Why can’t Metrics just be Indicators?

Humans like to measure things. It gives people a sense of understanding, and a related feeling of control. On the topic of measuring things, I’ve been through a range of opinions: I started believing that we just needed to improve performance metrics, so they better fit with their aims; moved to a nihilistic view that the focus on targets was negative, so removing measurements would improve performance; but I now believe that what’s most important is a level beyond that – understanding what the measurement is really measuring, what any results mean and why we should care.

Firstly, though, why the spread of the culture of measurement? Organisations do this for a number of reasons: it allows them to use targets to motivate staff; as entities get bigger, it’s more difficult to see what’s going on in your business; automation allows us to measure more than ever; they are easy to show to shareholders and other stakeholders; and, if I dare to be so bold, the more you measure, the more chance of finding a metric showing a positive trend.

So what’s the problem? Primarily that these measurements can lead to more and more negative behaviours – they can drive different parts of organisations to act against each other, actions that don’t fit with overall aims, time consuming analysis and unnecessary stress.

These issues arise for reasons such as: wanting to measure the performance of the smallest possible organisational unit clashing with the need to maximise the organisation’s overall delivery (this can lead to a lack of co-ordination between areas of the business, creating messy hand-offs and reducing overall efficiency); metrics either not measuring what they’re meant to (or thinking they measure something different); the clouding of a metric’s meaning due to uncontrollable or unforeseen variables; a misdirection of incentives and/or focus; unnecessary proliferation of data; and the creation of too many or inappropriate targets.

Those kinds of considerations led me to my first standpoint – we just need to invest more time and money in measuring the right things and that’ll lead to better results. It’s true that most organisations massively under-invest in their approach to performance metrics. It’s simple to keep using the same ones, it allows an easy comparison to other years and, potentially, across organisations and it’s easy for everyone to understand. And often the longer a metric has been in existence the less we remember about the subtleties of what’s really being measures, and the more we try to flex how we use it. Ultimately, however, I could see no way to reconcile all the different motives for metrics into one cohesive model.

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Bill Walsh – the 3 time Super Bowl Champion

This led me to move towards the Bill Walsh and John Wooden philosophy that the “score will take care of itself”. This supposes that focusing on any figure will lead to negative results, even if that figure is the bottom line (in their case the final score). They suggest that the focus should be on processes rather than outputs. If all the processes are performed as well as possible, then the final result will take care of itself. It’s a powerful and empowering approach. It brings activity right down to its basic components and puts emphasis on individuals, rather than numbers. It defines success as each individual achieving as near to their potential as possible, removing ability biases that can demoralise those who are less talented (because they can never “win”) and make the more talented become lazy (because they can “win” without delivering to their potential) It’s also the approach that I would take (and do take) when coaching sport. It makes it easy to be fair, helps push people and removes pressure.

However, it can’t work everywhere – in a large organisation you can’t see every employee, so you have to rely on other people’s judgements. But that then leaves you unable to compare performance across areas because people’s standards are all different. It also works in sport because, however much you try to ignore it, there is ultimately a way to quantify how you’re doing – just look at the score. There is a clear motivation and there is quick feedback on how the team is performing. This isn’t true of a team within a larger business. Finally, it leaves you with only the most basic outputs to communicate to others – if you only have your balance sheet then it’s very difficult to explain what’s really happening.

Thinking about metrics didn’t get me too far, so I started thinking about thinking about metrics. Our workplace culture has led us to view every metric as a key performance indicator and every key performance indicator (KPI) as an output in its own right. The easiest way to justify success is to show a number that’s getting better and the clearest way to be seen as failing is to oversee a range of figures all getting worse. The more we measure the more figures that become targets and the more time we have to spend focusing on how to make them better, rather than trying to achieve real organisational goals.

We’ve forgotten that KPIs are only indicators – they show us what is happening within an organisation and help us to identify areas where we’re performing well or poorly. A change in any metric is an insight into what’s happening, but only as much as any other source of information, such as the organisation’s overall delivery or the reports that you get from your staff (let’s not pretend that numbers can be just as biased as any other sort of information). And, even worse, we increasingly believe that anything we can measure is important.

This is what ultimately leads to the negatives that I noted earlier – an over-reliance on numbers, a misunderstanding of what they reflect and a failure to explore what the numbers are showing us. To shift back to American sports, an NBA team might have their interest piqued by someone who can jump 45 inches high and run the three quarter sprint in under 3 seconds. But they’d then go and watch the player actually play.

This limits what people can achieve – they are confined to act in such a way that increases “their figures”. Not only does this mean we stop people doing what’s right, but we disengage them as well – they begin to feel a lack of trust and an inability to do what they think is best. It can also lead to us rewarding people who aren’t the most deserving – if two salespeople both pitch perfectly, but one pulls in a million pound deal, while the other can’t make a sale then we’d see the first rewarded, when really they’ve both performed identically – leading to further disengagement and encouraging inappropriate behaviours (like trying to close other people’s sales).

Some organisations are better at this than others, but I believe the vast, vast majority can improve. This can only happen by seriously looking at the figures being generated and reviewing how they’re used. This takes time and is an investment, but it enables a workforce to deliver more and leaders to make better, more informed decisions. This change has to be top-down – when you stop being assessed on non-essential metrics, then you are able to free others.

Do I believe this is an easy thing to do? No – it’s a big cultural shift and removes the illusion of having sight of all parts of a business, but I do believe it’s possible. And we still need to look for better metrics, which I’ll talk about in later posts, and maintain a focus on the process. Overall it reflects where a lot of organisational issues come from; in line with Nietzsche’s quote above, everything else starts to become more important that what we actually set out to achieve.

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