Monthly Archives: February 2017

Building targets, constructing behaviour

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Recently, the press reported that UK construction company Bovis Homes Group PLC have run into trouble for encouraging new homeowners to move into unfinished homes and have therefore faced a barrage of complaints about construction defects. It turns out that these practices were motivated by a desire to hit ambitious growth targets. Yet it has all had a substantial impact on trading position and mark downs for Bovis shares.1

I have blogged about targets before. It is worth repeating what I said there about the thoughts of John Pullinger, head of the UK Statistics Authority. He gave a trenchant warning about the “unsophisticated” use of targets. He cautioned:2

Anywhere we have had targets, there is a danger that they become an end in themselves and people lose sight of what they’re trying to achieve. We have numbers everywhere but haven’t been well enough schooled on how to use them and that’s where problems occur.

He went on.

The whole point of all these things is to change behaviour. The trick is to have a sophisticated understanding of what will happen when you put these things out.

That message was clearly one that Bovis didn’t get. They legitimately adopted an ambitious growth target but they forgot a couple of things. They forgot that targets, if not properly risk assessed, can create perverse incentives to distort the system. They forgot to think about how manager behaviour might be influenced. Leaders need to be able to harness insights from behavioural economics. Further, a mature system of goal deployment imposes a range of metrics across a business, each of which has to contribute to the global organisational plan. It is no use only measuring sales if measures of customer satisfaction and input measures about quality are neglected or even deliberately subverted. An organisation needs a rich dashboard and needs to know how to use it.

Critically, it is a matter of discipline. Employees must be left in no doubt that lack of care in maintaining the integrity of the organisational system and pursuing customer excellence will not be excused by mere adherence to a target, no matter how heroic. Bovis was clearly a culture where attention to customer requirements was not thought important by the staff. That is inevitably a failure of leadership.

Compare and contrast

Bovis are an interesting contrast with supermarket chain Sainsbury’s who featured in a law report in the same issue of The Times.3 Bovis and Sainsbury’s clearly have very different approaches as to how they communicate to their managers what is important.

Sainsbury’s operated a rigorous system of surveying staff engagement which aimed to embrace all employees. It was “deeply engrained in Sainsbury’s culture and was a critical part of Sainsbury’s strategy”. An HR manager sent an email to five store managers suggesting that the rigour could be relaxed. Not all employees needed to be engaged, he said, and participation could be restricted to the most enthusiastic. That would have been a clear distortion of the process.

Mr Colin Adesokan was a senior manager who subsequently learned of the email. He asked the HR manager to explain what he had meant but received no response and the email was recirculated. Adesokan did nothing. When his inaction came to the attention of the chief executive, Adesokan was dismissed summarily for gross misconduct.

He sued his employer and the matter ended up in the Court of Appeal, Adesokan arguing that such mere inaction over a colleague’s behaviour was incapable of constituting gross misconduct. The Court of Appeal did not agree. They found that, given the significance placed by Sainsbury’s on the engagement process, the trial judge had been entitled to find that Adesokan had been seriously in dereliction of his duty. That failing constituted gross misconduct because it had the effect of undermining the trust and confidence in the employment relationship. Adesokan seemed to have been indifferent to what, in Sainsbury’s eyes, was a very serious breach of an important procedure. Sainsbury’s had been entitled to dismiss him summarily for gross misconduct.

That is process discipline. That is how to manage it.

Display constancy of purpose in communicating what is important. Do not turn a blind eye to breaches. Do not tolerate those who would turn the blind eye. When you combine that with mature goal deployment and sophistication as to how to interpret variation in metrics then you are beginning to master, at least some parts of, how to run a business.

References

  1. “Share price plunges as Bovis tries to rebuild customers’ trust” (paywall), The Times (London), 20 February 2017
  2. “Targets could be skewing the truth, statistics chief warns” (paywall), The Times (London), 26 May 2014
  3. Adesokan v Sainsbury’s Supermarkets Ltd [2017] EWCA Civ 22, The Times, 21 February 2017 (paywall)

UK railway suicides – 2016 update

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The latest UK rail safety statistics were published in September 2016, again absent much of the press press fanfare we had seen in the past. Apologies for the long delay but the day job has been busy. Regular readers of this blog will know that I have followed the suicide data series, and the press response, closely in 2015, 2014, 2013 and 2012. Again, I “Cast a cold eye/ On life, on death.” Again I have re-plotted the data myself on a Shewhart chart.

railwaysuicides6

Readers should note the following about the chart.

  • Many thanks to Tom Leveson Gower at the Office of Rail and Road who confirmed that the figures are for the year up to the end of March.
  • Some of the numbers for earlier years have been updated by the statistical authority.
  • I have recalculated natural process limits (NPLs) as there are still no more than 20 annual observations, and because the historical data has been updated. The NPLs have therefore changed in that the 2014 total is no longer above the upper NPL.
  • The observation above the upper NPL in 2015 has not persisted. The latest total is within the NPLs. We have to think about how to interpret this.

The current chart shows two signals, an observation above the upper NPL in 2015 and a run of 8 below the centre line from 2002 to 2009. As I always remark, the Terry Weight rule says that a signal gives us license to interpret the ups and downs on the chart. So I shall have a go at doing that. Last year I was coming to the conclusion that the data increasingly looked like a gradual upward trend. Has the 2016 data changed that?

The Samaritans posted on their website, “Rail suicides fall by 12%,” and went on to say:

Suicide prevention measures put in place as part of the partnership between Samaritans, Network Rail and the wider rail industry are saving more lives on the railways.

In fairness, the Samaritans qualified their headline with the following footnote.

We must be mindful that suicide data is best understood by looking at trends over longer periods of time, and year-on-year fluctuations may not be indicative of longer term trends. It is however very encouraging to see such a decrease which we would hope to see continuing in future years.

The Huffington Post, no, not sure I really think of them as part of the MSM, were less cautious in banking the 12% by stating, “It is the first time the number has dropped in three years.” True, but #executivetimeseries!

Signal or noise?

What shall we make of the decrease, a decrease to  “back within” the NPLs? First, the mere fact that there are fewer suicides is good news. That is a “better” outcome. The question still remains as to whether we are making progress in reducing the frequency of suicides. Has there been a change to the underlying cause system that drives the suicide numbers? We might just be observing noise unrelated to an underlying signal or trend. Remember that extremely high measurements are usually followed by lower ones because of the principle of regression to the mean.1 Such a decrease is no evidence of an underlying improvement but merely a deceptive characteristic of common cause variation.

One thing that I can do is to try to fit a trend line through the data and to ask which narrative best fits what I observe, a continuing increasing trend or a trend that has plateaued or even reversed. As you know, I am very critical of the uncritical casting of regression lines on data plots. However, this time I have a definite purpose in mind. Here is the data with a fitted linear regression line.

railwaysuicides8a

What I wanted to do was to split the data into two parts:

  • A trend (linear simply for the sake of exploratory data analysis (EDA); and
  • The residual variation about the trend.

The question I want to ask is whether the residual variation is stable, just plain noise, or whether there is a signal there that might give me a clue that a linear trend does not hold. The way that I do that is to plot the residuals on a Shewhart chart.

railwaysuicides7

That shows a stable pattern of residuals. If I try to interpret the chart as a linear trend plus exchangeable noise then nothing in the data contradicts that. The original chart invites an interpretation, because of the signals. I adopt the interpretation of an increasing trend. Nothing in the data contradicts that. I can put the pictures together to show this model.

railwaysuicides8

My opinion is that, when I plot the data that way, I have a compelling picture of a growing trend about which there is some stable common cause variation. Had there been an observation below the lower NPL on the last chart then that could have been evidence that the trend was slowing or even reversing. But not here.

I note that there’s also a report here from Anna Taylor and her colleagues at the University of Bristol. They too find an increasing trend with no signal of amelioration. They have used a different approach from mine and the fact that we have both got to the same broad result should reinforce confidence in out common conclusion.

Measurement Systems Analysis

Of course, we should not draw any conclusions from the data without thinking about the measurement system. In this case there is a legal issue. It concerns the standard of proof that the law requires coroners to apply before finding suicide as the cause of death. Findings of fact in inquests in England and Wales are generally made if they satisfy the civil standard of proof, the balance of probabilities. However, a finding of suicide can only be returned if such a conclusion satisfies the higher standard of beyond reasonable doubt, the typical criminal standard.2 There have long been suggestions that that leads to under reporting of suicides.3 The Matthew Elvidge Trust is currently campaigning for the general civil standard of balance of probabilities to be adopted.4

Next steps

Previously I noted proposals to repeat a strategy from Japan of bathing railway platforms with blue light. In the UK, I understand that such lights were installed at Gatwick in summer 2014 but I have not seen any data or heard anything more about it.

A huge amount of sincere endeavour has gone into this issue but further efforts have to be against the background that there is an escalating and unexplained problem.

References

  1. Kahneman, D (2011) Thinking, Fast and Slow, Allen Lane, pp175-184
  2. Jervis on Coroners 13th ed. 13-70
  3. Chambers, D R (1989) “The coroner, the inquest and the verdict of suicide”, Medicine, Science and the Law 29, 181
  4. “Trust responds to Coroner’s Consultation“, Mathew Elvidge Trust, retrieved 4/1/17