Good Metrics vs Worthless Ones, Part One

Metrics

Maybe it’s just that time of year, but I am somehow getting into a lot of discussions about metrics.

Sales metrics.

Compliance metrics.

Safety metrics.

Evaluation metrics.

And on and on…

What is grabbing my attention is how I often I am seeing worthless metrics.

And by worthless, I mean devoid of worth/value/utility.

Sure they measure things, but they don’t actually tell anyone anything. And worse, they don’t actually drive the desired outcome.

Because that’s the whole point, right? Getting the right things done?

Let me give you a brief example that everyone should find familiar… Safety.

Anyone who has every worked in a larger organization (even as the cashier for a fast food joint) has seen the safety posters and seen the safety numbers. My favorite safety metric is “days without an incident.”

Does it clearly measure something? Of course it does. But, by itself, it doesn’t really tell you anything.

By itself, knowing how many days we have gone without an incident does not necessarily mean we are safe. We could just be lucky. There could any number of bad/risky behaviors at play, but since we are only measuring incidents – and not the behaviors that lead to safety – people can easily fall into a false sense of security.

Lazy workerAnd the worst part of this particular dynamic is that the better the number, the lazier people can become.

This happens in Sales all of the time. People make plan (or even beat plan) for one period and suddenly start to sleep coast.

It happens in Production, where Quality numbers look good for one month, then drop off the next. Then go back up, then drop off again. It becomes a consistently up-and-down pattern over the course of a year.

And here’s what is going on.

If the only thing that is being measured is the final result/outcome, you don’t have a metric any more. You have turned it into a goal. Instead of focusing on doing the right things, people are focused on whether or not the numbers look good.

But here is the kicker: Metrics are not goals. They are simply indicators of whether or not the goal is being achieved.

Picture this: It’s the Olympic Finals in Team Sport Z. The winning team gets the gold medal. Before the game starts, the coach of the underdog pulls his players together and says, “I’m proud of you all. We’ve worked hard to get here. I know we are about to play the most important game of our lives, so here is what I want you to do. Score X points. Do whatever you need to do to get to X points, but if you don’t score X points, we fail.”

Can you see the ridiculousness of that approach? Can you see the foolishness of telling people to just focus on the score?

A great coach will never focus on the score. He/she will focus on doing the right/best things and let the score take care of itself. Does the score matter? Of course it does. But it’s just a metric. It’s not the game.

Let’s go back to the safety analogy. What is the actual goal here? It is NOT to go Y number of days without an incident. That is just how we will measure the goal. The actual goal is to have a safe, engaged working environment, right?

This means that people need to do things to create that safe, engaged environment. They need to take safety training. They need to conduct safety audits. But there is more than formal activities involved. People need to look out for each other. They need to watch each other’s back – and hold each other accountable. They need to proactively look for and address potential risks. And so forth.

It’s the same things in Sales. Hitting a number is not the goal. Generating revenue and protecting revenue are the goals. There are a TON of things involved in effectively generating and protecting revenue, like researching customers, connecting with different altitude levels, identifying and solving problems, making your value tangible, and so forth. The numbers are just ways to measure if these things are being done.

FocusDo you see my point? Clarity of the actual goal drives different, better behaviors. But if the team has turned the metric into the goal… the result will be different, worse behaviors.

In closing (at least for part one of this particular rant), let me give you a simple test.

Ask the people on your team what their goals are. If you only hear metrics as the answer to your question, you have a real problem. Your metrics have hijacked your goals. And that is going to lead to a bunch of bad behaviors.

But then, you can probably already see that now.

I mua. Onward and upward.

By Tim Ohai

This entry was posted in Leadership, Management, Metrics, Sales Leadership and tagged , , , , , , . Bookmark the permalink.

2 Responses to Good Metrics vs Worthless Ones, Part One

  1. Clive Price says:

    To quote you Tim, “Generating revenue and protecting revenue are the goals” – yes agreed but how do you know if you have ‘arrived’. A metric will tell us that. Surely, the goal should conform to the acronym SMART so it becomes a tangible objective. The critical actions to achieve that like number of qualified appointments, deal conversions and margins will all have unique metrics. Am I understanding you correctly or am I missing the bigger picture?

    • timohai says:

      Metrics are essential to the definition of the goal, but they are not THE goal. This particular rant is about how people move away from the actual goal and simply aim for the metric. Reducing the focus to hitting numbers will only limit the performance of the players.

      In terms of using SMART, I have shifted away from that when talking business (SMART is wonderfully useful when talking personal goals). See my post on the Definition of Success here (https://timohai.com/2013/12/21/always-use-a-compass/). It breaks down what I believe a great goal/definition of success includes (and yes, metrics are still part of the formula).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s