The metrics phenomena
You keep your finger on the pulse of your metrics to derive valuable insights for your business. With this in mind, in this article, I’m not going to tell a man his business and explain why metrics are important. Instead, I will deep dive into the phenomena of metrics and try to understand how we can make the most of them.
Our main aim is to understand how people perceive metrics data, how this data can influence human behavior in a good or bad way, and how we should adjust our behavior in order to boost staff performance and drive desired outcomes.
What you can measure — you can manage
The main advantage of metrics is that they can be attached to a business goal which a company wants to achieve in order to keep the team responsible. As well, they are helpful in linking any employee to any specific project goal and overall company goals.
To make the most of the metrics, first of all, a company has to define the most critical processes, which commit to the company’s strategic goals. Then, establish clear goals for the processes, and after that indicate outputs that correspond to each type of activity necessary to achieve these goals, and measure the outputs. The goal is real when you can see the progress towards its achievement.
Metrics pursue data-driven behavior
Many company owners become overwhelmed with routine operations. They are focused on the tasks and to-do lists, and often forget to get off the ground and think over the strategy.
According to Scientific American, numerosity is an intuitive sense, built-in into our brains since birth. For our minds numbers are obvious and illustrative. That’s why numbers can more easily tell us what’s working and what’s not in our processes than other types of data. Metrics can provide us visibility and clarity about what is going on, as well as give valuable insights on how to streamline our operations. Metrics are perfectly understandable for humans, still, there is a chance that we can misuse the obtained data.
Metrics are not reality
Numbers feel safe. They indicate something and tell a story. Still, as they are only a representation of the reality, but not the reality itself, which may give the false sense of understanding/progress. Happens, that according to the numbers the team’s performance is skyrocketing, but the company is failing. This is the case when we pick up the wrong metric to observe. For example, we track how many people visit our website each month, and the numbers go up and up. Seems, that the team exceeds the goals, but that visits don’t necessarily mean conversions.
Actionable metrics. Set your goals before metrics.
The amount of data available to you may be immense. However, metrics are not created equal. There is a huge difference between actionable metrics and vanity metrics. Far too many people make the mistake of focusing on the wrong metrics. Actionable and vanity metrics were described by Eric Ries in his landmark book “The Lean Startup”.
Actionable metrics tie specific and repeatable actions to the goals of your business and observed results. They help you get your stuff done and show you what you can improve. These metrics make a difference. For example, revenue is actionable.
Vanity metrics are in contrast to actionable metrics. They may seem very pretty on paper as the signs of traction, but they don’t tie with the main business goals. They don’t show key indicators for the crucial business processes, therefore, these metrics are not important right now. They give no insight on what to do next. These metrics are not what you should spend your time and energy on. For example, vanity metrics are number of meetings with a potential client (the client may sign the contract or not), number of Facebook followers (they may become buyers of your services or not), website visits per month (that don’t mean conversions), etc.
Metrics problem.
“Metrics can drive dangerous behavior”
Sometimes managers use a metric system to highlight their high personal performance to pursue their career, not to achieve the company goals. As in the example above, the team lead may focus on how to attract as many visitors to the website as possible in order to reach their personal KPIs, and leave out of account the number of conversions or product purchases, as these numbers don’t show their “hard work”.
This can happen when an employee performance metric is not aligned with the company’s primary metric, or when employees do not understand their performance metric or have several contradictory performance metrics. Alternatively, when an employee is trying to justify their hard work by blaming another department. For example, for high performance which didn’t improve the aligned KPIs. Such a war between departments to show off better results may lead to overall company failure. Although KPIs may be perfectly aligned with the company goals, people often do everything to justify their personal achievements, even if this leads to failures. This is especially true when the company’s main metrics don’t go well.
To avoid such a situation, a leader should be aware of the processes in the company, and the right outputs for these processes. Still, in practice, it’s impossible to be everywhere and know everything. Thus, they should establish the right metrics for all individuals that correspond to the company goals, and develop a system which aligns company goals with teams’/individual KPIs.
To bring time and efforts to achieve the company’s goals, employees should not only have the proper numbers set, actionable metrics tuned, and clear understanding of what and when should be done, but also they should have direct benefits for themselves (excluding promotion or salary raise). People want to be rewarded for their work with professional recognition.
Metrics and Dashboards. At the top of fingertips
The most convenient way to have access to the crucial metrics is to organize them into a comprehensive dashboard. A dashboard is the source of truth of what is going on under the hood that you have access to at any time. As humans, what we see first — we utilize first. Thus, when the data is available to you at any moment in a convenient format — it can serve as a good driver of your behavior and decisions.
A dashboard may serve you faithfully for many months, showing how the things go with your service and helping improve it. This dashboard can prove itself to be effective with that exact set of metrics and graphs. And then comes a moment when your dashboard shows you a perfect performance, but your customer is unsatisfied. What’s wrong with the dashboard and the info it shows?
If our metric system doesn’t ideally align main company goals with the goals of individuals and teams, which happens quite often, we cannot expect an easy achievement of the company’s mission. The only way for the leader in this situation is to go and see Gemba to identify first the root of the problem. They shouldn’t rely on mere metrics but explore what’s actually happening in the departments, what do responsible people do, and what caused the problems. Because your current dashboard wasn’t able to drive the right behavior of your team, you can’t rely on it anymore. This means you should be ready for a pivot and be prepared to change numbers you’ve been used to.
How to use metrics right?
In order to mine the most of gold out of your metrics, you should try not to miss the main point — the context. Context is what ensures the value of the metric data, and allows you better act according to these data. One of the dangers of using metrics is choosing the wrong outputs to observe, and this happens when you leave the context out of sight. Still, let’s not forget that the context is dynamic, and this makes everything with metrics even more complicated. As well, there is no explicit trigger that indicates the change of the context and tells you that it’s time to change the metric system.
Metrics are not the manna from heaven that ensures the excellent results, but they are just another tool. They are not necessarily helpful in finding solutions/problems, but they show us the progress of resolving the problems. They come in handy when we need to capture the results or monitor the regression, but they don’t tell us what to do next. Therefore, to achieve real performance excellence, we need something more than dashboards and numbers…
Takeaways
- Metrics drive both good AND bad behavior.
- What gets measured IS what gets done.
- Numbers are easy to digest. Use it wisely.
- Metrics do not get better with age — they often become obsolete.
- Good metrics help optimize the performance of the entire organization.
- Effective metrics do not measure people — they measure teams and processes.
The Answer or Importance of Why
“There are only two ways to influence human behavior: you can manipulate it or you can inspire it.” Simon Sinek
Those who use metrics forget that the tool lies into the manipulation category of people management. Even if you avoid all caveats with metrics usage, you will anyway end up with people, whom motivation and inspiration lie only on KPI you asked.
Be sure, that innovation and greatness do not come from the people are driven by just preset goals.
Feel free to leave your comments or ask questions. These topics are not as simple as it seems, so please share your thoughts and experiences. Let’s try to figure it out together!
