Taking the stairs is great exercise and for years, I took the steps two at a time. Recently, I realized that I was taking each step individually. This change was due to the fitness tracker that measures my step count.
To increase my step count I was now taking each step instead of skipping one. While it doubled the step count on the stairs, the amount of work was unchanged. This reminded me of a lesson learned years ago.
You achieve what you measure or what you reward, even if it’s not what you want. Improper objective setting is a potentially major risk management issue.
A recent, extreme example of employees blindly following objectives can be found in the Wells Fargo fiasco. Their measuring stick of sales objectives was not aligned with their overall stated vision of: “We want to satisfy our customers’ financial needs and help them succeed financially.”
As fallout of this breach of trust from creating extra accounts, Wells Fargo paid a 185 million dollar fine, the ousted CEO lost 41 million dollars in stock and the Wells Fargo brand is tainted from the scandal.
HSB often sees equipment losses that can be tied to poorly executed objectives, often around maintenance spending. While cost control is critical, a broad goal of “achieving a 10% reduction in maintenance costs” may result in key production equipment failing during a production run from lack of maintenance or less expensive, but non-compliant parts being stored in inventory.
An engineer recounted a story of a large facility where spare parts inventory for motors were reduced in a cost savings objective. When the inevitable motor rebuild was required, there weren’t enough brushes in stock to repair the motor and the equipment was idled until parts could be ordered and received.
Again, the set objectives (reduce cost) didn’t match the long-term goals of the department (maintain the equipment).
Setting objectives is easy, it is the “why” of the objectives and follow through that is often overlooked; did achieving this objective move us toward our stated goals? Verifying that the objectives outcome and the overall goal are aligned is incumbent upon those who set them.
If you’re not moving the company towards its goals, it’s time to recalibrate the measuring stick.
It’s time for a walk. For the record, I now pay attention to distance and active time, so I can take the steps as I please.
© 2017 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved. This article is intended for information purposes only. HSB makes no warranties or representations as to the accuracy or completeness of the content of this article.