Whatever gets measured, gets managed. But what if the performance metrics are not right?
Let's break-down a scenario to identify the importance of having the right performance metrics.
John is a marketing executive at a company Marketing X-Factors. His calibre as a successful marketing individual is determined by the total number of leads he generates. John gets a special request approved for a database of businesses in his target industry and forwards the leads to his client. At the end of the month, John is recognized and lauded for overachieving his target by 100%. At the end of the year, John’s client doesn’t renew its contract and ends the association with Marketing X-Factors. The root cause is found to be a lack of success rate for the leads John had generated over the year. A top-performing employee like John, couldn’t replicate top-performance in the bigger picture for the organization.
How many of us have known, or been a John at some point in our careers? The workforce is hardwired to behave like John - an employee’s calibre and performance is adjudged based on her ability to achieve their objectives, and the employee works towards those preset goals. But even high-performing employees and teams cannot translate into a high performing organization if there is a misalignment between the definition of high performance for individuals and the high performance of the organization.
Let’s analyze John’s example from above to deep-dive into the importance of measuring the right performance metrics:
The concept of incentivizing
Key question to ask:
What was John’s incentive when working for the client?
John’s performance was being adjudged by the number of leads he would generate. He visualized his goal, worked towards achieving it, and even ended up overachieving it. John’s incentive was to share leads with the client - he focused on it and achieved it. Could John be faulted for the client leaving because of the quality of leads?
The organization could have had an additional metric of ‘qualified leads shared with the client’. This would have incentivized John to spend more effort in sorting and shortlisting by quality of leads. He might have even put efforts in grooming these leads before sharing with the client to improve the success rate. Short term it worked well for the organization and John both, but the organization lost a client because of short-sightedness. This brings home the point about incentivizing the right results.
Then the organization also needs to work on additional incentives for John to strive for additional improvement in qualitative metrics which are not directly linked to year-end performance. For example, specific instances of quality client service can be rewarded and recognized. Academic research suggests that “properly constructed incentive programs can increase performance by as much as 44 percent.”
Sharing a compass to the employees
Key questions to ask:
- Would it have been better if John wouldn’t have had any goal?
- Is no goal better than a wrong goal?
Not having any metric is not the answer to having a wrong metric. Metrics provide direction to employees. How closely aligned the metrics are to the overall vision of the organization determine how much an individual’s performance can propel the organization to its overall objectives. Pre-agreed metrics such as ‘NPS for client satisfaction’ can provide the essential compass to John when starting on his pursuits. This metric would clearly inform him that it is important to maintain a high quality of client service, and this would be aligned with the organization’s objective of client retention and client satisfaction.
Break down organization’s vision into team and individual goals. Communicate these goals to the respective members of the workforce at the start of the year or as a part of their onboarding journey. This will get absorbed in the workforce’s way of working, and yield high individual, team and organization performance - unlike when John had high individual performance but organization performance went down for his own client.
Key questions to ask:
- Shouldn’t the client have timely raised the challenge around the success rate of John’s leads?
- If the client had shared this feedback, shouldn’t it have been included in the performance discussions between John and his manager?
Clients hardly shy away from sharing feedback on unsatisfactory results. Also, client feedback is relayed to the team members working with it. Managers do go amiss in performance conversations. Recency bias could kick in and qualitative feedback from the client could be forgotten if it happened much earlier than the performance conversation date. Or, the qualitative inputs may be a part of the discussion but the assessment metrics would have no space for such qualitative inputs - leaving the manager little chance but to rate the employee (John in this case) highly for doing extremely well in his performance goals (total number of leads shared with the client).
John’s manager should have leveraged the divergence between client feedback and actual performance against John’s goals to go back to the drawing board and revise the performance metrics. That is the advantage of having periodic performance conversations - an opportunity to course correct goals, or the approach to work. However, the manager and John didn’t utilize it to the fullest. It is also because the manager’s goals could also be aligned to John’s - and high ratings on performance metrics for John would translate into the manager’s performance card as well. Hence, it is important for the organization to - firstly, design the goals carefully; secondly, have a system of checks and balances to course correct whenever required.
John has been us, John has been people around us. If the performance metrics aren’t right, the focus is on managing non-strategic activities. To embark on the journey of becoming a high-performance organization - correct what you are measuring, then measure it, and manage it.