Are Your Metrics Crippling You?
Well-crafted metrics are a powerful driver of performance. Done even pretty well, they can provide a miraculous mix of recognition, motivation, and results. Done wrong, they damage motivation, drown direction in confusion, and dissolve the resolve that produces great organization results.
The top crippler of metrics isn’t fuzzy definition, lousy communication, or sporadic calculation. All those can slow results and confuse people, but none is destructive as too many measures. Like medication, the right dose delivers remarkable results, but overdosing is toxic.
SPEED BUMP: The purpose of metrics is to change what your people choose to do.
Here’s the damage that metric multiplication does to an organization.
Most employees know what to do on most days. Mixed leadership messages add confusion to the mix and stifle effective work. Metrics are, above all, a message from the leadership of the company. Too many metrics send a mixed message at best.
Recognition (praise) may be the single most powerful motivator there is. The more metrics you produce, the weaker their impact on recognition. The combination of clutter and information overload leads many to write off metrics as another bit of management busywork. Once dismissed, metrics lose their power to recognize achievement, and to influence individual behavior. Empty praise, either devoid of data or exaggerated generality, quickly depreciates the value of all recognition, effectively erasing one of leadership’s best tools. It happens so slowly it’s often not recognized until too late, dissolving in a flood of measures.
No Finish Line
Like a dog with six plates of food, people facing multiple metrics will take a bite of each opportunity, but never finish any one of them. Metrics send the message “Here’s what’s important around here.” When metrics multiply, the message becomes, “Everything is important right now.” When that message rides on a wave of usual work pressures, it overwhelms initiative, and even hope in some situations. Lost hope soon becomes rote work, meeting the minimums and avoiding pain or punishment, which leads no one on the path of greatness.
SPEED BUMP: Metrics impact your workers far more than you imagine.
Here is how your business looks to your workers when they’re overwhelmed with measures that they can barely understand, let alone react to. They are left either ignoring them or chasing a few of them, hoping for reward instead of criticism.
When I worked at a trash hauling company, improving results was tough. Rates, work mix, and profit were regulated. Digging deeper, however, we found three drivers of performance: vehicle accidents, employee injuries, and service complaints. When we established metrics for each, performance improved in weeks. “Established” meant getting agreement on how the measurements were done, what they meant, and how they were communicated. “Establishment” took six months. Once these three were in place, we used them as the framework of performance. That framework opened the door to a sequence of improvements that yielded a 20 percent boost in net worth!
ACCELERANT: When will you cut your metrics down to size?
Not a member-scholar yet? Join our financial community here!
Identify your path to CFO success by taking our CFO Readiness Assessmentᵀᴹ.
For the most up to date and relevant accounting, finance, treasury and leadership headlines all in one place subscribe to The Balanced Digest.