Measuring and managing performance in organizations

is an excellent book by Robert Austin (isbn 978-0-932633-36-1). As usual I'm going to quote from a few pages:

When outcomes are revealed so slowly, learning is difficult.

The difficulty of verifying quality is heightened when production activity is largely mental, hence not directly observable, as in many professional settings such as software development.

Empirical work on human motivation (Frey, 1993; Deci and Ryan, 1985, McGraw, 1978) has shown that external motivators often crowd out internal motivation.

Alfie Kohn (1993) observes that measurement connotes comparability which, in turn, fosters competition and even unfriendly feeling between workers, thereby undermining any sense of common purpose.

You manage things, and you lead people. You control things, and you release people. [Ed Tilford]

There is reason to question whether the two intended uses of measurement [motivation and information] can be decoupled in real settings.

W. Edwards Deming, often considered the father of both the Japanese and the American quality movements, has declared performance measurement "the most powerful inhibitor to quality and productivity in the Western world".

Dysfunction's defining characteristic is that the actions leading to it fulfil the letter but not the spirit of stated intentions.

Measured performance trends upward; true performance declines sharply. In this way, the measurement system becomes dysfunctional.

…conclude that no measurement system can be designed to preclude dysfunctional behaviours.

…motivational measurement is, by definition, intended to cause reactions in the people being measured, while informational measurement should be careful not to change the actions of the people being measured.

Russell Ackoff draws a careful distinction between organisms and organisations (concisely paraphrased here by Mason and Swanson): … organisms are comprised of organs that only serve the purpose of the system, whereas organisations are comprised of purposeful subsystems with their own goals.

The quality of a product or service is usually much harder and costlier to measure than its quantity.

If there is a single message that comes from this book, it is that trust, honesty, and good intention are more efficient in many social contexts than verification, guile, and self-interest.

The inclination to interpret control narrowly is due to what might be called a standardisation reflex.

Engineering control does not ordinarily assume self-interested behaviour on the part of components of the control system.

Almost all experts strongly agreed that the primary reason to measure in software development was informational rather than motivational.