Earlier quoted context omitted.
>I believe it's been shown that when you try to reward/punish some metric of productivity, invariably the employees will begin to maximize that metric, perhaps at the expense of productivity. After years of direct involvement in measuring productivity, I would accept that as a general axiom. I've likened it to badly applied wallpaper: push down a bubble and it just pops up somewhere else.
So what would you say are the best ways to measure productivity?
It triggers an arms race of workers seeking ways to mask their activities and management building ever-more elaborate and invasive metrics to capture them. The end result is that everyone spends so much time and energy on administration that the output of real work actually falls - along with both employee morale and management confidence.
I found myself nodding my head in recognition when I read the excellent essay on lesswrong.com about spammers trying to game PageRank. http://news.ycombinator.com/item?id=1339704