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Wednesday, July 16, 2014

Gaming the System at the VA

By: Howard Rohm

Imagine you take your car to the car dealer to get serviced. Before you give your car to the service manager you see the following performance statistics posted on the wall:

  • Average time to wait for an appointment after requesting one—27 days
  • Number of people who requested an appointment but didn’t get one—46,000
Not too reassuring is it. Would you leave your car or look somewhere else?

Some Veteran Administration facilities have a performance history like this. According to a recent review of the VA requested by President Obama, the agency is in deep trouble—average wait time for an appointment is 27 days and 46,000 veterans never got an appointment after requesting one. Some veterans died while waiting for appointments, although it’s not clear if the delays in medical attention contributed to the deaths.

At some VA facilities performance measurement data were misreported to make executives’ performance appear better than it was. Fraudulent performance reporting was used to help justify executive performance bonuses. (A department audit reported that three out of four facilities had a least one instance of false wait-time data and in some facilities two sets of books were being maintained.)

This type of behavior is called “gaming the system”. It’s a consequence of a culture overly focused on the wrong things (wait times) and a measurement system that emphasizes process performance over outcome performance. We shouldn’t be too surprised by the VA experience. When the wrong things are measured and incentivized, the wrong behaviors almost always result.

Focusing on the wrong measures and missing or minimizing the right measures created a climate of misreporting and deceit at some VA facilities, leading some executives to get credit for and bonuses based on reported good performance while all along the opposite seems to be true. Almost $300 million was paid out by the VA in 2013 for performance bonuses to employees, including nearly 300 senior leaders. (Maybe some of these executives should give their bonuses back to the VA for poor performance!) We’ll leave for another discussion the bigger question—what is systemically wrong at VA that encourages a behavior to keep two sets of books on performance?

Some critical questions come to mind. Where does customer satisfaction (veterans and their families are the customers) fit into the performance reporting and incentive equation? Shouldn’t satisfaction with medical service be heavily weighted in determining executive bonuses? If performance and reward are based mostly on process measures—like wait time—and wait time is being misreported, shouldn’t one assume that outcomes like effective medical care would suffer and that cheating to gain bonuses could occur?

How can an organization choose the “right” measures?  Start with the end in mind (desired results/accomplishments) and work backwards through the processes that lead to the desired outcomes and to the resources required to produce the program outputs that yield the desired outcomes. Make sure the desired results are expressed in unambiguous language. Then test the developed measures to make sure you’re not measuring what doesn’t matter, or worse, measuring the wrong things and incentivizing the wrong behaviors. Whether you are a hospital, a car dealership, or any other business, government or nonprofit, the same principles apply for developing good performance measures.

The unintended consequences of doing measurement badly are, in the case of the VA, potentially life threatening. Can your organization afford to do performance measurement badly, or not at all?

You can learn more about developing measures that matter in our book, The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard. You can order the book on our website or on Amazon.
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Author: Howard Rohm
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Howard Rohm

Howard RohmHoward Rohm

Howard Rohm is the Co-Founder and President of the Balanced Scorecard Institute. Howard is an author, performance management trainer and consultant, technologist, and keynote speaker with over 40 years' experience.

Other posts by Howard Rohm

Contact author Full biography

Full biography

Howard Rohm is the Co-Founder and President of the Balanced Scorecard Institute. Howard is an author, performance management trainer and consultant, technologist, and keynote speaker with over 40 years' experience. He developed the Institute's Nine Steps to Success™ balanced scorecard framework in 1997. The framework is now used in over 200 organizations in 70 countries; more than 6000 people have taken his management system development training, taught in Arabic, French and Spanish.

In 2013, he co-authored The Institute Way: Simplify Strategic Planning & Management with the Balanced Scorecard. As a Pioneer and member of the Association for Strategic Planning Board of Directors, Howard led the development of the Association’s long-term strategy and strategic plan. He is a Pioneer author of the Strategic Planning and Management Body of Knowledge, the international standard for the profession, and helped create the international certification program and examinations. Howard was a consultant with Booz, Allen Hamilton, and a U.S. government executive. He co-authored the first National energy plan while at the U.S. Department of Energy. Howard has engineering degrees from Iowa State University and George Washington University, and is a Presidential 1000 Points of Light recipient.

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