Organizations continually try to measure performance and bottom line results. It is common to hear someone make the comment, “We can run a report for that,” or “We can pull that data and take a look at those number.” While data can be helpful in making calculated decision and generating volumes of helpful statistical information, the reality is that those terabytes of data stored electronically do not equate to measurement. Data is data. Data is not measurement.
Data however can be useful in helping to identify and create measurements by taking a look at the past so to better understand where to go in the future. Bottom line measurement is about looking at our effectiveness in real time. How are we doing today (measurement) as compared to yesterday (data), the past week (data), or past month (data). They key is to identify a measurement of effectiveness that adds value and contributes to the overall bottom line performance of the organization. Measurement is about keeping track of the things that are helping us win at work.
Caveat:
People tend to associate measurement as a negative process; measurement of defects, number of safety violations, etc. However, effective measurement helps us grow and become more effective. As results based leaders, it is critical to make measurement positive. If measurement is negative, it becomes one of the quickest paths to demotivating your people. Measurement needs to encourage more of the same positive, results based behaviors.
Nearly every organization we have consulted with in the last 30 years creates pretty good metrics that track business results in a pretty decent way. We believe the age-old adage, “if you can’t measure it you can’t manage it.” Fortunately, initiatives that have been universally embraced by businesses, like Six Sigma, Lean Management, and TQM, thrive on gathering, tracking, and analyzing key performance indicators, meaning that we have a number of strong systems that help us measure so we can manage better.
The most important discovery we have made over the course of many years is that the data alone won’t drive your business to the next level of bottom line performance. We have learned that the way the data is used by leaders has a direct impact on whether the results they see are ordinary or extraordinary. The way leaders interact with the individuals with whom they work either has a negative or positive impact on the results that leaders so desperately seek. The key to leveraging the metrics and boosting employee performance is making the data meaningful to people. It doesn’t matter if you are a scientist or an assembly worker: if you know how your efforts contribute to key results, what those results mean, and how to make the scoreboard move in your favor, you tend to become more engaged and motivated by your work. The magic of metrics is all about how leaders coach, communicate, and solve problems with other members of the organization. They have to help people interpret the data and create metrics that feed business results, and they need to make it personal. If leaders can connect individuals to the metrics driving the business’ success at the very core, if they can help employees see how they fit and why they matter, then every person will suddenly become personally invested in helping the organization improve its bottom line.
The trick is having the ability to position, explain, and use the data in a way that motivates and inspires people. This power resides in the leader’s ability to support, coach, and assist employees, as well as work through the barriers and interference that they will inevitably encounter. There is no inherent value in data. Motivation doesn’t come from analyzing the numbers. Business performance takes a sudden leap when trusted coaches help the people around them figure out ways to be challenged and stretched beyond their perceived abilities. If people gather relevant data about themselves, about the factors that are critical to their own success, analyze those factors with a coach, and then set realistic, meaningful goals grounded in the information they have gathered, they are more likely to want to perform in a superior way.
If you already have a system to measure performance, help your leaders learn how to use that information to its maximum effect, motivating members of your organization at all levels to perform to the very best of their abilities. We can help you enhance you bottom line leadership using the resources you already have at your disposal—your people.
In a previously posted article, Scorekeeping and Leaderboards to Drive Performance, the author discussed how measuring for performance cannot build fear and negativity into employees. Driving bottom line performance with the right measurement will engage people and get people excited and committed to push performance levels. Our experience with a retailer in Columbia, SC. proved that the right incentive can create a culture ready for the challenge. In this case a large part of the company’s business plan was to increase their sales per guest visit. The effort was a grass roots effort in which each employee picked a small, inexpensive item of the week that they would promote throughout the day. At stake for the company was a goal of 2% overall increase in sales based adding an item of the week to one out of fifteen customer visits. At stake for the employees was a pair of tickets to an upcoming NASCAR event. It’s important to point out here that, for many folks from Columbia and points south, NASCAR is life.
To keep score they painted a miniature oval on the floor in the back office. Each person got to choose a miniature car with the number of their favorite NASCAR driver. Once the dust settled over who was going to get #3, Dale Earnhardt’s old number, the race was on.
Each time an associate sold their item of the week they got to advance their car one length. The first ‘car’ to the checkered flag won.
It was a raucous week. Lot’s of fun, lots of incremental sales, and the store increased its sales for the week by over 6.5% which was an unqualified success.
In addition to making the scorecard fun by picking a game board that the team related to and had an interest in, this team captured the essence of effective scorecards as motivators. To be effective, a scorecard:
• Has to be about what I do
• Has to “talk” to me
• I Have to touch it and own it to believe it
• At some point is has to make me feel successful, whether it is hitting a target, showing improvement, or reinforncing my contribution
Simple, daily profit focused scorekeeping can be and should be fun.
Leave a comment telling us what was the most unique or innovative score keeping method you have seen in your company or another?
“When performance is measured, performance improves; when performance is measured and reported back, the rate of improvement accelerates.” –Thomas S. Monson
While working in the publishing industry Thomas S. Monson discovered that when workers were kept in the dark about their job performance they frequently became average performers, and for some workers less than average. But when workers were provided timely, relevant, and easy to understand information about their performance, many became superior performers.
As Marshall Sashkin explained in his book Performance Appraisal, annual performance appraisals can actually be a disincentive or de-motivator, rather than the panacea they are often held up to be. Sashkin observed that when workers’ performance is only “reported back” annually, they often become suspicious and distrustful of the entire measurement and reporting system. In a private conversation Sashkin once observed, “A manager would be better off with no appraisal than only an annual appraisal, because from a performance perspective being in the dark might be preferable than being surprised, shocked, disappointed, or even angry.”
Monson’s quote has been used for decades to explain why workers become more motivated when they are told how well they are performing. The trick in management is finding appropriate methods to not only measure, but also “report back” employee performance. Regrettably, left to their own devices, far too many managers give either vague or critical feedback on workers’ performance. And when the majority of feedback workers receive is unsupportive, untimely, unspecific, and uncalled for, the result can be poor performance at the best, or trouble performance at the worst.
Formal evaluations, such as performance appraisals, often measure job positions in subjective terms, such as, “Meets Job Requirements.” In today’s business climate do you really want an employee who merely meets expectations, or do you want an employee who smashes beyond “Meets” and consistently hits homeruns?
One of the reasons why annual performance appraisals can create more angst among employees than motivation is the subjective nature of the categories in which employees are measured. Workers’ performance must be thought of as scorekeeping, not as a measurement. We measure something to see what is wrong; we keep a scorecard to track what is correct. When employee performance is tracked with a scorecard that visually displays what went correct, the employee can connect his or her behavior with what is needed to win. By contrast, when employee performance is measured to find what went wrong, the employee may or may not be able to connect behavior with results.
Creating a scorecard system to “report back” performance must include ten essential characteristics.
1. The employee must have psychological ownership of his or her scorecards. People believe and trust what they own, not necessarily what is imposed upon them.
2. Scorecards must be based on specific measurable results for which that employee is paid. Traditional job descriptions are constructed with generalities that don’t include specific measurable results.
3. Scorecards must be posted near the employee’s work area. Scorecards place bottom line performance at front of mind awareness, not something that is discussed infrequently, or even annually.
4. Scorecards must be updated by the employee every day, or at the least every week. Scoreboards in stadiums are updated each time the score changes; likewise, scorecards must be updated as frequently as is practical.
5. Scorecards must include an agreed upon performance line. The performance line tells the employee how he or she is doing against an agreed upon standard.
6. Scorecards must include an agreed upon goal line. The goal line tells the employee when superior performance has been achieved and celebration is deserved.
7. Scorecards must include a way for the employee to compare his or her performance against past performance. An employee must be able to see in a glance how he or she is doing now verses yesterday, last week, or last month.
8. When a scorecard shows performance below a performance line, an action plan must be connected to the scorecard. An action plan is necessary for performance below the performance line, and it is optional when performance is above the line.
9. The employee’s coach must pay attention to scorecards and give daily, or at the least weekly, feedback and coaching. Scorecards must become the reason for coaching: supportive coaching for good performance, and corrective coaching for substandard performance.
10. The employee must feel a sense of celebration when his or her scorecard performance exceeds the goal. A goal achieved is worthy of celebration by the employee, coach, and possibly the entire team.
“When performance is measured [with effective individual scorecards], performance improves [because they become an incredibly strong motivational force]; when performance is reported back [through scorecards that adhere to the ten principles described above], performance accelerates. [Employees tap into discretionary performance when they believe their performance is being scored fairly and will make a difference].”
Innovation starts with leadership. The foundation of growth, increase profits and productivity are a clear vision, a prepared and enabled workforce, a culture of accountability, appropriate rewards systems and an environment that fosters creativity while preserving the values of the organization. Leadership that gets results is leadership that knows the way, shows the way and has prepared their team so they, as leaders, can get out of the way. Are you doing the same thing you have always done and expecting different results? Consider the story below and see if it sounds like behavior and processes in your organization today:
Two Bears: A Story About Change And Obsolescence
(An adaptation based on a story by Father Anthony de Mello)
A guide friend of mine tells the story of two hunters that came up to Alaska from the lower 48 to partake in their annual bear hunt. There are few roads to access prime bear hunting territory in the Agoolawok region, so a guide with a plane fit for the task is essential. A favorite aircraft for bush pilots in the region is the DE Havilland Beaver; a twin engine, amphibious plane that is capable on land, water or snow.
The two hunters hired out an experienced guide to take them in for a 6 day excursion. He dropped them off with their gear in the heart of bear country promising to pick them up at a designated time and place at the end of their outing.
It was a successful week and each hunter had bagged a decent size brown bear. They had field dressed the animals and, as agreed, the guide was at the meeting place to pick them up. Looking over the load including the two bears the guide suggested that the load was too heavy and they would have to leave one bear behind. Somewhat taken back one of the hunters proclaimed that the guide they had last year was very willing to take them out with the same load; the same two hunters with the same gear and two bear about the same size. Hesitant, the pilot looked the load over and did a little math.
“Are you sure it was the same load with about the same size bears?” the pilot asked.
“Yep” persisted the hunter. “Same stuff. I may have put on a few pounds in a year” he joked “but otherwise all the same”.
“Same aircraft?” the pilot wanted to be sure.
“Yep, DE Havilland Beaver” the hunter replied.
The pilot finally gave the ok. “Load ‘er up”.
They loaded up the plane and took off. Sure enough, about a mile out the aircraft didn’t have enough lift to get up over the next hillside. Fortunately the pilot was able to set the plane down safely in a clearing. It was a bit of a rough landing but no one was hurt and there was no damage to the plane. The two hunters climbed out and scrambled up the hillside to get their bearings.
“Where do you suppose we are?” one hunter asked the other.
“Best I can tell, just about a mile from where we had to set down last year!”
Are there instances in your organization where you are loading the “same two bears” over and over and expecting different results? Look at your business and see what processes, behaviors and routines are standing in the way of improving your bottom line profits. Get your leaders and your people involved and focus on driving business results.
Developing and testing new business simulations at CMOE is always a lot of fun. It’s a time when the CMOE staff gets free lunches, prizes, and the opportunity to meet countless new people we ask to join us. So in addition to creating or reworking our products, we create a culture of fun.
This past week I was assigned to pick up the food for a volunteer test group. I went to get Pizza and as I was standing at the payment counter, I noticed a computer screen on this wall. In big, black, block print, it read “LEADERBOARD.” I was immediately excited to see this. As I was waiting for my order to be finished, I was trying to identify what was being tracked by the “leaderboard” and how it worked. It was obvious that the leaderboard was networked with other stores and I quickly noticed that the store I was purchasing from was second from the bottom. This piqued my interest further. I decided to speak with the manager to understand how it worked.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
Manager: Yeah, it tracks just about everything in the store from the time a phone call was placed to the time the order leaves the store for delivery. Corporate can pull up data on just about anything in the store.
Me: It doesn’t sound like you believe it’s a good thing by the way you are speaking. Do you get recognized or rewarded for hitting certain levels of performance?
Manager: No, it basically indicates what you have to do as a minimum to keep from getting fired.
The manager continued to explain that this tracking system was to help employees have higher levels of customer service, reduced mistakes, and shorten production times, among many other things. While those are great focus areas, I was emotionally deflated by the way he explained it. This employee was telling me that the “Leaderboard,” this scorekeeping system, was the worst thing about his job.
If organizations are to succeed against strong competition and have higher levels of profitability, measurement cannot build fear and negativity into employees. Driving bottom line performance with the right measurement will engage people and get people excited and committed to push performance levels. By using our piles of data, managers can help employees sort out measurements that drive individual results.
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I believe there is a correlation between employee happiness, customer satisfaction, and increased profit margin. We all know in order for a company to stay in business it must produce profits. Too often though, the focus is centered around profits and not enough on the drivers of profits, the employees. Employees tend to treat the customers, whether internal or external, to the extent to which they are satisfied and happy with their current position. The question becomes how does a leader create enthusiasm and ensure job satisfaction for their team members.
Most satisfied employees feel empowered. This means they must have the tools, support, training and ability to make decisions. In addition, a leader needs to become more of a coach than a “teller” or dictator. Coaching creates an atmosphere of collaboration, trust, and confidence, where constructive and sincere feedback is accepted. Remember, “The worst feedback is no feedback”.
Employees need to understand how their job function contributes to the bottom line of the organization. Employees will tend to work harder if they feel like their work is meaningful and adds value. My first job in high school was at a dry cleaner. I staffed the front counter taking in clothes, entering the information into the system and creating an invoice for the customer. The job was not exciting and every day I wished for the fewest customers possible. When a customer came in I would get the order entered as fast as I could and get back to doing nothing but wait for the next customer. Looking back, I imagine that not everything was entered properly and those mistakes, although small, cost the company some profits.
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a scorecard. What if we created a scorecard review of my key functions so I could see the importance of the work I was doing. Even the “front counter” employees need to understand how important the work is that they are doing.
If employees are happy, customers are happy. When customers are happy, they come back and tell others of their experience. Repeat business and referrals equal greater profit. Sometimes we need to step back and look at our own performance. Are we focusing solely on the profit and forgetting about the people driving the profit? Are we creating an atmosphere where employees are coached or are we a dictator? Do the employees know how important their job function is? Do the employees feel empowered and find their work meaningful? Are we tracking the important functions that help build profit? We need to look at these questions often as we lead for greater profit.
The Value of You We all like to see results. Whether it is in the work we do, our bank account, or other personal activities, results make us feel good. The life of Warren Buffett is a great story about leadership that gets results. He spent decades mastering the financial industry and understanding how to get results. Regardless of how you feel about his approach, philosophy, or business style you cannot argue with the effectiveness and success he and his organization has had. In 2008 Warren Buffets net worth was estimated at $62 billion dollars. Those results were achieve by a lot of focus on the bottom line.
So how does Warren Buffett’s success apply to you? In November 2009, Warren Buffett and Bill Gates participated in a Town Hall meeting at Columbia University. During this event the following question was posed by a student:
Student Question: “Mr. Buffett, Mr. Gates, thank you for being here today. My name is Justin, I’m a second-year MBA, as I get ready to graduate, I was wondering, what’s the one thing that your MBA didn’t prepare you for when you got out into the real world?”
Warren Buffett Response: “Well, I was — it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into. I knew I was interested in investing, like I say, from the time I was six or seven years of age. So I was lucky that I found what turned me on early on. And I had these two marvelous professors here at Columbia that just being around — I had read all the stuff they had written. So it wasn’t I was acquiring lots of incremental knowledge but I was getting inspired. They were terrific for me. They treated me like a son. They would take me out to dinner. Ben Graham did the same thing for me. So it gave me confidence in myself. It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. [APPLAUSE] But let me add one point because — to the MBA situation. Right now, I would pay $100,000 for 10% of the future earnings of any of you. So anybody that wants to see me after this is over — [LAUGHTER] [APPLAUSE] If that’s true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000? You could improve — many of you, and I certainly could have when I got out, just in terms of learning communication skills. You know, it’s not something that is taught. I actually went to a Dale Carnegie course later on in terms of public speaking. But if you improve your value 50% by having better communication skills, that’s another $500,000 in terms of capital value. See me after the class and I’ll pay you 150-thousand.”
Monetary Value of Learning and Communication
This matters because it illustrates the importance of learning and effective communication. As individuals, it is important to develop ourselves. Whether you get an industry trade degree, look at going through a mini MBA program, or complete a Masters Degree at Columbia University, ongoing development of yourself is important to you, your future success, and ultimately your net worth. Investment in learning will pay huge dividends. If good communication skills are worth an additional $50,000 to Warren Buffet, it’s worth far more to you individually.
Heavily Invested
Ask yourself this question. What would an investor ask you at the annual shareholders of YOU meeting? At a high level, you might hear questions such as:
- Do you understand what it takes for you (and your organization) to win today?
- Do you understand where and how we can increase profit margins?
- Are you cutting operational expense to increase profit margins?
- How can you create distance or differentiation from the competition?
- Is the organization focusing on what matters?
If you can answer those questions, you are doing great. If not, look to refocus your efforts. Educate or develop yourself to the point where you can answer them. You are heavily invested in yourself so what do you want your future earnings look like? Are you a million-dollar person? It’s hard to argue against hard results.
Traditional rock climbing is a style of rock climbing where a climber places pieces of protection gear, such as camming devices and stoppers, into the rock as they climb up. In traditional climbing there are at least two people, one who climbs andone who belays. Traditional climbing also requires more gear than other styles of climbing. At the base of the climb two people attach themselves to the rope. The climber ties the rope into his harness and the person on belay connects the rope to his harness using a belaydevice, giving him the ability to manage the rope as the climber ascends the wall. The person that begins climbing up and placing gear to get to the top leads that wall. This leader has the responsibility to plan out and take the correct line or route, use the proper pieces of gear throughout the climb, and to set up a secure anchor to which he and the other climbers following him will rely on. Once he reaches the top and sets up his anchor, he takes over the role of belay and manages the rope as those who follow ascend. Often times the reward of traditional climbing is phenomenal as the climbers are able to stand at the peak of their climb and take in the beautiful view hundreds of feet off of the ground.
To run a successful business there must be those who rise up and lead, and as a lead climber does, one must step up and make many decisions that will be crucial to the life of the company. As a leader you will not be alone. You will have those who are beside you who, when you begin the climb, will be there to catch you if you fall. There are also many tools available that you must use to aid you in getting to the top.
To have leadership that gets results many of the same responsibilities that a lead climber has must be taken on. The first responsibility a leader has is planning out and taking the correct line. Remember, others who follow behind you will take the same rou
te you did, make sure its where you want them to go. The second is using the proper tools available at the right times. Often, leaders feel like they have to do everything. Trust and teamwork must come into play. You hire specific people who all have different skills an abilities for a reason, use them. Lastly, setting up a secure anchor. If you do not have a secure anchor to rely on and keep you steady as you make your way to the top, there will come a time when something will happen and because of a lack of an anchor you and others may fall.
These of course are only a few of the responsibilities necessary to lead, and every leader will need to carry out these responsibilities in the way that is specifically tailored to their companies needs. When things get a bit challenging, tie in and climb on, the rewards waiting at the top are well worth the effort.
Organizations continually try to measure performance and bottom line results. It is common to hear someone make the comment, “We can run a report for that,” or “We can pull that data and take a look at those number.” While data can be helpful in making calculated decision and generating volumes of helpful statistical information, the reality is that those terabytes of data stored electronically do not equate to measurement. Data is data. Data is not measurement.
Nearly every organization we have consulted with in the last 30 years creates pretty good metrics that track business results in a pretty decent way. We believe the age-old adage, “if you can’t measure it you can’t manage it.” Fortunately, initiatives that have been universally embraced by businesses, like Six Sigma, Lean Management, and TQM, thrive on gathering, tracking, and analyzing key performance indicators, meaning that we have a number of strong systems that help us measure so we can manage better.
To keep score they painted a miniature oval on the floor in the back office. Each person got to choose a miniature car with the number of their favorite NASCAR driver. Once the dust settled over who was going to get #3, Dale Earnhardt’s old number, the race was on.
As Marshall Sashkin explained in his book Performance Appraisal, annual performance appraisals can actually be a disincentive or de-motivator, rather than the panacea they are often held up to be. Sashkin observed that when workers’ performance is only “reported back” annually, they often become suspicious and distrustful of the entire measurement and reporting system. In a private conversation Sashkin once observed, “A manager would be better off with no appraisal than only an annual appraisal, because from a performance perspective being in the dark might be preferable than being surprised, shocked, disappointed, or even angry.”
Are there instances in your organization where you are loading the “same two bears” over and over and expecting different results? Look at your business and see what processes, behaviors and routines are standing in the way of improving your bottom line profits. Get your leaders and your people involved and focus on driving business results.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a 
Traditional rock climbing is a style of rock climbing where a climber places pieces of protection gear, such as camming devices and stoppers, into the rock as they climb up. In traditional climbing there are at least two people, one who climbs andone who belays. Traditional climbing also requires more gear than other styles of climbing. At the base of the climb two people attach themselves to the rope. The climber ties the rope into his harness and the person on belay connects the rope to his harness using a belaydevice, giving him the ability to manage the rope as the climber ascends the wall. The person that begins climbing up and placing gear to get to the top leads that wall. This leader has the responsibility to plan out and take the correct line or route, use the proper pieces of gear throughout the climb, and to set up a secure anchor to which he and the other climbers following him will rely on. Once he reaches the top and sets up his anchor, he takes over the role of belay and manages the rope as those who follow ascend. Often times the reward of traditional climbing is phenomenal as the climbers are able to stand at the peak of their climb and take in the beautiful view hundreds of feet off of the ground.
