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From Dr. Scott Sampson's Understanding Services Businesses Book (click for table of contents)
SBP 14a: Measuring Customers⇐Prior —[in Unit 14: Measuring Service Quality and Productivity]— Next⇒SBP 14c: Comparing Apples and Oranges

SBP 14b: A Measure of Motivation

With services, employee motivation will often deteriorate to the level at which employees are measured.

Why it occurs

This principle occurs because it is very difficult to measure or even define employee productivity. (See SBP: Difficulty in Measuring Output.) Since productivity is loosely defined, employees often base their behavior on how productivity is “defined” in terms of how it is measured.

Question it addresses

How do we motivate employees to produce desired behaviors?


Employee productivity in service organizations can be difficult to measure. The measurement used can have a significant impact on employee motivation. The following are some examples of motivation that results from various kinds of productivity measurements.

If you measure customer volume, you get rapid service. This is the case with some call centers, where customer service agents are measured according to call count quotas. The result can be lousy service to individual customers.1)

If you measure complaints, you motivate complaint-avoidance behavior. That might sound like a positive thing except for the limits it can place on employee creativity and initiative. There are few greater motivators for meritocracy than to punish any adverse affects of risk taking, such as by making a big deal of random complaints.

If you measure work attendance, you motivate punctual clock punching. When eight hours of low productivity measures the same as eight hours of high productivity, many employees will reserve their energy by choosing for the former rather than the latter.

Granted, there are some employees who are motivated independently of what is measured. Those employees are likely to leave the organization due to mismatch between their values and the company's apparent “values.” Indeed, measurement systems are a primary signal of an organization's value system.

How it effects decisions

Companies should be careful in selecting how employee productivity will be measured, and especially how those measurements impact employees. What is convenient or easy to measure does not always portray what is truly important to the success of the organization.

What to do about it

It is difficult to say what the “best” productivity measurement method would be, since service processes differ and service organizations have various objectives. The decision of which measurements to track should be rooted in the values of the organization, which should be part of a viable and well thought out strategy.

For example

Among the most explicit measurement systems seen is service organizations is tipping at restaurants. Customers measure employee performance directly in the form of tips. Restaurants that have a no-tipping policy must rely on other means to motivate good service by employees.

Measurements do not necessarily have to tie into pay to motivate employees. Just knowing they are being measured influences employees' motivation. This was discovered with the legendary Hawthorne Studies, involving lighting experiments at a General Electric plant. When the lighting was increased, productivity went up. When lighting was lowered, productivity went up. The researchers discovered that by simply measuring the productivity of employees, productivity was influenced.

My airline example

It is very difficult to measure productivity of airline employees. What is a productive pilot? What defines a productive baggage handler? How does the company identify productive stewards and stewardesses? For airlines without formal measurement systems, the default becomes counting complaints. How do employees respond? By complaint minimization. Consider the personableness level of most airline employees, especially when compared with how it was a dozen or more years ago. Personableness does not seem to be on the increase.

An exception would be Southwest Airlines, who surely has access to complaint information but usually stands up for employees. Legend has it that one way Southwest measures the potential of customer service job applicants is to ask them to tell a joke. Such measurement motivates and promotes the “fun” culture for which Southwest is known.

How manufacturing differs

With manufacturing, productivity is relatively easy to define in terms of units of output per time period. As such, employee motivation is generally focused on what is rewarded, such as piece-rate pay motivating rapid production.

Analysis questions

  1. How is productivity measured in this organization?
  2. How do those measurements impact employee motivation? What types of behaviors are employees motivated to do? What types of behaviors are employees motivated to avoid?
  3. Might employees “manipulate” the measurements to their advantage without correspondingly improving productivity? How? What can the company do to prevent this?
  4. What do the measurements imply about what the organization values?

Application exercise

List three behaviors that would define good productivity for a particular type of employee at your target service business. For each behavior, describe a measurement which would motivate employees to exhibit the desirable behavior. How valid are those measurements-in other words, how accurately do they correlate with actual productivity? Might employees produce high measurements without correspondingly high productivity? How? Describe what the company might do to improve the validity of the measurements.

1) Page E1 of the June 8, 1998 Salt Lake Tribune contained an Associated Press article with the following statements: “Many customers complain about how hard it is to call customer service centers, where they get long waits, little information and often a bad attitude from people answering the phones. No wonder, says the Radclyffe Group, a management consulting firm that found in a study of 130 call centers that employees work under difficult and stressful conditions. Problems include . . . requiring [specified] numbers of calls to be handled by each worker.”

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