Editor's Note: The world of science holds many lessons for those of us in the rewards field. Here, Stephanie Thomas channels her inner astrophysicist to illuminate some lessons from the phenomenon of black holes!
It's a little-known fact, but the fields of astrophysics and compensation are closely related. Similarities are particularly apparent between black holes and compensation metrics. Both fields attract theorists and experimental researchers looking for a challenge, and both require a unique combination of empirical fact coupled with imagination. We know that black holes and compensation metrics exist, but the full extent of their innermost mysteries are yet to be revealed.
Taking an interdisciplinary approach can give us new insights into old problems. With that in mind, here are five things black holes can teach us about compensation metrics.
1. Black Holes and Compensation Metrics Suck - a black hole is a region of space from which nothing can escape. Because of strong gravitational fields and magnetic winds, these collapsed stars are impossible to resist. Compensation metrics also have strong gravitational and magnetic fields - it's easy to get sucked into the promise of finding that ultimate metric that will finally give you the perfect compensation system. Like cosmic dust into a black hole, a constant stream of time and money can get pulled into developing and implementing these metrics. If those resources are focused on measuring the wrong things, all that time and money can easily disappear into the singularity, lost forever, without shedding any light on the question at hand.
2. The Information Loss Paradox - when an object falls into a black hole, all of the information about that object is evenly distributed along the event horizon and is lost to outside observers. The same is true for compensation metrics. By their very nature, metrics are designed to aggregate information across observations and distill that information down into meaningful insights. But information is lost in the aggregation process. The primary unit of observation in compensation metrics is the person; people invariably have a rich history full of details that help to explain their current characteristics. Before crossing the event horizon of information processing and aggregation, it's important to think about what secondary information and individual characteristics might be of interest, and come up with a way to preserve that information in the overall metric.
3. Lack of Direct Evidence - by their nature, black holes cannot be directly observed. Astrophysicists looking for black holes have to rely on indirect evidence - usually gravitational interactions of the supposed black hole with its surroundings. Metrics essentially show us gravitational interactions, allowing us to make inferences about the unmeasurable things we really care about. Metrics may provide indirect evidence of problems in base salaries, workload, or management, but they rarely are able to accurately capture the problem itself. Metrics are proxies, and before we draw conclusions about the underlying processes at work, we need to make sure that our metrics are really measuring what we think they're measuring.
4. Observations Are Influenced By Position Of Observer - one of the most interesting effects associated with black holes is gravitational time dilation. To a distant observer, an object falling into a black hole appears to slow down, taking an infinite time to fall in. But an observer falling into the black hole crosses the event horizon after a finite time, although he doen't know when (it's impossible to determine the location of the event horizon from local observations). A similar phenomenon is true for metrics - two people could look at the same metric and come to different conclusions. Assume that employee turnover has increased in the last quarter. One person could look at this metric and conclude that the wrong people were being hired in the first place. Another could look at the same metric and conclude that the micromanagement policies implemented three months ago are the problem. Neither is really wrong; the new policies had a negative effect on the incumbent employees, but if individuals preferring micromanagement were hired, turnover would likely decline... The point is, perspective matters in interpreting the metrics.
5. Gravitational Collapse - black holes are created when the celestial object's internal pressure is insufficient to resist that object's own gravity. Metrics, if left unchecked, can lead to the same kind of gravitational collapse. We're assigning more importance to metrics in all areas of our lives - from KPIs at work to tracking 3-D information about workouts at the gym and the quality of our sleep at home in our beds. We love those little graphable sound-bites of information. There's something really gravitational about metrics, and it's easy to get caught up in their pull. But when the reasons for creating the metrics in the first place takes a back seat to the "what-can-we-measure-next" mentality, it's easy to collapse into the singularity of measuring for the sake of measuring.
Stephanie Thomas, Ph.D., is a Lecturer in the Department of Economics at Cornell University. She teaches undergraduate and graduate courses on economic theory and labor economics in the College of Arts and Sciences and in Cornell’s School of Industrial and Labor Relations. Throughout her career, Stephanie has completed research on a variety of topics including wage determination, pay gaps and inequality, and performance-based compensation systems. She frequently provides expert commentary in media outlets such as The New York Times, CBC, and NPR, and has published papers in a variety of journals.