There’s an old business axiom: What gets measured gets done.
Most organizations seem to do a good job at measuring things like sales and quarterly profits. But very few measure what really matters.
Unfortunately, being too focused on short-term metrics, even quarterly financial reports, can be devastating for an organization’s long-term success. Former Medtronic CEO Bill George—who achieved extraordinary business success by every metric—makes it very clear why this is so in his book Authentic Leadership.
To put it simply, we eventually fail to serve the customer when we focus on quarterly financials. And no business survives very long without customers. This kind of focus makes us much more likely to want to cut costs than to balance the reduction of expenses with the long-term investments that are absolutely vital for actually serving our customers.
As Bill writes, “Inevitably, the short-term opportunities to increase shareholder value taper off. At this point top management usually turns to financial restructuring to achieve its financial goals. Nonstrategic acquisitions, divestitures, consolidations, layoffs, and cutbacks generally follow. By the time these financial moves are completed, the corporation has lost its capacity for growth. Restoring the firm to a growth company at this point is a long, arduous process.”
Of course, this is not to say that we shouldn’t be aware of our quarterly financial numbers, or that we should eliminate them as a metric. The point is simply that if we want to have consistent long-term growth in our organizations, we can’t just focus on short-term financials.
We need to focus on the underlying elements of the organizations that create the conditions for long-term growth and profitability: happy, loyal employees who ensure that we have happy, loyal customers. And the best way to increase our focus on these things that really matter is to measure them.
We can measure the health of the organization as a whole by asking team members questions like:
- How happy are you at home?
- How happy are you at work?
- How would you explain the vision and mission of our organization?
- To what degree do you feel your daily work contributes to our vision and mission?
- How well do you feel our organization as a whole lives our core values?
- What can we do to help you enjoy your home life more?
- What can we do to help you enjoy coming to work more?
For the best results, leaders need to ask these questions in face-to-face meetings. An e-mail survey doesn’t have nearly the same impact as real human beings asking other human beings questions that show how much we care.
We can also apply this practice of measuring what really matters to ourselves, and to the organization’s other leaders. If we expect our leaders to live our core values and focus on serving those around them, we must measure precisely those things.
As Joel Manby points out in his book Love Works, many organizations are great at measuring what he calls do goals—the success of the customer experience, employee satisfaction, safety results, brand strength, and financials. But very few measure what Manby calls be goals—those we set for how we want our leaders to treat each other and the members of their teams while they are working to accomplish the “do” goals.
In essence, the “be” goals measure how well a leader lives the core values and fits in with the culture. Leaders at HFE are not only measured on how well they achieve the “do” goals, but their performance on “be” goals is also important. In fact, their compensation is directly tied to how well they do on both; in order to even qualify to be a senior leader at HFE, a person must excel at both.
To get the best measure of the “be” goals we set for our leaders, we should consider gathering anonymous, 360-degree feedback from employees and peers, and getting feedback from seniors in person.
We can ask questions (reformulated for accurate survey measurement, of course) such as:
- How well does Bob listen?
- How willing is Bob to help others?
- How important to Bob is the happiness and success of the people he leads?
- How kind is Bob?
- How compassionate is Bob?
- How well does Bob live core value A (repeat for each value)?
In essence, we’re asking, “How well does Bob love his team members?” Of course, we’re not talking about some romantic feeling that people often confuse with love. We’re talking about acts of love—extending oneself for others’ benefit and treating them with kindness and compassion and respect.
When we commit to measuring how well we love those around us, and how well the other leaders in our organization love those around them, we can dramatically improve the business outcomes for our organizations.
This helps us focus on the parts of our leadership development that are the most essential for achieving positive long-term business outcomes.
It also makes our lives much more fulfilling.
Please leave me a comment below if you apply these ideas. I’d love to hear about your experience.
This piece is an adapted excerpt from the book Serve to Be Great: Leadership Lessons from a Prison, a Monastery, and a Boardroom.