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The Metrics and Reporting View looks at the various feedback cycles, metrics and reports in Holistic Software Development.

Targets reinforce measurement driven behaviors and can often be counter-productive as they reduce a focus on Business Value moving the focus to meeting the target instead. 
Setting targets leads to goal-seeking behavior where any behaviors that helps hit the target is considered acceptable. In one of our clients an agile mentoring team was required to run a number of maturity assessments on development teams. This requirement became a target of 1 per month. This target caused two dysfunctional behaviors:
  1. A pressure to get maturity assessments done caused the mentoring team to hassle development teams, damaging their reputation as positive enablers
  2. One month there were no assessments done because the various teams couldn’t fit in an assessment. The mentoring team’s management rounded up this 0 to 2 on their monthly report
We discuss the validity of “maturity assessments” later in this Process Metrics in the Metrics and Reporting View.
Goal seeking involves working backwards from the target to derive actions that will meet the target.  A better approach is to simply tell people what behaviors you’d like them to exhibit.
Incentives have the same effect in terms of goal seeking. They can have a very negative effect on people doing knowledge work (see Motivation) and supplier relationships (see Contracts). 
At another client we were asked to examine a contract model that was proposed by a supplier with incentives built into it. The intent of the incentives was to reward the supplier for delivering the scope within initial time estimates. When we compared the various scenarios the supplier proposed through their own models side by side a perverse effect emerged that the supplier would actually earn more money by delivering late, and to a low level quality. Although this wasn’t intended by the supplier, or obvious from the model at face value once exposed the contract model was rightly shut down in favor of a simpler model.
The best incentive for teams is continued motivation, any incentives that are counter to that motivation (in terms of autonomy, mastery and purpose) will be damaging. 
We do not recommend the use of targets or incentives.

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