More to Success than Money and Metrics

Louie was doing his job well, actively selling Marie on the reasons why she should list his firm’s talent assessment on her company’s website. He mentioned making money three times, and improving metrics four times, in response to Marie’s questions.

“Louie, thank you for reaching out,” said Marie. “Our companies’ interests don’t appear to be aligned, so a partnership isn’t going to work.”

“If I may ask, what interests aren’t aligned?”

“Metrics and money.”

“Wait a minute, Marie. Aren’t you interested in metrics and making money?”

“I am, just in a different way.”

“Which is?”

“Money and metrics tell me our business is doing well, but they aren’t the reasons we’re in business.”

Quantitative Metrics

Back in the 1950’s, the average lifespan of a business was 61 years; today, it’s around 18. Marie wants to beat both of those metrics. Her moonshot goal is achieving what the Nishiyama Onsen Keiunkan Hotel in Japan has done. The hotel opened in 705 AD and is still operating. Impressive.

Professor Makoto Kanda from Meiji Gakuin University studied the Nishiyama Onsen Keiunkan Hotel and other long-term operating businesses to understand their longevity. His findings? These organizations focus on a central belief that isn’t solely tied to making a profit. An orientation to something more than money and metrics is hard to find in most Wall Street analyses and reporting.

Quantitative metrics are valuable for tracking and assessing a specific business process. However, making quantitative metrics the only measure of success creates a number of other issues such as:

• People learn to game a system’s numbers and play to specific metrics.
• While many experts promote metrics and AI as the antidote to bias, that’s not really the case. Bias is built into data and algorithms, and that bias can skew greater over time as the algorithms learn.
• Initiative, innovation, and risk-taking lose out because they tend to harm metrics.
• The long-term is sacrificed for the short-term.
• Certain stakeholders are marginalized because of their minimal role in achieving the “right” numbers.
• People fall into binary either/or thinking patterns that tend to produce an artificial value hierarchy between business practices. For example, it’s not uncommon for companies to believe that improving the bottom line is more important that employee engagement or development.

Quantitative measurements do help people manage more efficiently. However, using a mix of quantitative and qualitative metrics makes managers both more efficient and effective.

Results vs. Relationships

A study by James Zenger found that 14 percent of employees viewed a manager who focused only on results as a good manager. Twelve percent thought a manager who focused on relationships was good. What about managers who delivered both results and relationships? 72 percent of employees saw them as a good manager. The really sad study finding? Less than 1 percent of managers focus on both results and relationships.

85 percent of managers prefer either results or relationships. Emphasizing one preference means there’s a counter-balancing factor that isn’t being used. Picture the playground teeter-totter with one side up and the other down. A singular focus on metrics (side up) results in workplaces where employees aren’t fully engaged (side down).

Marie’s business, the Nishiyama Onsen Keiunkan Hotel, and the 1 percent in Zenger’s study focus on actions that aren’t solely tied to making a profit. They’ve mastered “teeter-totter” leadership in balancing both quantitative and qualitative aspects of managing and leading. They:

• Get things done and are kind
• Have high standards and give positive feedback
• Have a plan and interact with people
• Speak directly and are encouraging
• Are decisive and consider impacts on others
• Are analytical and have good interpersonal skills
• Provide direction and listen to feedback
• Are candid and show empathy
• Think about today and tomorrow
• Are self-aware and trust others
• Compete externally and collaborate internally
• Measure KPIs as well as smiles and laughter
• Deliver the numbers and make people feel valued

Think about where you’ve worked. Did you thrive in an environment where you were only as good as your last set of numbers? Or where you felt like you were valued and made a difference?

Now think about your employees and your legacy. Do you want people to think of you as the boss who only cared about money and metrics, or as the boss they willingly followed because he/she focused on a central belief that wasn’t solely tied to making a profit?