target audience: TECH BUYER Publication date: Jun 2021 - Document type: Tech Buyer Presentation - Doc Document number: # US47987221
Perverse Incentives: Lessons from Unexpected Sources
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Abstract
This IDC Tech Buyer Presentation alerts readers to ways that KPIs can go wrong and how to avoid measurement pitfalls. A "perverse incentive" is an unintended and undesirable result that accidently rewards the wrong behavior, causes people to act on exceptions, perpetuates a broken process, measures results too late, or omits the influence of natural human motivations. Many KPIs now in use fail to measure and encourage the human actions they were intended to foster — impeding the cultural change to a data-driven organization.
"CIOs should examine metrics used without intentional thought about the ramifications," says Cora Carmody, adjunct analyst with IDC's IT Executive Program (IEP). "Time, money, quality, and risk: most of the measures of business success are within those dimensions — but the KPIs used must drive improvements, not result in substandard or counterproductive outcomes."