On the topic of running organizations from last week, I want to touch on an often talked about subject this week. Metrics and numbers are typically the foundation of the executive level in which they utilize their magnifying glass and are how we hold people “accountable”. I am here to challenge this notion. As I discussed last week, people are liquid. They take the path of least resistance and for most people, numbers are the easy way out. We should be holding our managers accountable for employee engagement, satisfaction, and retention. Metrics, it’s a love/hate relationship. Let’s talk.
First, the love. Metrics are a key thermometer of a business. Looking at financial statements and understanding if your business is healthy is extremely important. These different documents allow you not only to see where the business may be hurting, but also where you can utilize different resources to improve. Overall they also give you different types of feedback, not just financial. You can use surveys to talk to your customers, employees, and even suppliers. Not only can you get a lot of information in a short period of time, but it also allows you to have a diversified look at your business or a potential business you are looking to invest in. The numbers are very crucial, but as I said earlier it’s a love/hate relationship. Here comes the hate.
“Just as businesses cannot live without profit, humans cannot live without red blood cells. The sole purpose of humans is not to just make red blood cells, just as the sole purpose of business should not be to just make a profit.” This is a quote from Edward Freeman and the conscious capitalism model. As I said earlier people take the path of least resistance, which typically in business is the metrics. We have so much information and different ways of slicing and dicing it that we can paint any type of picture we want. That is one of the problems of metrics. We can manipulate the numbers to show what we want, whether it is stagnating opex, sales growth, or justification for expansions in the business. Another problem with metrics and numbers is that they only show one level. Simon Sinek talks about this in more detail in saying that we do not know the impact past the metric. An example would be that we could see that sales have grown, but what you didn’t see was that because we had a training that grew our people. They then became more knowledgeable to then sell better to our clients who in turn became more loyal. We only saw the number, not the trail that led to it. The last piece I dislike about numbers is that it affects the people. At the end of the day people are the most important asset a company has, yet the easiest way to justify the numbers is by sacrificing the people. This mindset has led to many people losing jobs, careers, and affected more than just the company’s bottom line.
At the end of the day we need to switch our focus, we need to change the perception of how we run our organizations. We are more than just a bottom line. I just finished reading a book I mentioned in the past called 12 Elements of Great Managing and a quote from the book goes as follows; “…business tolerates interpersonal incompetence, where it would never allow financial malfeasance.” How often do we see this in an organization? Where people in managerial roles care more about the number rather than the people under them! Simon Sinek also talks about this subject and says that we need to change the way we promote within our business. We give our employees that get groomed for upper management financial training from day one. The area we are lacking in is the people side. Our employees get really good at doing the day to day operations it takes to run our individual businesses. After years of doing so they get promoted into positions where they are no longer responsible for the numbers, but responsible for the people who are responsible for the numbers, resulting in a micromanage environment that creates hostility in the work place. We need to train our people to understand people, not just numbers.
Choosing the path less traveled is never easy. I understand that, but the problem is that this is something we cannot continue to sacrifice. We need to have an understanding of our financials and how to utilize them, but we need to have a better understanding of how our people work and how we can offer them the opportunities to get better, grow, and learn. Just as you want the best for your children at home, we should want the best for our employees at work. At the end of the day if we take care of our people, our people take care of our customers, and our customers take care of our shareholders.