What We Measure, Improves — Part One
Be careful what you measure.
Topics include: time-clocks, Wells Fargo’s failures, Nordstrom’s employee handbook, cost/benefit.
The beauty of a good aphorism is that it is memorable. The challenge of a good aphorism is that it’s like a fortune cookie: we each take from it what we need. With Simple to Say, Hard to Do, there is no such thing as a shortcut. Let’s investigate measuring for improvement.
This classic nugget of management advice can be interpreted in contrasting ways. If you measure something, you can improve it, but also, To improve something, you must measure it.
Seeing this dichotomy helps you see possible downfalls of this approach. For the former, it paints a manager, rather than a leader. If you want to be a leader rather than a manager, be careful what you measure. The latter, requires you to recognize that you may improve things at a cost to others.
If you measure something, you can improve it.
Let’s start with a common challenge for companies that employ hourly workers: avoiding overtime. Businesses that build overtime into their budget create an incentive to work overtime hours. An hourly employee who ends up working close to 40 hours per week (or 8 hours per day in some states), has a strong incentive to work more once they get close to the threshold.
One simple approach to managing (not leading) this would be to measure overtime and publicize those results. You could publicize it by emailing the entire staff each week with a list of weekly overtime. You could post the hours with a list by the time-clock. You could define punishment for those who waste overtime hours.
The problem with this approach is that you will likely get unintended consequences. Some employees find excuses to not finish important tasks because they “ran out of time.” Hard working employees may “help” by working off the clock, a sure route to demoralization. Some employees will conclude that cost-cutting is more important than the opportunity to do good work. You may get overtime only from those who are less worried about the punitive result. You may get additional overtime as some people realize how much overtime others are working. None of these outcomes are particularly helpful.
Measuring the wrong thing lead to legal issues, for example, at Wells Fargo Bank. The company had a measurement of success which focused on how many accounts branches could open. This was enforced through both incentives (benefits for hitting new-account benchmarks) and punitive pressure (the impression that one could be “let go” for failing to meet sales goals). The company got incredible results on one metric, new accounts and credit cards opened, as well as incredible results on another: they earned the largest ever Consumer Protection Bureau fine.
To improve something you must measure it.
First, recognize the inherent wisdom that you can’t know if anything is improving unless you measure it. This is because everything is relative and you can’t improve unless you know where you start.
If your goal is leadership, rather than management, the methods to achieving it must be complex, because leadership is complex. When it comes to breaking down the business into areas for improvement, I suggest a paradoxically simple approach: The more complex the goal, the simpler the measurements.
I once got to see a copy of Nordstrom’s “employee handbook” for customer service. This legendarily customer-focused company has the most elegant solution for how to achieve an incredibly complex goal. When I saw it, it was on a 4" by 4" notecard. While I don’t want to violate their copyright, it is easy to find online, so I’m going to quote it in full so that you can appreciate its effect:
“Welcome to Nordstom. We’re glad to have you with our Company. Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high. We have great confidence in your ability to achieve them. So our employee handbook is very simple. We have only one rule…
Our only rule: Use good judgment in all situations.
Please feel free to ask your Department Manager, Store Manager or Human Resource office any question at any time.”
This is an ideal illustration of simple yet hard. The simplicity is evident, the difficulty is that it requires constant leadership effort to achieve success. It requires participation. You can’t measure “outstanding customer service” or “use good judgment” very simply. In fact, it is easier to measure failure than success. In thirty years of working with customers, I’ve had three or four times that customers have complained about me. They stand out more than the hundreds of times they’ve praised me.*
We want things to be easy to measure. We want them to be easy to solve. We have built an entire American education system on the idea that we can measure a person’s aptitude and ability with a series of numbers. And yet anyone reading this knows that there is no number by which they can be measured.
You can measure inputs, results, quantity, or sometimes quality but you can’t measure the true worth of employees. People and their worthiness are too complex, too nuanced. If you could measure all the aspects of employee worth, you wouldn’t because the cost would be too high to benefit the organization. There is a reason that research not funded by government or education is most often funded by those who benefit directly from the results.
As leaders, we benefit from a holistic approach that communicates our shared goals clearly and allows for individual methods to achieve them. Leaders know that measurements can never tell the whole story.
But before I convince you that measuring something to improve it is a fool’s errand*, remember my goal is to help you. Part Two should help you measure something to improve it.
Coming in part two:
My new favorite mathematics term; a story of me being a jerk; comparing apples and oranges; and my favorite hippie adjective — all in service of improving what I measure.
Footnotes
- * It’s worth considering that much of this discrepancy is that when we receive praise, we rarely look for more detail. If someone says about me, Hey, you did a really great job, I will thank them. If someone says, Hey, you did a terrible job, I will have follow-up questions.
- * Does anyone say, “mug’s game,” anymore?
