The best way to get somebody to do something is to measure and reward that what it is you want them to do. In this video tutorial, accounting professor Kay Stice explains the connections between measures and rewards, which directly impact key performance indicators.
- I give out lots of grades. In fact, my estimate is that in my academic career, I've assigned between 20 and 25,000 grades. I'm a grading expert. This past fall, I taught a course at Nazarbayev University in Astana Kazakhstan. At the start of the course, I told the students that their final grades would be based on the following four things: online pre-reading assessments to be completed before the beginning of the course, daily online quizzes, daily class participation, and comprehensive final exam.
Now, if my sole objective were to assign the final course grades, I could save everyone, including myself, a lot of work just by basing the entire grade on the final exam score. Student behavior would be predictable. With the entire measurement system focused on this final exam and only the final exam, many students would choose not to come to class. Now, this would be shortsighted and incorrect, but because class participation and daily review of the material would not be rewarded, they would often choose not to come to class. And when they did come, they would just sit back passively and not engage in any classroom discussion.
All of their effort would be preserved for cramming for this all important final exam. Well, my long experience in teaching has suggested that such an approach results in poor learning by the students and much less enjoyment in the class for me. So, to get students to do what I want them to do, I measure and reward or punish certain behaviors. I want them to do some reading in the textbook before the course even starts. Now, I could tell them to do the reading and about five percent, the eager students, they'd do it.
But if I measure and reward this pre-reading, they all do it. I want them to participate in class. Again, I could suggest that they participate. I could ask lots of questions in class. But again, those questions would be answered by the same five percent who did the pre-reading before the course started. But if I measure class participation, I sometimes have a hard time managing all the comments that students want to make. After each class discussion, I want students to review the material for that day. Now, I could ask them to do that.
And we know which small fraction of students would actually do that review. But if I measure their performance on regular after class online quizzes, they all review the material in order to do well on these quizzes. At the end of the course, students learn a lot by looking back over all the material and working hard to get all of their understanding solidified. But no one, probably not even that same five percent, is going to take the time to do this if I merely ask them to do it. So, I give a comprehensive final exam and they all review the material at the end of the course.
The best way to get somebody to do something is to measure and reward that thing. Remember, you get what you measure.
In this course, accounting professors Jim and Kay Stice explain what KPIs your business should consider in a balanced scorecard, from financial goals to employee and customer satisfaction. They describe how to craft a clear mission statement that complements your KPIs, and how to tie performance to incentives. Plus, get a look at KPIs in action, as Jim and Kay break down a case study examining a trucking company's balanced scorecard.
- The importance of KPIs and measuring performance
- Financial goals and measure
- Customer needs and satisfaction
- Employee growth
- Creating an effective mission statement
- Linking measurements and rewards
- Examining a KPI case study