter. As the quarter ends, the customer can drive harder for bargains as salespeople get more desperate to make a sale. Consumer just exploit that.
Anybody with a better theory, or some reasons why my theory would be right or wrong?
If my theory was right and the primary cause, then remodelling salespeople's incentive to be independent of quarterly boundaries should remove the hockey stick.
I'd say that not only bonuses work per quarters but budgets are generally allocated in quarters or semesters as well. Typically, budgets allocated for one period need to be used in that period, otherwise it's "lost" and you don't get as much the next period.
So, on one hand, sales people want to close as many sales as possible before the end of a quarter and, on the other, buyers are also pushed to spend the money towards the end of the quarter.
So, on one hand, sales people want to close as many sales as possible before the end of a quarter and, on the other, buyers are also pushed to spend the money towards the end of the quarter.
There are a few reasons but they are all related to the quarterly numbers. Whether it's salespeople who get a bonus or the board pushing for a quarterly revenue number, sales will make the biggest concessions at the end of the quarter to try to close the deal. Customers are aware of this and so they push closing out to the end to take advantage of it.
Ways around this might be to look at some kind of rolling 3-month average when examining revenues/sales or comparing sales people to each other (although depending on the sales volume this might suck statistically). You could also do sales bonuses as a combination of numbers + manual review. Maybe eliminate bonuses altogether and go straight commission so that the salespeople's incentive is to close the biggest deal irregardless of when. This of course is predicated on the board not pushing for big quarterly numbers; if that is the case then they are possibly the ones being the "bad managers" (minus extenuating circumstances like shopping around for a buyout).
Ways around this might be to look at some kind of rolling 3-month average when examining revenues/sales or comparing sales people to each other (although depending on the sales volume this might suck statistically). You could also do sales bonuses as a combination of numbers + manual review. Maybe eliminate bonuses altogether and go straight commission so that the salespeople's incentive is to close the biggest deal irregardless of when. This of course is predicated on the board not pushing for big quarterly numbers; if that is the case then they are possibly the ones being the "bad managers" (minus extenuating circumstances like shopping around for a buyout).
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I love how forthright Ben is in detailing his own mistakes in management, to show how he learned from them.
He's insightful here on how to avoid managing for short-term metrics in a way that sacrifices value and long-term growth, one of the most widespread and persistent management mistakes. Ultimately, no metric can substitute for having individual employees who really care about producing work that the end user will love.
He's insightful here on how to avoid managing for short-term metrics in a way that sacrifices value and long-term growth, one of the most widespread and persistent management mistakes. Ultimately, no metric can substitute for having individual employees who really care about producing work that the end user will love.
Ben Horowitz's actual topic is the challenge of incentivizing management.
His subject is covered very well by one of the best to write about this subject, Charlie Munger (Warren Buffets right hand man and Director of Berkshire Hathaway).
Charlie Munger discusses extensively the challenge of not only incentivizing managers and employees, but demonstrating that it is difficult to even fully understand what really incentivizes them (hint: it's typically different than what their superior thinks it is). He talks about human mis-judgement and its role in distorted intending incentives.
Munger says over 30+ years in business, this is the one area he continues to make judgement mistakes year after year, since this is such a difficult topic to get right. That doesn't mean you can't get it right or that proper incentives don't work however.
Check out the FedEx example in Munger's 1995 speech to Harvard.
http://www.rbcpa.com/Mungerspeech_june_95.pdf
His subject is covered very well by one of the best to write about this subject, Charlie Munger (Warren Buffets right hand man and Director of Berkshire Hathaway).
Charlie Munger discusses extensively the challenge of not only incentivizing managers and employees, but demonstrating that it is difficult to even fully understand what really incentivizes them (hint: it's typically different than what their superior thinks it is). He talks about human mis-judgement and its role in distorted intending incentives.
Munger says over 30+ years in business, this is the one area he continues to make judgement mistakes year after year, since this is such a difficult topic to get right. That doesn't mean you can't get it right or that proper incentives don't work however.
Check out the FedEx example in Munger's 1995 speech to Harvard.
http://www.rbcpa.com/Mungerspeech_june_95.pdf
See also, http://en.wikipedia.org/wiki/Goodharts_law . There are several take-aways, but the relevant one here is "a metric becomes useless as soon as it is a goal."
One thing about "you get what you measure/pay for" is that if you're clear about your incentives its much easier to see how your expectations and the employee's actions misalign. If you hide your measurements and incentives behind a complicated or arbitrary system you'll never spot the misalignment.
i am sure folks here have already looked at this : http://www.youtube.com/watch?v=u6XAPnuFjJc (RSA Animate - Drive), but doesn't hurt to spread the word again.
maybe marginally related to the article...
maybe marginally related to the article...
In a normal business environment, human cognitive biases about authority act very strongly. I think that a big part of what causes 'bad management' is that managers may tend to think of themselves as buddy-buddy with their subordinates, and rationalize that surely someone will tell them if they make a mistake, issue instructions that seem counterproductive, make bad tradeoffs like the ones in the article, et cetera, et cetera. That's almost always wrong. The incentive structure for normal employees means that you go along with the boss' idiot idea in almost every case, or alternatively that you take it on good faith that your wise and benevolent manager knows what they're doing, and in both cases employees do not critique managers in ways that the managers can hear (by which I mean, both covert conversations and social cues that managers miss).