Measuring worker value: the new Average is Over

This trend is accelerating:

When Jim Sullivan began working as a waiter at a Dallas restaurant a few years ago, he was being watched — not by the prying eyes of a human boss, but by intelligent software.

The digital sentinel, he was told, tracked every waiter, every ticket, and every dish and drink, looking for patterns that might suggest employee theft. But that torrent of detailed information, parsed another way, cast a computer-generated spotlight on the most productive workers.

Mr. Sullivan’s data shone brightly. And when his employer opened a fourth restaurant in the Dallas area in 2012, Mr. Sullivan was named the manager — a winner in the increasingly quantified world of work.

Here is some of what goes on behind the scenes:

Ben Waber is chief executive of Sociometric Solutions, a start-up that grew out of his doctoral research at M.I.T.’s Human Dynamics Laboratory, which conducts research in the new technologies. Sociometric Solutions advises companies using sensor-rich ID badges worn by employees. These sociometric badges, equipped with two microphones, a location sensor and an accelerometer, monitor the communications behavior of individuals — tone of voice, posture and body language, as well as who spoke to whom for how long.

Sociometric Solutions is already working with 20 companies in the banking, technology, pharmaceutical and health care industries, involving thousands of employees. The workers must opt in to have their data collected. Mr. Waber’s company signs a contract with each one guaranteeing that no individual data is given to the employer (only aggregate statistics) and that no conversations are recorded.

The article by Steve Lohr is here.

Comments

So we are back to cybernetics--or maybe it never really disappeared!

This stuff dates way, way back to the Time-Motion Studies of Frederick Winslow Taylor and Lillian Gilbreth.

And when the big bosses talk about improving the value & productivity of workers -- they are never talking about themselves. Tracking the minute-by-minute productivity of corporate officers & senior managers would be a real eye-opener to stockholders.

How would college professors do in these detailed productivity studies ? Congressmen ? Journalists ? Economists ?

College professors need to be monitored for going off topic, especially for political rants, during class time thus defrauding students of the knowledge that was to be imparted.

We should also demand an accounting of all universities who receive or whose students receive government funds or loan guarantees for those times when class is cancelled for other than hazardous weather or imminent threats of bodily injury to discover how much of the tuition payments are being squandered when no instruction is happening.

The university is ripe for metrics, advocates metrics for other industries, but seems loath to reveal their inefficiencies and, basically, non-provision of contracted services. Students are obviously not good judges of academic value since they cheer class cancellations...as long as they get a piece of paper with Latin on it after a time.

If you think political rants are off-topic, you have seriously misunderstood the purpose of the modern university!

Well, that's right - it's hard to measure the productivity of people whose job is to generate ideas. If someone did a time-and-motion study of me, they'd find I was wasting a lot of time going to conferences, writing reports nobody reads, and talking to people with no apparent purpose. But - as head of research for a money management organization - if I come up with one really good idea a year, I could make my employer a billion dollars. (Of course, others will take credit for it, and I will take credit for the ideas of others; it's a team sport.) I don't think productivity studies work well at that level.

Put sensors like that on board members and upper management, and release the data to all shareholders! Just the tools needed for benchmarking when taking a vote on compensation packages!

We already have that. It's the stock price.

That is a horrible measure since the movement of a given company's stock price is driven far more by overall market movement and industry movement than the actions of an individual executive or board member.

Then you compare the stock price to the overall market or to the rest of the industry rather than looking at in isolation. In any event, it's common to hear executives complain about being measured on the basis of their stock price using basically the same arguments that workers use to complain about these sorts of metrics.

I agree that meritocracy at all levels and for all employees is a good thing. Of course, this would actually *increase* the compensation of top executives and increase inequality of results.

Put them on big-firm lawyers who bill by the hour. Watch 80% of their billables disappear.

Most lawyers (from big and small firms) bill in 3- or 6-minute increments. They are already monitored all day.

How do you go from billing every five minutes and being monitored every five minutes? Surely lawyers are still treated moderately decently in that their word is taken on trust. If they say they spent five minutes at breakfast thinking about a case, everyone pretends to believe them. Not that their firms implant them with microchips so they can measure down to the micro-second how long someone spent at breakfast.

No one minds billing in five minute increments.

Given the number of lawyers I see posting on blogs/message boards, I don't believe they're effectively monitored.

they self report those, no work tracking occurs

At some point no one in their right mind will accept the humiliation of being a paid employee. This is a rather sad development as it means moving from a High Trust society like Britain, Germany or Japan, to a Low Trust one like Italy or China or pretty much the rest of the Third World.

Very well put.

Using this system to recognize the most productive employees has little to do with trust. It introduces an ability to measure and reward performance that wasn't there before. Personally, I think that working in an environment where a good job goes unrewarded is much more demoralizing than being monitored. If I were going to be a waiter, I would rather have this system than not (assuming it actually does a good job of monitoring performance--a non-trivial assumption).

As for the trust aspect--using this system to prevent stealing--I agree that it is too bad that such a thing is needed. But the blame can't be placed solely on the employer. The erosion of trust occurs on both sides.

A great example would be professional athletics, where myriad stats are kept on every player's performance, players' actions are captured on video, and every move is scrutinized in post-game film reviews. Agents hate the fact that they can trot out performance statistics at contract negotiation time, and it has reached the point where no one wants to be a professional athlete anymore.

While your snark is appreciated, millions upon millions of dollars sort of changes the equation.

Also most professional athletes, you know, actually like what they do for a living. Unlike most workers.

True. At the middle income level, we are starting to see many colleges that need to pay students reverse-tuition to get them to subject themselves to the scrutiny of the admissions process and, once enrolled, to constant testing and grading. That's because the signalling value of college education is quite negative. When everyone stops going to college, then employers will not be able to exploit workers by distinguishing between college grads and non-college grads, thus increasing wages.

BC has no idea what he's talking about.

Funny, I understood him.

Some professional sports teams are doing this. The Philadelphia Eagles wire their players up with package that includes thermometers, heart monitors GPS, accelerometers, etcand possibly other sensors during practices and use it to monitor for health issues liek heat stress and dehyration. They also design player workouts and practices using the data.

http://www.nj.com/eagles/index.ssf/2014/06/eagles_chip_kellys_sports_science_impact_continues_in_year-two.html

Ahhh, it's the fear of liability. More than a few pro football players have died due to heat stroke.

I am not sure that is a good comparison, although it is worth making. Because they are only measuring what the player does on the field. Which is the only useful measure of his worth. Most of the time - it is not true in all sports, but it is true in many of them.

That is not what this attempts to do. These metrics are a *rough* measure of worker efficiency. They do not measure a lot of other things as well. They can measure how fast and accurately a waitress deals with customers, but they cannot measure how nice she is to them. Which does matter. Take someone working in a call center, they can measure the average length of a phone call, but it is common for workers to hang up on difficult calls just because they are not worth the worker's time to deal with.

What is more, these actively undermines other aspects of the job like how nice it is to work there. Chinese factories do this by timing toilet breaks - rationing them even. That is very efficient up to a point. But no one in their right mind wants to stay at such a factory. Does good morale among the workers count? It should.

The correct parallel with athletes would be if they were tracked 24/7, subject to regular urine tests, vetted for every word they said to the media, forbidden to sleep with groupies without going through Legal and so on. We are getting there with athletes, but so far the major leagues are amazingly tolerant of off-field behavior - see Michael Vick.

No, all of this will be gamed. We won't talk to each other because giving time to bright leaders will be paying them.

"No, all of this will be gamed. "

It's useful at times like this to point out Goodheart's Law ("When a measure becomes a target, it ceases to be a good measure."), and Campbell's Law ("The more any quantitative social indicator (or even some qualitative indicator) is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.").

In other words, the more a restaurant uses a customer experience metric to track performance of its employees, the less useful that metric will be to actually track the customer experience.

My first instinct is to see a great evil coming forth from developments like this. This mainly stems from my belief that people in general are not good - though it is not their fault - neither the ones who watch nor the ones being watched. That being said, it is high time that we ascertain what is a healthy level of productivity. For that we need data on everyone and everything - simultaneously. Not so we can see who is best, but what is good enough and that everyone has flaws. We too often fall into the trap of thinking that people are assembly-line robots or that we deserve the very best - be it doctors, mechanics, or gardeners - even though we ourselves are unlikely the best in our field. Full data will remedy this. In an ideal world, we would know everything about everyone, and that would enable compassionate and balanced full-disclosure competition. It will be this mechanism that moves us past failed collective agreement systems and secretive pay packages and widespread company (large and small) cronyism. Pay, work, promote, and produce based on industry wide data norms and comprehensive metrics - be it sole practitioner or Fortune 500. Do it cheap and transparently - and emotionally-balanced workers at all levels will accept their fair monitoring.

Your first instinct is right, the rest of your paragraph is, well, stupid.

In an ideal world, we would know everything about everyone.....and emotionally-balanced workers at all levels will accept their fair monitoring

Note the term "emotionally balanced" a common liberal argument is to argue that anyone who refuses to submit to tyranny are not "emotionally right." Orwellian to the core.

It's like deja vu all over again - 'Another pioneering outfit is Sociometric Solutions, which puts sensors in name badges to discover social dynamics at work. The badges monitor how employees move around the workplace, who they talk to and in what tone of voice.' http://marginalrevolution.com/marginalrevolution/2014/02/employers-are-measuring-the-value-of-workers-with-ever-greater-precision.html

Which might make one wonder - is it loyal or disloyal readers that point out something that almost seems to be on the boundary of an endorsement?

You mean Tyler could only post one (1) thing about Pikkety? Or, was it Tyrone endorsing Pikkety?

The cell phone I am reading this on darkened. I don't have it set to auto unreadable. So I put my finger over the camera. Post hoc it brightened. Who knows?

After they push updated my android they changed a lot of things that worked, only differently and broke a lot of things that didn't need fixing.

Are we going to be able to judge the computers too?

You probably also read the Dear Marc Andreessen letter on the Browser:

"When workers oppose new technology, they are protesting not against the technology as such but against its effect on their lives — which is, almost invariably, to increase the efficiency with which they are exploited, driving down their wages and depersonalising their jobs. "

In one of my iterations I looked after a building where Canada Post had a sorting and distribution floor. If you went into the basement, through a door and a narrow stairwell you entered into an observation gallery. A room suspended from the ceiling that had small one way glass windows overlooking most of the space. It hadn't been used for a few years and smelled of stale cigarettes. The usage corresponded with the worst years of labor strife as well as theft and vandalism. The employees figured out quickly the spots that were hidden and made sure they got back at the man.

Are they that stupid at MIT?

If this type of thing takes off it will remove the US economy. It is really funny, but the US has become a nation of middle managers. This type of thing removes the necessity of having them. Or gives the impression that it could. The stupid people that came up with this will be able to sell it to the stupid people who handle money. The market opportunity is to attract smart people and smart managers who won't put up with this bullsh*t and own the market.

When my daughter was trained as a waitress for a restaurant chain, she was urged to approach a table, pull up a chair, sit down, and address the (usually young) customers with "Hi, guys". When she started work, she noticed that the most successful waiter - as measured by tips, smiles on the face of the customers, and brisk resolution of business - was a young man who would address every young couple as Madam and Sir, and remain standing.

Then she was put in charge of training the new waiters. Quandary!

Is there any mention of the question if the digital sentinel revealed anything (with regard to productivity, no theft) that wouldn't have been obvious, anyway?

Or, in other words: What's the "average is over"-effect here? Does the sentinel find qualified workers or rather balance the lacking qualification of employers who are incapable of distinguishing between waiters with managerial skills und such that are "just" waiters. In that case we'd have an "average is hip" effect with regard to useless employers.

You have it right. It isn't about the front line employees, it is about the managers.

Well, I wouldn't say that I have it right. But this can easily framed in a way that shows the contrary effect. If you align every such story in a way that makes it consistent with you pet model it's not really a surprise that it fits.

Average is over and I look forward to this

It's probably worth noting that better evaluation of employees is not necessarily a zero-sum game. Overall average compensation may very well increase. At first blush, one might think that for every Jim Sullivan that gains from an above-average evaluation there is another employee that loses from a below-average evaluation and, thus, average compensation should remain roughly the same. However, workers' professions are not fixed. Through selection effects, better evaluation can increase average productivity and, thus, wages.

Consider two types of firms, A and B, and two groups of employees, X and Y, each comprising 50% of the workforce. Suppose the marginal product of X's and Y's when working for A's and B's are

X: MPL_A=11, MPL_B=12
Y: MPL_A=9, MPL_B=8.

So, X's are absolutely more productive than Y's and, when X's and Y's cannot be distinguished, then average MPL at both A and B are equal at 10, which is the average wage that all workers earn. If individual productivity can be measured, however, then X's will end up working for B's with a wage of 12 and Y's will work for A's with a wage of 9. Thus, although Y's will make less than they would have with no individual evaluation, the average wage across all workers increases from 10 to (12+9)/2 = 10.5. Although Y's are absolutely less productive than X's, the degree to which they are less productive is less at A firms than at B firms, leading to gains in overall average wages. Essentially, better evaluation can lead to better matches between employers and employees.

Also worth noting - restaurant managers work much longer hours than servers, and generally make less money. (Radically less on an hourly basis.) They are working entirely for power/prestige, such as it is. (And they don't have to be a server any more, which is pretty nice.)

I look forward to the disparate impact lawsuits.

This is easily avoided by adding an affirmative-action fudge factor.

Well, what are we trying to measure again? :)

One computer will run the employee performance-surveillance systems to identify the best workers;
So that a second computer can analyze exactly how they achieve that extraordinary level of performance;
So that a third computer can imitate that method and automate it.

Pretty soon we're going to need a Turing Test for the Labor Market.

Turtles all the way down.

Just another example of smart companies run by smart people creating technologies that improve our lives

I'll bet signaling: good parents make good waiters.

Are waiters who have to wear this technology paid more than those who don't?

Presumably, if the technology gives them good and actionable recommendations on their performance they will sell more food/beverages and make more tips which is effectively the same thing.

You can read about this stuff in Alex Pentlands book, Social Physics.

By the way, this post and the comments imply this is about efficiency...no, that is so 19th century.

Its about human interaction and social networks within the workplace.

Let's say you have a research department, like the old ATT, in which world class scientists sat in their isolated offices, and compare that to an open plan research environment with scientists who interacted and were from different backgrounds.

Which do you think would be the most creative.

Do you want the management fad answer? Does that answer have a believable lit?

Management research shows that open office environments lower productivity. Managers keep implementing them anyway because they want to be "cool."

Not sure if scientists have ever been studied this way. My guess is that having some mandatory interdisciplinary and inter-group meetings while still giving people private/semi-private offices would be the best of both worlds.

Andrew' and Justin, Perhaps you want to read the ATT Bell Labs study which identified social interaction as the key feature of Star Engineers: Kelly, "How to be a Star Engineer,"IEEE Spectrum 36 (10):51-58 Persons with wider social networks and more diverse networks were the star performers, and more creative, because they could capture more information and had more resources available to tackle a problem.

Again, what is interesting is that the comments and the post imply that this type of monitoring is the new monitoring to manage the line worker in a factory.

Apparently, the writer and the commenters think like factory managers.

Persons with wider social networks and more diverse networks were the star performers, and more creative, because they could capture more information and had more resources available to tackle a problem.

That article is a very nice piece of work, but it does not define its terms. There is the flaw. Who is a star performer? The author notes that the management and the employees have a different definition of what a star is, but does not question what he is measuring. It looks like the employees were measuring the traditional scientific way - someone who makes a real contribution to science. It looks like the management was measuring in the traditional management way - someone who makes the biggest contribution to this year's bottom line. The two are not compatible.

Needless to say, the author follows the management line. So Lai, his example of an ideal employee, is a little brown-nosing suck up who constantly sacrifices her work for others. She wastes her own research time on things like installing software she could ask a technician to do. But hey, she has internalized what the management wants, and she is willing to go all out to give it to them. Great for their bottom line.

Does that make Lai a star? Depends on what Bell Labs wants to produce. I would think people will remember it for the Big Bang a long time after Lucent has vanished. And no one will remember Lai. They will remember Einstein sitting in his cold bedroom, working at the Swiss Patent Office, with barely three friends in the world.

Now notice what this new technology threatens to do - by monitoring social interaction, they will punish social interaction. Chatting over coffee or by the water cooler is not productive company time. They will measure key strokes as many already do. Time spent helping a colleague with some software is not time used to write your reports. Even in its own terms it is self-defeating and destructive. You can't have happy little corporate drones if they are not trusted to organize a bare minimum of their own time and effort.

I would read the paper suspecting that the result is based in opinions is who is a star, and those opinions would correlate to visibility and I'd disagree with the finding of the single paper.

This "Average is Over" theme gets to you after awhile, particularly when the NYT article, and the materials and studies referenced in it, relate to SOCIAL interaction and efficiency, NOT how many nuts a line worker at a car plant can attach to a car body each minute. That stuff has been done AGES ago.

What the material is about is measuring social interaction, diffusion of ideas and acquisition of ideas, coordination, identifying isolates within the organization, and measuring engagement.

This posts direction, Tyler's editing, and the comments shows you that below average is not over, at least here.

Look up Pentland and sociometric badges and the MIT lab mentioned in the article if you don't believe me.

What on earth makes a company think that a good waiter will be a good manager?

Or even that the best waiter would want to be a manager. Really good wait staff in a reasonably high end restaurant -- or particularly in a bar -- can make a lot, lot, lot more than the manager.

Ah, good question, finally, "what makes a company think a good waiter is a good manager." Excellent.

You see, what they measure with these badges is interaction...do other waiters confer with this one to solve a problem...does this waiter train others ... is this waiter influential across the range of other workers....is this worker more successful in bridging across groups or in interacting with customers.

Are those questions relevant to a manager selection.

Sure.

The badges can measure interaction. But how do they know what sort of interaction is going on? Do other waiters confer with this one to solve a problem or do they talk about the World Cup for hours? Does this waiter train others … to sell drugs? Is this waiter influential across the range of other workers and so extorting sexual favors from them? Is this worker more successful in bridging across groups or in interacting with customers and so is actually running an illegal betting shop out the back?

A chat about problems at work does not look that different to a computer than a blow job. It cannot tell. What it can do is try to help senior managers express a deep distrust in the competence and trustworthiness of junior management when it comes to managing. Clearly the restaurant's floor manager, who interacts with these waiters daily, is not competent enough to tell who is good at their job and who is not - and it is a tough call some times. Much better for a computer to take as much of that out of his hands as possible.

If people cannot see how destructive this is of morale, well, they will learn in the end. See the Soviet Union.

The badges are part of employee surveys as well. So, you get a question like, who do you turn to for help, who do you trust, if you had a problem with x, who would you consult. Badges tell you how many links, how you communicate (in person, by phone), who initiates, who is active and who is inactive in meetings, who follows up with whom, who reports on paper and who reports in the real world.

Your comment about morale is funny, because there are often isolate, negative employees in a workplace who make it bad for everyone, and identifying, training, engaging and helping those folks, may be better than firing them.

Its not the Soviet Union, but management consulting firms that do this at the behest of an employer. By the way, some employers, after an acquisition, survey the email traffic of the acquired firm to identify the person who people really turn to for advice outside of, or despite, the org chart. You want to make sure you don't fire the guy everyone turns to for the information that gets put into a report prepared by someone else up the line. IBM and HP have done some of the computer work in this area.

As to badges, Pentland reports that they gather info on tone of voice, body language, whom people talk to and how much, and certain data correlates to team success. Pentland at 220.

Bill June 22, 2014 at 9:18 pm

Employee surveys are great. If the employees are trusting enough to answer honestly. Or at all. But those workers don't need this level of monitoring. Although, again, it is part of withdrawing trust from the lower level of management. Changes to society work quite well until societies change to take into account the original changes. See the welfare state. If you say that you think your workers are lazy, untrustworthy and dishonest, it won't be long before they are.

I agree that it would help society as a whole if poor workers were identified. That is not the issue. The issue is why a company cannot trust its low level managers to do so. Although no one is naive enough to think so that a poor worker won't be fired in seconds rather than "helped".

Bill June 22, 2014 at 9:30 pm

Its not the Soviet Union, but management consulting firms that do this at the behest of an employer.

But? How does that work? It is likely to be France rather than the USSR as no one is going to be sent to Siberia. This is where there is a compulsory mention of Francis Fukuyama's Trust. The fact that employers don't even trust themselves to manage properly and so have to call in outsiders speaks volumes too. Even though we know they do it to distance themselves from the decisions made.

So they spy on their workers in ways Orwell did not even think of, and they think this is going to work out well in the long run? The question is not whether they can take a snap shot of a successful team. The question is whether by relentlessly telling their successful teams that they are unappreciated, untrusted, and lack in competence they will destroy the good will that exists between employer and employee and so destroy that successful team.

So Much,

You can't have it both ways: surveys and other things to find poor workers, but not using the same instruments to find and promote workers, or to identify those who should be trained or linked with productive workers so they won't be fired. As for gaming the system, if you wear a sociometric badge for two weeks you'll get tired of thinking about it and will resume a normal pattern.

Finally, you presume current managers are infallible, or even good ones, such that their opinion, and not other data, matters. Employee surveys ask the employee to rate the supervisor or ask questions about how a manager does things. Surveys help get rid of bad, and identify good, managers.

Everyone is promoted to the point they become incompetent.

It's called propaganda.

This is 1984, all Orwell got wrong was the date. No, you won't be sent to the gulag for facecrime(the "wrong" facial expression), speechcrime(the "wrong" tone of voice), posturecrime, smilecrime, respectcrime, ect. You will merely loose your job....as a waiter. One of the most menial jobs there is. Having no job isn't so bad, is it? Who needs food or shelter? No, our libertarians will assure us that since this is all done in the private sector, nobody's "rights" have been violated. For libertarians it's not so much an objection to tyranny and oppression of men by other men as an objection to that tyrant being the government. Think of a feudal lord and his peasants. If he says that he is a government and the peasants must pay him taxes or be expelled, he is evil. If instead he is merely a private sector actor who collects rents from the peasants on "his" land, and evicts them if they don't pay, well then he is a jolly good fellow.

BC is one of these people, he cites the possibility of this system of increasing "productivity." Such a perverse word to use, as if this is a factory and goods are "produced." No, increased productivity means all the stuff described above. Waiters will work harder, a lot harder, in more humiliating conditions. They will know that if they do not they will be fired and replaced by someone who will. And they won't be payed any more money, as we have seen over the last forty years in America where (amount of production / number of workers) increased greatly while wages did not increase at all.

We are entering a new gilded age. I see similar technology being used all over in order to monitor working and middle class people.(Somehow I doubt this will every be applied to lawyers, doctors, engineers or bankers) We used to have a word for this, a speedup. Employers would punish workers by speeding up the production line. The speedup will be used all across the economy, in preparing and cooking food, at the checkout lines at Wal Mart, in sales, in office work, on construction sites, ect. The speedup will allow the same amount of work to be done with fewer workers, reducing demand and reducing of the wages of those who do have the ever more difficult jobs.

What a load of B.S.

Yes, it is true, when you have a job you have to do what your boss tells you to do. And if you don't, you might...gasp...get fired! Oh, the humanity!

How do you not understand the distinction between voluntary and involuntary? Behavioral requirements that make up part of a voluntary contract are totally different than behavioral requirements imposed by a totalitarian government. Any job would be oppression if the government forced you to do it and sent you to the gulag if you didn't comply. The government forcing you to wait tables would be slavery. Working voluntarily as a waiter would not be. A service employee who is not friendly to customers deserves to be fired, since they voluntarily agreed to do a job and are now not holding up their end of the bargain.

What makes something "tyranny and oppression" is, you know, actual tyranny and oppression, not superficial similarity to a fictional story about the same.

And your rant against "productivity" is bizarre. Surely you care about the price of food and the quality of service when you go to a restaurant? A restaurant can't have any control over this without having some standards for the performance of their workers.

The fear of employers forcing more and more out of their employees is particularly misplaced when you are talking about wait staff: they get a large portion of their salary from customer tips, which are not controlled by the employer, and as a group, they are quite well-paid for unskilled laborers, making significantly more than minimum wage. In any case, "speedup" is countered by one thing: a healthy job market where people have other options. Preventing employers from evaluating the performance of their employees would be an exceedingly dumb way to try to address this. And the more one tries to regulate all jobs into being good and safe, the more the flexibility of the job market is taken away, which harms employees overall.

You forgot "flarecrime"!

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If you take the real retail restaurant sales data calculated by the BEA and divide it by the restaurant employment data from the BLS you can construct a productivity series for restaurants.

According to this data real restaurant sales per employee is now 95.5 as compared to 100 in January,1992.

The only time the series was above 100 was in 2006-2007.

The average workweek for restaurant employees has ranged from 24 to 25 hours per week during this period.

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