Measuring KM: Measures, Targets and Rewards

1. Measuring KM Measures, targets & rewards David Gurteen Gurteen Knowledge Bogota, June 2010

2. Begin with the end in mind  A talk on measures, targets and rewards  An explanation of the Knowledge Café  A Knowledge Café on the topic

3. The context  Start with the business issue  Measures  Targets  Rewards

4. Start with the business issue The measures will then naturally follow

5. Business issues and outcomes  “People will not share their knowledge” is NOT a business issue  “Implementing a knowledge sharing system” is NOT a business outcome

6. Business issues and outcomes  “Slowness to market of new products” is a business issue  “Shortening the time to market of new products” is a business outcome

7. Business outcomes  These are not business outcomes – Doing KM – Improving knowledge sharing – Creating a learning organization – Creating a knowledge driven organization – Setting up communities of practice  These are business outcomes – Cutting costs; Improving profit – Improving quality – Reducing staff turn over

8. Measure against business outcomes  Business outcomes – Cutting costs; Improving profit – Improving quality – Reducing staff turn over  These can easily be measured  Doing KM cannot!

9. Understanding measures Understanding measures Understanding KM measures

10. Two things can be measured 1. Measure the knowledge of an organization Intellectual capital 2. Measure outcomes of ‘knowledge in action’ Say a KM project – – My interest is in outcomes – demonstrating the value of a KM project 

11. Some considerations when measuring things

12. Beware the word “Measure”  Beware the word “measure”!  Other words: performance indicator, metric, ROI (return on investment)  Performance indicator is usually best  Measures and metrics imply an exactness that is usually not achievable  Its ok 'to measure' but you don't create 'a measure‘ but an ‘indicator’

13. What is the ROI of KM?  Common question  There isn’t one – only an ROI on the business outcomes  Distinguish between – estimating an ROI before a project i.e. justifying the expenditure – after or during a project i.e. demonstrating value  Its hard to estimate a financial ROI before a project

14. Why measure?  Could be for one of several purposes – To conform to laws or regulations – To deliver on a promise or agreement – To meet a service level agreement – To justify your existence – To enforce performance – You have been told to – To prove to yourselves you are not wasting time – To provide feedback that facilitates learning

15. Keep asking the question why!  What are the real objectives and are measurements the best way of achieving them?  Don’t measure for its own sake!

16. Beware not measuring  Your manager may not have asked for measures  But when the going gets tough you had better be able to justify your existence  Your manager’s manager may have different ideas  Your manager may change!  When cuts have to be made – KM is high on the list! (KM means Kill Me!)

17. Plan to measure before you start  You should plan to measure before you start a KM project - not after  What you measure and how you measure will affect how you do things!!  Too often knowledge managers don’t plan to measure up front!

18. There are multiple stakeholders  Multiple stakeholders will 'measure' you depending on their perspective  Don’t assume – you know what the right measures are. Ask your stakeholders! – they will measure you by the measures you have agreed to provide them!  Understand what is important to them  You may be measured on their 'gut feel’

19. Prime stakeholders  The sponsor – Agree & measure what’s in it for them!  Senior management – Agree & measure on business outcomes  Staff – Agree & measure on what's in it for them

20. Two types of measure  There are two types of measure – you can measure activity  e.g. creating an ideas database – or you can measure business outcomes  e.g. improved innovation

21. Focus on outcomes not activities  Too often we measure activity rather than outcome  And we try to measure & justify KM projects on activity rather then outcome  Sometimes activity is the only proxy we have but too often we focus on activities at the expense of outcomes

22. Examples of measure of activity  Number of documents captured in a database  Number of times a document is read  Number of meetings held  Number of active communities of practice  Time taken to complete a task

23. Examples of measure of outcome  Bid to win ratio  Increased sales  Decreased costs  Improved quality  Reduced development time  Reduced staff turn over  Percentage of customers happy with service according to customer satisfaction survey

24. Activities v Outcomes  Measuring activity is useful as it can be a good indicator that things are going well  Having 10, 20 or 30 communities of practice is meaningless in terms of business outcome  The real measure is the impact on the business  This should relate to the business purpose for which the communities were created e.g. getting new products to market faster

25. Some things cannot be measured  Cynefin domains – Simple – Complicated – Complex – Chaotic  You cannot correlate cause & effect in the complex domain  You cannot say this was an outcome of my activity  And thus things cannot be directly measured

26. Measures distort  Measures distort behaviour  Have unintended & unimagined side-effects  Can be detrimental to the whole!  You tend to only get what you measure  Measuring one thing implies that others not being measured are not important

27. Softer measures  Outcome based measures  Activity based measures  Anecdotal stories – Success stories – Focused on outcomes  Surveys and polls – Can provide numbers

28. Better measures  To provide feedback to facilitate learning  NOT for control or conformance  Must be developed, owned and bought into by the people involved otherwise they will be ‘gamed’  They are personal learning tools!

29. When a measure becomes an objective it ceases to be a good measure!

30. Targets

31. Do not set targets Do not set targets

32. Do not set targets  People are often given ‘targets’ by which they are ‘measured’  A command & control way of trying to force people to change  Targets have similar detrimental effects to rewards e.g. impose an unthinking solution  Rewards and imposed targets will be gamed  Targets need to be agreed and bought into

33. Examples of poor targets  First piece of baggage should arrive in arrival hall within 10 minutes of plane touching down  Patients when booking an appointment should not have to wait more than 48hrs to see their doctor  In-patients in A&E should be seen by someone within 30 minutes of arrival

34. Beware of gaming of targets  A measure or target that is based on a simple metric such as a number or time interval is probably a bad one as it can be too easily “gamed” – too simple to reflect the complexity - the multidimensional & contextual aspects – a simple ‘satisfaction survey’ that measures ‘customer perception’ is better

35. Rewards

36. Do you believe we need to reward knowledge sharing?

37. Do not reward Do not reward people for sharing their knowledge

38. Alfie Kohn and Dan Pink  Punished by Rewards by Alfie Kohn  Drive: The Surprising Truth About What Motivates Us by Dan Pink

39. Rewards  Research shows that giving rewards (even praise) actually result in worse performance and destroys intrinsic motivation

40. Do not reward To the best of my knowledge, no controlled scientific study has ever found a long-term enhancement of the quality of work as a result of any reward system. Credit: Alfie Kohn

41. Do not reward  Rewards punish  Rewards rupture relations  Rewards ignore reasons  Rewards deter risk taking  Rewards undermine interest Loving what you do is a more powerful motivator than any goody including money Credit: Alfie Kohn

42. Rewards Punish  Threats & coercion destroy motivation and so do rewards  Rewards are manipulative  “Do this and you will get that” is not much different to “Do this else here is what will happen to you”  When people do not get the reward they hoped for they feel punished  The more desirable the reward the more demoralizing it is to miss out Credit: Alfie Kohn

43. Rewards rupture relations  Excellence depends on teamwork  Rewards (especially if scarce) destroy cooperation  Incentive driven employees will not ask for help from their manager when they need it  They will conceal problems from their manager to appear infinitely competent Credit: Alfie Kohn

44. Rewards ignore reasons  To solve problems people must understand the causes  They ignore the complexities of the problems  Each situation calls for a different response  Rewards tend to blindly promote a single solution Credit: Alfie Kohn

45. Rewards deter risk-taking  People are less likely to take risks; to explore possibilities; to play hunches  The No. 1 casualty of rewards is creativity Credit: Alfie Kohn

46. Rewards undermine interest  Loving what you do is a more powerful motivator than any goody including money  Rewards are controlling!  If people focus on getting a reward they tend to feel their work is no longer freely chosen and directed by them  If they have to bribe me to do it - it must be something I don’t want to do! Credit: Alfie Kohn

47. So how do you encourage people to share their knowledge and work better together?

48. Alfie Kohn  Pay people well  Pay people fairly  Then do everything possible to make money (rewards) off people’s minds Incentives, bonuses, pay-for- performance-plans and other reward systems violate this last principle by their very nature!

49. Bob Buckman Our approach to KM is far more than stick or carrot. We say, "Knowledge Sharing is your job. Do it!" As a reward you may keep your job.

50. Intangible Rewards  Opportunities for Personal Development  Recognition Loving what you do is a more powerful motivator than any goody including money