Sunday, January 11, 2015

If everyone is good, good is average

My fascination with statistics has developed over the years. Possibly because I am a bit nerdy; maybe because as an intuitive by nature I need to remind myself constantly that statistics are counter-intuitive and need to be studied to reveal their secrets. As I am fond of saying, a mugging victim will find it hard to believe that crime is down in the moments after the attack.

I read another example of this in the excellent 'Thinking Fast and Slow' by Daniel Kahneman this week, discovering the delights of 'regression to the mean'.

Which is better? Shouting at the poor performers or praising the good?

Time's up.

What is your gut reaction? Probably that there is a place for both stick and carrot.

Now let me tell you more. In an organisation where everyone is on top of their game - say it is sales - give or take, most of the team members sell 100 units a week, most of the time. One week a sales rep shifts only 23. You are the team leader and you have that person in your office and give them a dressing down. They can offer no explanation for their poor sales and so you assume they didn't try hard enough, missed some leads or allowed private affairs to get on top of them. After a stern talking to and threat of disciplinary action, you send them packing.

Next week they come in with 105. You pat yourself on the back for your management skills.

Another week a second member of the team pitches in with 342 units. You invite them to your office, praise them, give them a bonus and a 'sales-person of the week' award and an afternoon off.

Next week they come in with 95.

Which is better? Shouting at the poor performers or praising the good?

Time's up.

Obviously the counter-intuitive conclusion from these results is that shouting works but praise doesn't.


Your intuition was right at the beginning.

You see, all things being equal, from time to timely average performers will produce above average results and below average results. They average out. Rarely, but occasionally, very bad and very good results will crop up. Remember that in this organisation everyone is on top of their game. I told you that. So circumstances will conspire to have an occasional customer who wants to buy loads of your product as a one-off, giving you an outstanding week. And sometimes all the good customers stay away at once. It just happens like that because averages are, well average.

The shouted at will put extra effort in and do slightly above average next week but they won't keep that performance level up. The praised will be encouraged, slightly complacent and try slightly less hard.

It all reverts to the mean.

So if neither make a big difference, ask yourself this. Will my workforce do better in an environment where the good is praised and the bad understood? Or in one where the bollocking is the only tool?

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