when metrics leads to madness

When Metrics Leads to Madness

Before we get into the thick of it, let’s breakdown what exactly metrics are. Metrics are those nifty numbers that help companies get a better idea of what’s working and what’s not. If utilized correctly, metrics can be incredibly useful in achieving the various strategies that companies have in place. If not used correctly, metrics can lead to madness.

And these days, metrics are everywhere, tracking everything.

Take the internet for example. In just a few clicks of a button using Google Analytics, we can see the exact movements of our company’s website visitors. And because best practices have taught us not only to gather metrics but actually use them, the information can be used to update website content, increase SEO and drive new traffic to the page.

The usage of metrics is not just confined to webpages either. Metrics are also used to measure customer satisfaction through surveys, to measure product sales through achieving quotas, and to measure effectiveness of social media content through tracking engagement, just to name a few. If the metrics are not meeting the goals that we have set out for ourselves, we change direction and try something new.

So What’s The Catch?

Many companies have a tendency to place too much attention on achieving one single metric that they lose sight of the overarching strategy of the company.

This is where metrics can lead to madness.

Harvard Business Review did an excellent job laying out this exact scenario examining the in-famous Wells Fargo scandal in which the bank aligned their long-standing strategy of building long-term customer relationships by tracking and incentivizing cross-sales numbers. The employees focused on increasing their cross-selling numbers by any means possible, and the strategic focus of building long-term customer relationships fell to the wayside. The strategy of the company was lost to meeting sales quotas.

Don’t get me wrong, using metrics to analyze and enhance performance, absolutely makes sense. But when your metrics take the front seat to strategy, issues will arise. So how do we execute and promote company strategy without unleashing the metrics madness?

1) Incentivizing strategy over metrics

In the case of Wells Fargo, sales quotas and the incentives linked to those quotas were driving employees to focus more on achieving their numbers than developing customer relationships. Incentives are intended to motivate and encourage productivity from your staff. Make sure your incentives are in alignment with your entire company’s strategy. Focusing on just one metric can encourage the shortsighted and even malicious behaviors.

2) Use multiple metrics

No single metric has the ability to completely capture the effectiveness of a company’s strategy. Your company’s performance should be measured by a culmination of metrics such as customer satisfaction, product quality/issues, repeating customers, profits, etc. Not one of these can truly depict the company’s alignment of performance and strategy without the other. Multiple metrics can give you a better picture of performance and keep staff more focused on the overarching strategy.

3) Include staff in setting the metrics

Executive staff, senior management, sales reps, anyone who is responsible with implementing strategy, should be involved in the process of setting metrics. Senior management can help implement the company’s strategy from the top. Including staff can help them understand and act on the company’s strategy. They can also provide guidance on metrics that make sense without taking over.

 4) Evaluate your metrics and revise when necessary

As time goes on, you may notice that the metrics that you set out may not be measuring what they were first set out to measure. You may start to wonder if they are truly in alignment with your strategy and if they still make sense for where the company is. This will happen and it’s okay. Companies change and evolve. If your metrics are not changing when new strategies are implemented, the company could be missing essential information.

5) Create a company culture where your employees can thrive

A few years ago, Google went on a research quest to understand what characteristics made a successful team in the workplace. It’s called Project Aristotle, you can read more about the process and findings in The New York Times Magazine 2016 piece. But I’d like to focus on one factor  they found was crucial for a team’s success; psychological safety. Create a company culture where your staff feels comfortable sharing their opinions, asking questions, and even taking risks. Your staff needs to know they’re supported. There may not be a quantitative way to measure psychological safety of your staff; however, a team that feels safe leads to enhanced performance and the effective implementation of company strategy.

Metrics are extremely useful, when used correctly. As a result, they can give you an accurate depiction of what’s working and inform you if your performance is in line with your company strategy. But when too much attention is given to one single metric, madness can ensue. Use metrics to your advantage, don’t let them lead you towards a collapse.