Predicting Performance: There Must Be a Better Way

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Categories: Motivation

By Lynda Bourne

Accurately predicting project outcomes has always been difficult. The standard tools in use today for doing so don’t offer much help. These tools work on the assumption that the planned duration or cost of future work is the best option to use for calculating completion outcomes.

The significant exceptions to this approach are earned value (EV) and earned schedule (ES). EV, ES and some other tools do adjust future performance based on past performance to predict outcomes—and they have demonstrated significantly more accuracy as a consequence. But no mainstream control tools deal with the management opportunity to actively change future performance with the use of incentive and motivation.

The performance of any activity is influenced by:

  • Management competence, in organizing the work and the workers
  • The availability of the right resources, tools and equipment
  • The skill of the workers
  • Workers’ incentives and motivations. Incentives are extrinsic, while motivations are intrinsic.

Incentive Schemes and Motivation Theory

Incentive schemes

Incentives in the form of piece rates have been used since the commercial revolution of the 11th and 12th centuries. Then in the 20th century, a range of more sophisticated payment schemes were introduced by management consultants looking to drive enhanced productivity (some of the better known are outlined in the chart above – click for more information).   

The word “piecework” first appears in writing around the year 1549. Under this system a worker is paid for each piece of work he produces. Since the 16th century, a wide variety of incentive schemes have been developed to encourage productivity by directly linking payments to performance.

Individual schemes are either time-based, with incentives being paid for completing on time or early, or production-based, with workers paid based on the number of items produced.

Group incentive schemes reward team performance by paying a group bonus instead of individual bonuses. The bonus is distributed among all the employees of the organization or team.

From the 1920s onward, management researchers began to realize simple incentive schemes were not sufficient and a range of motivational theories were developed.

Management theorists are still debating whether it is possible to motivate a person or if motivation is an internal state that can be encouraged. However, there is a consistent view that when motivation is increased, productivity increases.


The Planning Conundrum

From the 12th century on, managers have known that well-directed incentive schemes can influence worker behaviour. Consequently, we know the productivity of a worker is a variable based on how he or she responds to various incentives and motivators.

Similarly, the emergence of scientific management and other management theories in the 20th century also highlighted the importance of organization and planning of work, and the workspace, in enhancing productivity. Improvements are always possible.

However, these concepts are largely ignored in project planning and control disciplines. Plans are set based on estimates made at the beginning of the project and rarely changed; at best, tools such as EV adjust future estimates based on performance to date.

What seems to be missing is a process that takes an objective look at productivity and identifies the changes needed to improve productivity to the levels needed to achieve project objectives. The concepts of process improvement and total quality management exist in general management and are mentioned in the A Guide to the Product Management Body of Knowledge (PMBOK® Guide), but no one seems to have moved these concepts into the domain of project planning and controls.

How do you think we could better approach the management of future work to enhance productivity and deliver better outcomes?

Posted by Lynda Bourne on: September 08, 2018 07:37 PM | Permalink

Comments (23)

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Management theorists have long associated motivation with productivity. However, most of their theories were conceived in the US infused with western bias, so it may not always be applicable in other regions of the world.

I think you are confusing two separate issues - motivated teams and workers are productive, regardless of region or culture. Demotivated workers do as little as possible. BUT the unanswered questions are first, can external influences motivate workers or is motivation an intrinsic characteristic of the person?? Second, do incentive payments motivate people??

There is very little persuasive evidence around motivation, no one knows if external influences really work.....

Incentive payments (including KPIs) seem to be most effective if people are struggling to make a living, other factors seem more important when people are comfortable with their basic income. But this does not answer the question in the post - why don't project controls processes deal with the options for changed levels of productivity??

Hofstede (1980) argues that various management theories "reflect the cultural environment in which they were written". Theories by Maslow, McClelland, Herzberg, Vroom and McGregor for example were very much rooted in western individualistic culture, and there is an argument as to whether or not any of the assumptions made in those theories can be applied to collectivist societies. You are correct about incentive being effective if people are struggling to make a living, which is why 70% of workers in the Philippines (where I managed a lot of my projects recently) rate monetary benefits as the sole driver for seeking new employment. Things are different here in Australia though. People are motivated by many things, but money is not always at the top of everyone's list. Things like flexible working options, social responsibility, diversity among teams, environmental responsibility, and the list goes on play a more meaningful motivator for many people. With so many motivating variables, an organization may need to infuse incentives catered per employee from an acceptable smorgasbord of options.

Interesting piece Lynda. Motivation in many cases goes beyond incentive schemes so to keep your employees motivated, they have to feel job security beyond the project, feel they make a difference, feel they are respected and that their opinion matters.

Useful discussion but way off topic! The post is NOT discussing the question of motivation or the questionable effectiveness of incentive schemes and piece-rates. The question is why do project control processes ignore the possibility of changing performance levels (and therefore cost and time outcomes)? The concept has been around since the early 1900s and seems to be ignored by project management.

Project control measurement and performance metrics are narrowed to cost and schedule at the project level and contract level. While contracts can contain incentives to encourage schedule improvement, and disincentives (liquidated damages) to encourage avoidance of delaying progress to schedule dates, there are no approaches in PMBOK for the measuring the soft product and added value by project management relative to project milestones and goals. Additionally, project success is only recorded in project controls by standard indexes tied to scheduling software.

Despite the proven impact of best practices in project management on the outcome of project realization, any measurement maybe too abstract to define an objective and measureable process. While corporate Human Resources departments can measure the performance of personnel to individual company values and annual goals, the temporary nature of projects and the abstract nature of correlating project management proficiency with project success factors in an objective and measureable terms has not found a section in PMBOK.

That's the point of discussions: "the action or process of talking about something in order to reach a decision OR to exchange ideas", and in that regard, I default to the latter definition.

I didn't know that "project control processes ignore the possibility of changing performance levels". Here I was thinking that PMI covered the topic adequately in their monitoring and controlling process group, and that changing/addressing performance levels was done through the change control process if said performance levels resulted in variance between baseline and actual progress.

Although I agree that it is valuable, if there is "a process that takes an objective look at productivity and identifies the changes needed to improve productivity to the levels needed to achieve project objectives", I don't believe it belongs in the PMBOK or any other project management standard other than briefly mentioning control tools such as expert judgement, analytical tools (one you mentioned already: EV) and meetings. Aside from that, I feel it it belongs in the realm of management theory.

I also support team performance measurement and appraisals, moving away from the more traditional individual metrics. I believe individual metrics are largely destructive, and slowly becoming irrelevant, at least in organizations that are adopting Agile frameworks.

The approach to governing and managing projects is shifting significantly - Agile and adaptive approaches are common, as are alliances, partnering and various forms of 'gain-share' contracts in the more traditional 'hard-hat' industries. Add to this the fact that some 80% of projects are internal to an organisation so all that matters is the outcome, one has to ask why is the project controls focus still on fixed baselines?

Fixed baselines were useful in the 'blame-and-claim' culture of the last century but are they the best way to deliver outcomes in the 21st century?

That would depend on who's footing the bill, or who's head is on the chopping block if the project fails. C-suite love baselines. But I agree that the importance of fixed baselines are diminishing.

Yes the 'golden rule' still trumps good practice :-)

Very interesting Lynda. (Not sure I've fully understood so I'll post and see...)

First I can see Henry's points regarding projects being transient and perhaps this is more management theory.

However, I can see how having some tools/processes to explicitly explore our productivity/motivation options upfront, capture possible opportunities, and know how to identify and then benefit from opportunities that arise during a project could provide quite an advantage in some circumstances.

Given that organisations often have multiple projects having staff shared between projects and/or BAU, or other constraints, may prevent any meaningful gain from increased productivity because not all work streams can achieve to match. Also, I would ask, what is sustainable? We're all aware of burnout. Does one project achieving a higher productivity actually gain the organisation much value in the bigger picture? But then maybe the right tools will help drill into this.

That's the $1million question Ashleigh - it seems very 1950s to simply assume an estimate of duration made in the past is the sole arbiter of what represents a realistic baseline going forward simply because it is in the schedule.

This is definitely a good point! We can somehow predict the productivity if we have just to do with machines, but human behavior can severely impact on all predictions. I have seen so many "Friday deliveries" for which on Thursday there was still a lot to do.

Very interesting, thanks for sharing

Lynda, what I was trying to say is that the incentive plans should take into consideration several factors.

I can't speak as to why control processes ignore the change in performance levels because my experience was different. We always took this into consideration and were very agile in they way performance levels and incentive schemes were handled.

Some companies probably do not realize the real benefits of doing so and that's why it might be ignored.

I hope the above is within topic.

Thanks Rami, do you have ideas to share on good processes for doing this?

There is no projectized system that a Project Manager can implement to supplement the standard annual performance review of functional managers. I learned early that the PM’s the best way to influence top performance from project participants is effectively communicating expectations, showing mutual respect, acknowledging competing goals between project and corporate annual goals, making personal connections to individuals, contributing equally to the project endeavor, and reinforcing the importance of individual work quality to the project and personal achievements.

Lynda, for example, this was a topic for discussion in each senior management meeting where performance against incentive scheme is evaluated and adjusted accordingly.

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