A lot of emphasis is placed on the need for metrics in business – “What gets measured, gets done” or “What gets measured, gets managed.” When management starts tracking a behavior, the staff starts paying attention to it. That’s good, right? That’s the point! When the metrics aren’t clear or aren’t aligned with your business’ goals or the actual behaviors you wish to encourage, both management and staff become frustrated and give up. The costs may be employee turnover or even money paid as bonuses for a misguided metric.
The metrics you choose to measure must be directly linked to your business’ goals. A common example is sales commissions. If you want to increase sales, you compensate your sales team based on their increase in sales. Anyone who has used sales commissions know that they must be more nuanced than what’s described above. We don’t want any kinds of sales. We want sales with high margins or from recurring clients, or that are collectible. “Increase sales” is not often a specific enough direction. You must be clear about the results you want so that the behaviors achieve the stated goals. When we began tying team success to company profitability, a team member commented, “You need to be careful with ‘profitability’ as a metric because people will take it to extremes – not turn on the lights or not take that prospect out to lunch – in order to save money.” That response definitely made me think about how to be more specific in framing our objective and the purpose of this metric.
Another important factor in whether a metric successfully promotes a certain behavior is whether the team members buy into that metric. You must carefully communicate why the metric is important and how it contributes to the individual’s benefit as well as the company’s benefit. On the flip side, what are the consequences for not achieving the goals? Many of us have been in companies where we wonder why management cares so much about a particular metric – from our standpoint, we disagree that it’s an important factor for success. Communication in both directions about what is being measured and why it is measured is critical. Listening to the team’s perspective on how to implement and measure it properly is also critical. If they are not heard, they are unlikely to buy in. In our business, we pay attention to the efficiency of our client services team. We try to be transparent as to how these metrics are calculated. Sometimes we change the way a process is performed or something changes in our systems and our metrics don’t adjust accordingly. Usually, it’s a team member who is impacted by that metric bringing that gap to our attention.
Sometimes you will find an employee who objects to the metrics or responds defensively to their performance being measured. The individual may need a more thorough understanding of how their behavior contributes to the company’s success or the ability to provide some input or feedback on implementation. You should listen carefully because other team members may feel similarly. However, you may determine that the individual isn’t aligned with management’s objectives and is not a good fit for the company’s culture.
All the excitement around “data” and what it can do for your business must be grounded in a clear understanding of the business’ objectives to create meaningful metrics that are applied in a way to encourage behavior so you can achieve your results.