Philip Greenspun: It's not just programmers who can inflate their LOC counts

Performance targets can be a double-edged sword. When the Blair government introduced performance targets for the public service, it resulted in a mixture of improvement and unintended consequences (ie. gaming of targets).

Manipulation of targets in the case of hospitals, from the BBC: http://news.bbc.co.uk/1/hi/health/4721174.stm

So as Greenspun says, the selection of targets that are difficult to game is pretty important.

"The Board at Merrill Lynch Enronized their company by promising to pay Stan O’Neal roughly $50 million per year if he made some numbers look good. One of the numbers that they wanted to see improved was Return on Equity. O’Neal managed to improve it by using the company’s cash to buy back stock. By reducing the amount of equity in the firm, whatever profit they managed to earn in a given year would be a larger percentage of the remaining equity. Unfortunately, for a company that faces risk, reducing the cash supply inevitably means courting disaster."

You get what you pay for! Isn't life great?!

Reminds me of that old Joel on Software article on incentive pay http://www.joelonsoftware.com/articles/fog0000000070.html

"The stats are clean." -- Cedric Daniels