By Toby Lowe
Audio Recording of Seminar

Payment by results is a simple idea: people and organisations should only get paid for what they deliver. Who could argue with that? If your job is to get people back to work, then find them a job dammit.

Plenty of people working in local government and public services are already starting to realise this is nonsense, and a pernicious, damaging nonsense at that. The evidence is very clear: if you pay (or otherwise manage performance) based on a set of pre-defined results, it creates poorer services for those most in need. It is the vulnerable, the marginalised, the disadvantaged who suffer most from payment by results.

Here’s why: payment by results does not reward organisations for supporting people to achieve what they need; it rewards organisations for producing data about targets; it rewards organisations for the fictions their staff are able to invent about what they have achieved; it pays people for porkies.

We know that common things happen when people use payment by results, and other outcomes-based performance management systems. There have been numerous studies that show that such systems distort organisational priorities and make organisations focus on doing the wrong things – and they make people lie.

This lying takes all sorts of different forms. Some of them are subtle forms of deception: teachers who teach to the test or who only enter pupils for exams they know they are going to pass; employment support that helps only those likely to get a job and ignores those most in need; or hospitals that reclassify trolleys as beds, and keep people waiting in ambulances on the hospital doorstep until they know they can be seen within a target time. In the literature, this is known as gaming the system.

Some of the lying is less subtle. People just make up results. Last year’s scandal with A4e provision of employment programmes is just one in a long line of haphazard outcome measurement.

Gwyn Bevan and Christopher Hood, professors of management at the London School of Economics and the University of Oxford respectively, looked at the impact of results targets on the NHS. They concluded that “target based performance management always creates ‘gaming’ “. Not sometimes. Not frequently. Always.

Sadly, the distortion of practice by payment by results doesn’t just stop with managers. The evidence shows that it also undermines the practice of frontline workers. It turns the relationship between support worker and client upside down. When payment-by-results practices are introduced, workers who used to ask their clients “How can I help you to achieve what you need?” instead think “How can you help me to produce the data I need?”

This is demonstrated in Hilary Cottom’s study of what social workers spend their time doing:

Spending time alongside social workers, such as Ryan, who works with Ella’s son Tom, we saw that 86% of time is system driven – filling in forms for accountability and discussing them with colleagues. Most shockingly, even the 14% of time spent face to face with a family member is not developmental. The dialogue between Ryan and Tom is dictated by the forms and their need for data and information. This squeezes out any possibility of the sort of conversation that might be needed to develop a supportive relationship as a first step in fostering change.

There’s a growing momentum behind the understanding that outcomes-based performance management in general – and payment by results, in particular – is dangerous idiocy. It makes good people do the wrong things, and then forces them to lie about it.

I will be taking part in a public conversation with others who are asking questions about payment by results, and seeking alternatives to outcomes-based performance management at a conference in Manchester on Wednesday 6 March. If you’ve been forced into gaming the system or just plain telling porkies in order to meet daft results targets, I’d love to hear your stories. If you get it off your chest you help contribute to changing the system. Let’s make this change; it’s important.

Toby Lowe is a visiting fellow at Newcastle University business school and chief executive of Helix Arts, a charity that transforms lives through art. You can follow him on Twitter: @tobyjlowe


Photo credit: A bus not in service by Barry Lewis