Unintended consequences and perverse incentives are as old as social organization. [See Wikipedia's unintended consequences page for an interesting and informative list.] Many of them could be avoided by asking a few simple questions ahead of time.

1. Can this metric be manipulated without improving the underlying business?

If so, employees are inventivized to take the short cut.

Example: PM schedule compliance

As commonly measured, PM schedule compliance allows dates to be moved or schedules to be adjusted or old work orders to be completed out in order to bring the numbers up.

2. Can this metric be improved through undesirable or unintended behaviors?

If so, then the benefits of improving the metric will be offset in ways probably not measured.

Example: MTTR

MTTR encourages maintenance employees to store and hide extra supplies or take short cuts in workmanship to get jobs done faster.

3. Can this metric be improved by sacrificing long-term productive capability?

If so, then short-term results will turn into long-term decline.

Example: earnings per share

If earnings per share is growing at five times the rate of revenue or more, watch out!

Are these metrics, therefore, invalid?

Not necessarily. But consider selectively sharing the information or de-emphasizing them in benchmarking efforts in order to mitigate the risks, MTTR in particular is especially useful for planning purposes, but not for incentive schemes.

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