Nudge · 2-minute read
When a measure becomes a target, people optimise the number instead of the thing it was meant to indicate — sometimes disastrously.
Wells Fargo’s aggressive cross-selling targets led staff to open around 1.5 million deposit accounts and 565,000 credit card accounts that customers may not have authorised. The metric went up. The business it was supposed to represent did not.
Metrics are useful precisely because they are proxies. Put enough pressure on a proxy and people will find ways to move it that have nothing to do with what you care about. Pairing outcomes with harder-to-game behavioural signals keeps the proxy honest.
The research: Strathern (1997), European Review; Consumer Financial Protection Bureau (2016), Wells Fargo enforcement action.
Adapted from Nudges at Work by Tareef Jafferi, shared in partnership with Happily.ai.
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