Bad Metrics, Used Poorly = A Game You Will Lose
Recently, Don Peppers, an industry leader in customer experience, published an article on LinkedIn Why “You Can’t Manage What You Can’t Measure” is Bad Advice. In his article, Don makes a great point that quantitative metrics used in a mindless fashion do more harm than good. I’d put his story in the category of “bad metrics, used poorly!”
Don’s article prompted me to take a more in-depth look at the issue and offer some insight from my own experience on the front lines.
The reality is, we’ve all encountered bad metrics. A few of the ones we’ve witnessed over the years include:
• Customer Service Centre phone representatives whose primary metric of performance was the number of calls they handled in a day. So, they would routinely hang up on customers with more complex problems because it limited the number of calls they could take.
• A resort at which we led a turnaround where previous managers had punished the leaders of their food and beverage outlets for their high food costs. Unit leaders had banded together to fudge the costs so that no one would get into trouble. Hence, the data they had about food costs was completely misleading.
• Even the Wells-Fargo sales scandal from a few years back – beyond the obvious poor leadership and the perpetuation of a toxic culture by leaders at all levels – was a case of sales performance measures used to punish people, rather than for learning and improvement.
It’s always dangerous to manage by adage – it way oversimplifies the complexity of leading effectively. Let me toss another one in the ring that applies here: “what gets measured, gets done.” If we’re going to put poor measures in place, they are going to lead to poor results. It gets exponentially worse when leaders make bad decisions based on data that bad measures generate. And worse yet, when leaders act to punish people based upon the information, rather than learn from it.
Despite the mess such examples create, there is still a need and a place for strong measurement. This is where Visible Scorecards come into play. Visible Scorecards provide a direct line of sight between performance and results. They allow people at all levels of the organization the ability to adjust their performance, while the game is being played.
Here are some suggested ways to make your Visible Scorecards work effectively:
1. The best Visible Scorecards enable people to change the game while it’s being played to deliver better results for the organization, including its customers.
The key question is, do the measures we have in place give us the information we need to make the optimum decisions in the right timeframe? If not, the metrics are probably not the right ones, or the information isn’t timely, or the data is not being used in the way it was intended.
2. Measures need to be aligned to the Strategy…how do you make or keep yourself competitive and how do you distinguish yourself in the marketplace? So, what do you need to measure to ensure you’re executing your strategy effectively?
3. The information from your Scorecard must be used for learning, not pain and punishment.
Ultimately, it’s learning that is critical. Ask yourself: Are we on track with where we need to be to deliver the best results? Are we moving fast enough in that direction? If we’re not on track, why not? What do we need to change about our performance to hit the targets? And, what barriers are in the way that limit that performance?
Anti-learning environments create fear and loathing and keep people from performing their best. They spend more time trying to manipulate the data rather than just doing the right thing for the organization or its customers.
4. Most people want to perform their best.
In most cases, when you see bad measures gone bad, they are the result of leaders imposing metrics on people perhaps even with the best of intentions. To overcome that, engage the performers being measured in defining the metrics that help them perform their best. That way, building the metrics is a process done with them, not to them. Or, at minimum, ensure the performers clearly understand the purpose and intent of the measures (the why behind the what).
5. As Don Peppers points out in his article, leave room for judgment. Merely having data is insufficient. As someone once said, “I’m drowning in data, but dying of thirst for real information.”
It’s important to regularly challenge your thinking. Even with what you believe are the best of metrics. Ask yourself: Are these measures telling us what we think they’re telling us? Are they giving us the information we need to make the best decisions? Are there other measures that would give us better, more timely information to allow us to make better decisions? Finally, remember that you need to update your metrics on a regular basis. It’s very important to ensure you have the best information possible at any given time.
In the 2011 American sports movie Moneyball, Peter Brand said the following: “Using the stats the way we read them, we’ll find value in players that no one else can see.” Using good metrics for positive purposes gives you the ability to see what no one else can see which successfully leads to the end game — better results for your organization and for your customers.
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