Early in my working life I heard the phrase “if you don’t measure it you don’t manage it” and I would have to say that it has held true over a long period of time. Measuring something achieves two things; firstly it elevates the outcome to a level of objective assessment and secondly it requires us to explore underlying assumptions regarding the causal effects. If you really want to generate debate about causation then link the measure to remuneration as people then become highly motivated to attribute poor results to other reasons/causes than those currently held which promotes good debate!
The link between a measure and its underlying causes is a critical element and one that can be easily overlooked or misinterpreted. Let’s look at an example of staff turnover (% of staff who over 12 months voluntarily leave an organisation as a % of total staff in that organisation) being used as a measure of effective leadership.
Why do people voluntarily leave a company? The causal factors may be many – lack of career progress, desire for travel, changing locations, going back to study, poor management, changing careers, poor pay etc.
Whilst poor leadership may be one of the causes of staff turnover it may not be the primary cause and to use it as the key measure would be both inaccurate and misleading.
The measures around leadership can be difficult and yet there has been good progress on this front with a variety of surveys that seek to examine the engagement that staff have with their workplace and how executives and managers can influence this level of engagement.
The BlessingWhite Employee Engagement Global Study 2010* is one such survey and highlights the benefits of an engaged workforce. The model examines an individuals contribution to the company’s success and their personal satisfaction in the role.
In Australia only 36% are Engaged and whilst this is not bad in global terms it is a sad indictment on leadership both here in Australia and overseas.
Towers Watson found that engaged organisations Earnings Per Share growth rate of 28% compared to an 11.2% decline for low engagement firms. JC Penney found that stores with top-quartile engagement scores generate about 10% more in sales per square foot than average. Hewitt claims that the highly engaged are 78% more productive than the low ones.
Building high levels of staff engagement would appear to be one of those measures that should be managed by all businesses who seek high levels of performance as it underpins achievement in other areas (customer service, sales, profit) by maximising the contribution from staff.
So think carefully about what you measure and the true causes of results and what drives increases and decreases in the measure otherwise you might believe the Mayor of a US city who observed the correlation between when they won the championship and the town celebrating and therefore suggested they start celebrating from the start of the season to ensure a win!
For more on non-financial measures you may want to read this article by Ernst & Young “Measures that Matter”*For a copy of the full report (92 pages) go to www.polson.com.au .