New Research: Status Reports Can Make Teams Less Effective

Conventional wisdom says that “you can’t manage what you don’t measure.” That why it’s not surprising that many bosses demand frequent performance reports, especially when their teams are working remotely.

While this “always keep me in the loop” management strategy may sound smart, it’s actually stupid, because according to new research, the more frequently managers demand status reports from their employees, the less effective those employees become.

A study conducted at the University of Illinois and published in the current issue of The Accounting Review (a peer-reviewed journal of the American Accounting Association) found that:

“Frequent performance reporting has negative motivational and performance implications when employees know or assume that the information they report will be used to evaluate their task-related skills. High frequency serves to increase an individual’s tendency to focus on avoiding unfavorable judgments of competence rather than on developing competence for the work at hand.”

In turns out that as management scrutiny increases, employees become more anxious, causing their primary goal to switch from “get the work done” to “avoid being seen as incompetent.” And here’s the kicker:

“performance was adversely affected even though 1) most participants did not know the administrator to whom they reported their scores and 2) the consequences of appearing incompetent were, at most, tenuous.”

Wow. So even with low stakes, “those asked to report only once averaged almost one third more correct answers than those asked to report three times.” In other words, pester your employees and they’ll make 33 percent more errors.

One can only imagine the adverse effect when employees know a manager personally and believe they’ll lose credibility if any status report is less than glowing.

I observed this phenomenon decades before Covid-19. I once worked in an organization so obsessed with status reports that employees lost about 10 hours a week to status meetings, each of generated a report to top management. In one those meetings was this timeless conversation:

• Boss: This project must be seen to be successful.
• Me: Which is more important: 1) being seen to be successful or 2) actually being successful?
• Boss: [pauses] This project must be seen to be successful.

Spoiler alert: that project cost our company over a million dollars and generated less than a thousand dollars in sales. It did, however, produce a series of rosy-glassed status reports. With cool graphs and everything.