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You’re General Shinseki.

What happened to him could happen to you. Here’s how to prevent it:

But first, let’s get two facts straight.

Fact #1: The scandal at the VA isn’t that the VA provides awful care to veterans. Veteran satisfaction with VA care is on a par with private-sector care. An acquaintance who heads a chapter of the Vietnam Veterans Association and has been involved in the current inquiry confirmed for me that care quality isn’t an issue.

Fact #2: Nobody in the VA delayed care or treatment. Veterans seeking care were scheduled into the earliest timeslots available.

The “scandal” is that managers throughout the VA required staff to fudge the numbers to make it appear the agency was meeting its required service levels.

The VA’s leaders, from Shinseki on down, didn’t act on chapter 3 of the KJR Manifesto. They didn’t, that is, avoid Metrics Fallacy #4, which is, in case you need reminding, extending organizational metrics to individual employees. It’s a fallacy because the moment you do you won’t be able to trust your numbers any more.

What was true for Jeff Skilling and Ken Lay at Enron is just as true for a low-level manager at the VA: When your performance is gauged by numbers, you have an incentive to fudge the numbers, which in turn makes the numbers useless for gauging organizational performance.

If you lead a large IT organization I’d bet good money it’s happening to you right now.

Start with time tracking. Employees all know that if the numbers show they’re under-utilized they’re more vulnerable to the next round of layoffs. Think they don’t allocate some of their open time to various categories of doing something productive?

Of course they do.

Now think about Agile. Many Agile variants use some form of backlog management, the “backlog” being the project’s to-do list of desired new or improved system capabilities. These are usually described in terms of “user stories,” which describe what’s needed.

Each user story receives a consensus degree-of-difficulty rating from the Agile team. Agile teams become very good at this, which in turn means Agile projects forecast delivery more accurately than traditional waterfall projects.

It has to be tempting to use weighted user-story development time to rate developer performance.

Resist the temptation. Succumb and here’s what you’ll get: padded degree-of-difficulty estimates, slower development because developers will live down to their inflated estimates, and inflated performance numbers, because of the same padding.

Then there’s the Help Desk. Help Desk managers have a lot in common with VA scheduling managers, in that the amount of staff time available to resolve reported incidents is often quite a bit less than the time needed. Think your Help Desk staff don’t quietly close incidents they’ve touched but that aren’t really resolved, to make their close rate look better and their incident backlog smaller?

Which brings us to the most astonishing aspect of this whole sorry mess: General Shinseki apparently acted like a manager, not like a leader, and not a very good manager, either.

Shinseki, that is, relied on reports, his 12-level chain of command, and extensive time spent with the VA’s regional medical directors.

None mentioned the metrics-fudging. Why would anyone expect them to?

Generals are supposed to know that if they want to know what’s really going on, they need to talk to the soldiers. I’ve encountered no hints that Shinseki did much of this.

Look, fudging management reports to make performance look better is a time-honored tradition in the world of organizational dynamics. This isn’t a scandal in any meaningful sense of the word.

If there’s a scandal, it’s that the metric that mattered most … a metric on which lives depend if it’s the VA, and your relationship with the business depends if it’s the Help Desk … was jeopardized by the insistence on measuring individual performance. That metric? Demand/Capacity. So long as it’s enough less than one to cover day-to-day variations in demand, veterans will get the care they need when they need it and users with failing tech will get the fixes they need.

Turns out, in the VA it’s nowhere close.

Which in turn reveals Shinseki’s true failure.

The VA budget has increased significantly during the past two administrations, yet somehow that budget increase hasn’t turned into sufficient capacity.

With money to spend, Shinseki and his predecessors failed to make sure it was spent hiring and retaining doctors and nurses. That’s a scandal.

I trust the parallel is clear.

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There was a time it would have pained me to give Microsoft a compliment. But no more.

There are those in the industry who see all of Microsoft through a Windows 8 lens. Not that it has anything to do with this week’s missive; my opinion is that Windows 8 is best understood as Vista 2 — what matters isn’t Windows 8 itself, but what Microsoft learns from Windows 8 as it figures out Windows 9.

No, this isn’t a Windows 8 column. It also isn’t a Visual Studio column, although from what I’ve read, Visual Studio is outstanding. Nor is it an Azure column, even though Azure might just be the most interesting and enterprise-ready PaaS platform available, especially given the enterprise need to integrate the development environment (that would be Visual Studio) and identity management (Active Directory) into the whole shebang.

Nope. This isn’t a technology column. It’s a human-resources-management column (aka “human capital management,” aka “how you treat the men and women who work for you” column).

Microsoft has made a cutting-edge discovery: Stack rankings are a terrible idea and must be stopped.

To understand why stacked ranking … insisting that ten or twenty percent of every manager’s direct reports must be classified as “doesn’t meet expectations” … is a terrible idea you have to start by understanding where and in what circumstances they were a good idea, namely, General Electric when Jack Welch first took the helm.

Welch had been put in charge of a flabby, complacent company. He was quite sure it was overstaffed, and equally sure it had more than its share of mediocre-or-worse employees. It wasn’t hard to go from there to an inescapable inference: GE also had more than its share of managers who were quite comfortable drifting into the future on the efforts of mediocre employees.

These managers were too numerous to terminate en masse, so the only practical alternative was to give them no choice in the matter. Every year, every manager had to cut the bottom ten percent of their workforce.

Which had two salutary effects. First, General Electric got rid of its least profitable employees. And second, managers learned it was okay to terminate employees who weren’t worth keeping.

But just because it made sense in that restricted set of circumstances doesn’t mean it makes sense as an HR practice that pervades American industry.

As pointed out here years ago (“Staff inflections,“ KJR, 9/11/2006):

 Jack Welch popularized cutting the bottom ten percent of the workforce every year. Because it was Jack Welch, too many business leaders decided it must be a great idea. If you inherit a complacent, flabby organization this might be just the ticket … for a year or two. Beyond that limit, forget it — it’s both statistically and socially invalid.

Statistically: If you trim the worst performers, and choose strong replacements, then after two years your average performers must be well ahead of the industry average. And if you give other managers credit for brains, those they’ve terminated were the ones who didn’t do their jobs well, dragging down the average among the currently unemployed. If you can continue to strengthen your workforce by churning those rated lowest among your employees, you’ve been doing a poor job of recruiting and retaining great employees. You won’t fix this by continuing to cut.

Socially: How do you think your best employees will respond to the annual ritual? My guess — they’ll find companies that take a more surgical approach to dealing with problem performers. So in the effort to cut your worst employees you also lose your best.

Even worse: The more you churn your workforce, the less employees will trust each other, or you, because trust takes time to develop. Without trust there is no teamwork; without teamwork few organizations can achieve anything important.

Sorry to quote myself so extensively and self-congratulatorily, but I have nothing new to say on the topic, other than to congratulate Steve Ballmer.

Yes, Steve, your name is on several seriously bone-headed moves. Fair’s fair. If you’re going to get nailed for them, you also deserve credit: for making Microsoft’s products far more enterprise-ready than when you took over; and for building Microsoft’s enterprise infrastructure product portfolio. And especially now, you deserve credit for getting rid of stacked ranking at Microsoft.

It’s a fine legacy. Even more important, it just might make it okay for the HR departments in other companies to abandon the practice in favor of alternatives that have the advantages of making … what’s the word I’m looking for? Oh, yeah, now I have it.

Sense.

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