When Data Dooms Your Company

When Data Dooms Your Company

Why you should care

Because ignorance can sometimes save money. Tiny-island GDP money.

Data, data, data! So goes the chant of the management masses. Oh, you want more? Here’s the whole damn management jingle, sung to the tune of “Twinkle, Twinkle, Little Star”: Data, data, big data. / How I hope you’ll change my team. / Management will be disrupted! / Up above in the C suite! / Data, data, big data. / I await your synergy.

But, whoops, data’s not always good. It can, in fact, cost your company a cool

$1 million.

That’s according to research done by Steven Blader and Claudine Gartenberg of New York University and Columbia’s Andrea Prat. They studied how public information about employees’ performance affected a company. And often, it affected teams poorly. All of this despite the fact that whenever companies do something like make salaries public, they get a splash of media (see SumAll). What Blader and company looked at in particular, though, was whether employees fared better if they had heard about only their own performances or if they’d heard about themselves in relation to others.

“There’s an assumption that if we drive competition, we automatically elevate a group’s performance,” Blader says. Turns out that’s true only sometimes. The study, done on a transport company, followed truck drivers who got feedback about their work and that of their compatriots. For some, the researchers found a “substantial drop in performance,” as the paper puts it — meaning the drivers were less fuel-efficient and idled more.

But there was another group: drivers for whom the competitive impulse worked. The difference? The same company also ran a training on half the participants, aiming to promote the warm-and-fuzzies of collaboration and teamwork. The ones working in an environment with the rah-rah-team vibe were the ones whose performance plummeted; those still operating on their own generally did better. Moral of the story: Dial down on nailing the data theses to the door if you work in “a context where people build tight bonds with one another,” Blader says.

The whole thing smells of a larger, sometimes freaky, conversation about data in the workplace. Plenty are afraid of how numbers attached to their names might turn into the new performance-evaluation standard or influence job recommendations. Most of the public stuff, though — whether it’s salaries or truck-driver comparisons — is pretty niche, says Cade Massey, a professor at the Wharton School in Philadelphia who focuses on management. Companies that air their numbers publicly are “the exception.”

All these numbers in our workdays will take some getting used to, Massey says. “People always react when they are measured,” he says. He adds that “the potential has never been greater,” but we’ll all need to calm down and wait for a better transition. One day we’re sure to be totally used to a leaderboard. Speaking of which, it looks like my colleague has filed more edits than me today. Off I go.

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