Performance Measrument Economicst

approach
Hong Kong - June 20th 2017

Ajit Alwe
What you will see.
The way you frame the problem, determines whether you solve it or not

1. How to define performance management, the economist way

Key Axiom in Framing Performance measurement

Measurement is almost always part of an effort to achieve some goal.

You cant always measure all aspects of progress against the goal, so you settle for some proxy
parameter, one that seems to represent the goal closely and is simple enough to measure.
o example,

o If the goal is to build a team to win a football league, then you may seek to achieve that goal by measuring
the number of goals player is scoring while scouting for talent.

o if the goal is long-term profitability, you may seek to achieve that goal by measuring and tracking
productivity.

Dysfunction occurs when the value of proxy parameter goes up, but the values of your goal
get worse.
Two categories of Measurement

1. Value chain indicators provides insights on the value chain of the organization and allows
better short-term management and long-term improvement of organizational processes to
achieve organization goal

2. Incentives Indicators information available to the employee which helps them to avoid/adapt
a behavior in pursuit of personal and organizational goals.
Incentivizing information they way economist see it

1. When cooperation involves

coordinating behavior.
2. The problem people must solve is a
knowledge problem rather than a
motivation problem:
What do cooperators need to know
about each others beliefs to coordinate
their behavior?

Coordination is Mutualistic: Each cooperator confers a benefit on the other while simultaneously
conferring a benefit on himself or herself.
 Knowledge needed for co-operation

Palo IT Palowans
Commits to define jobs based on Palo IT vision Commits to acquiring new problem
solving skills which can be added to BIO

Job 1 Job 2 Job n

Positively
impact the
world by
empowerin
g Growth mindset
organizatio
ns and Employee Evaluate & monitors Company evaluates/monitors/tracks if
belief that talents
can be developed
leaders to Motivating potential of the job on 3 consultant is adding new skills (from the mkt (through hard
harness the work, good
power of dimension: demand trend) to his/her bio as regular strategies, and
transformat 1 Meaningfulness of work input from others)
ive
2 Responsibility for the outcome interval
technology
for the 3 Knowledge of the result
greater
good.

Palo IT
Palo IT
Consultants
Use this information to
decide what skills to
acquire
internal Consultant
availability with matching
X1, X2, X3 problem
solving skills
Value Chain
Market
Regularly updates skill
demand trends from
market
I have problem X1, X2, X3
Palo IT Customer
Sales
Palo IT Proposal, with built in
Job motivational potential for
Palo IT Consultant
HR
Key KPI
Throughput of proposal /Month
Cycle Time / Customer request
Wait Time across the value chain
What Skills to learn?
How do we speed Skills Acquisition?

Power of collective intelligence

Learning new skills in smooth flow needs 3 pre-condition:

1. Clear Goals
2. Immediate Feedback
3. Challenge-Skill ratio

The expert in a particular skills designs 1-3

For 1 & 3 - recommend Dreyfus Skill acquisition model
For 2 recommend Toastmaster model
Tostmaster model
Demonstrate your skill
Get feedback
Dreyfus Skills Acquisition model
Dreyfus Dreyfus Guidelines Translate the guidelines to Ux Skills Translate the Translate the
level guidelines to Full guidelines to Product
Stack Developer Owner Skills

Novice Refer to previous To be done by the Ux Community in To be done by the To be done by the
slide HK as initial draft Dev Community in HK Product owner
Example: Can list Community in HK
SOLID principles
Adv. Refer to previous
Beginner slide
Competent Refer to previous Ex. Demonstrate a
slide project where SRP is
applied
Proficient Refer to previous
slide
Expert Refer to previous
slide
Dreyfus model of skill Acquisition

Training Professional Practice

Job Design, that increases motivation potential
Prerequisite & Premise of the Model

Prerequisite - Growth mindset

Premise - The model is based on the
premise that jobs can be designed not only
to help workers get enjoyment from their
jobs but also to help employee feel that
they are doing meaningful and valuable
work.
Base Line the current Motivational Potential score of job.
Questioner to baseline current MPS
1 I have almost complete responsibility for assessing the risk, estimating volume and planning of the work assigned to me.

2 I have a chance to do a number of different tasks, using a wide variety of different skills and talents.

3 I do a complete task from start to finish. The results of my efforts are clearly visible and identifiable.

4 I understand how the value-chain of Palo HK works & able to figure out where in the value chain i can contribute.

5 What I do affects the well-being of other people in very important ways.

6 My manager provides me with constant feedback about how I am doing.

7. The work itself (without the need for human feedback ) provides me with information about how well I am doing.

8. I make insignificant contributions to the final product or service of palo it, client

9 I make insignificant contributions to the final product or service of palo it

10. I get to use a number of complex skills on this job.

11. I have very little freedom in deciding how the work is to be done. ______

12. Just doing the work provides me with opportunities to figure out how well I am doing. ______
 13. The job is quite simple and repetitive. ______

14. My supervisors or coworkers rarely give me feedback on how well I am doing the job. ______

15. What I do is of little consequence to anyone else. ______

16. My job involves doing a number of different tasks. ______

17. Hive master let us know how well they think we are doing. ______

18. My job is arranged so that I do not have a chance to do an entire piece of work from beginning to end. ______

19. My job does not allow me an opportunity to use discretion or participate in decision making. ______

20. The demands of my job are highly routine and predictable. ______

21. My job provides few clues about whether Im performing adequately. ______

22. My job is not very important to the companys survival. ______

23. My job gives me considerable freedom in doing the work. ______

24. My job provides me with the chance to finish completely any work I start. ______

25. Many people are affected by the job I do.

Information Measurements

1. Baseline the value-chain for each of the Value Proposition Palo IT is selling now.

2. Value chain information needs to be kept updated based on the market information

3. 5 levels of career path needs to be integrated with the Value Proposition, so that employee
can know what effort and in what direction needs to be applied to be valuable to the company

4. Proposing new Swarm, is adding new Value Proposition

Need for Trust

Because the category of measurement is not inherent in the information provided by the
measurement, information is difficult to segregate by intended use.

Unless trust between workers and managers is greater than usual in organizations, claims that
measurement will only be used in a particular way are not credible.

Social Trust the belief that others will not, at worst, knowingly or willingly do you harm, and
will, at best, act in your interests.
 1 = Very nondescriptive
2 = Mostly nondescriptive
3 = Somewhat descriptive
4 = Mostly descriptive
5 = Very descriptive
Value Chain Market

Use this information to

decide what skills to Regularly updates skill
update demand trends from
market

I have problem X1, X2, X3

Palo IT Customer
Sales
Here is the solution y1, y2,
Palo IT y3
Consultants internal Consultant
availability with matching Else hire from market
X1, X2, X3 problem
solving skills

Palo IT consultant
Technical evaluation
HR
Dreyfus model of skill Acquisition

consultant
 First treating causation as a summary of behavior under interventions; and
Second using equations and graphs as a mathematical language within which causal thoughts
can be represented and manipulated.

And to put the two together, we need a third concept: treating interventions as a surgery over
equations.
Causality - fundamental to all natural science

Causality (Working definition): A variable X is a cause of a variable Y if Y in any way relies on X for its
value.

think of causation as a form of listening; X is a cause of Y if Y listens to X and decides its value in
response to what it hears.

Our robot, economist, and epidemiologist all need to track down causeeffect relations from the
environment, using limited actions and noisy observations.

It may seem intuitive or simple, but a commonly agreed-upon, completely encompassing definition of causation has eluded statisticians and philosophers for centuries.
Key Premise - Human System are Probabilistic System, Not
Deterministic
Dysfunction

Goal of organization is = X

When a human system is trying to achieve a goal (X), there will be many aspects ( Y1, Y2, Y3Yn) of
progress that needs to be monitored regularly to make sure we increase the likelihood of achieving the
goal (X).

In practical terms, in human system, we cannot figure out all the aspects . So we end up shortlisting few
aspects (Y1, Y4, Y6) that seems to represent the goal closely and is simple enough to measure.

Dysfunction occurs when the value of Y1, Y4, Y6 go up but the values of X get worse.
 common knowledge the shared understanding in which two or more people know
something, know that the other one knows, know the other one knows that they know, and so on
to coordinate their actions, and how peoples efforts to cooperate may fail without this infinite
level of shared beliefs.