Wednesday, August 22, 2012

Measures: Good or Evil

Back in my days as a corporate planner, our department used to joke about whether we would use our powers for good or evil that day. We used to assign good and evil days.  On Week 1, Monday, Wednesday and Friday were good, and Tuesday and Thursday were evil.  Then we would switch the rotation the next week.

We would joke about it and then go off to meet our clients to help them unravel the mysteries of their respective universe, because that was our job. We held in our hands, and by the power vested in us, the responsiblity of helping to make things better in the world of work.

One of the mysteries of the universe leaders face is that of measures. Usually questions like how many, which ones, how to use them and how to measure them come into play.  

But there are other questions about leadership integrity that are not so easy, or popular, to ask. Is the leadership measuring to reveal issues and opportunities, or measuring to hide them? Are the leaders up to the challenge of finding the truth in the issues, or hiding the truth?

On the question of leadership integrity, 99.9% of the time, the answers to the questions of are: yes, no, yes, no. 

I have always been an advocate that measures in balanced scorecards hold the key to universal harmony in the business when the measure expresses the intent to improve a given situation.

If this were expressed in a linear process, it would look like this:
  1. Describe your Big Hairy Audacious Goal 
  2. Set Objectives 
  3. Research to find out what the current state looks like and the issues 
  4. Establish strategy to resolve the issue with desired and specific measurable outcomes. 
  5. Communicate it and make sure everyone understands, is on side, and ready to roll. 
  6. Implement. 
  7. Measure against the strategy.  
  8. Report 
  9. Begin again . . .
Properly chosen measures inform the decision makers about important trends that could be occurring so that decision makers can determine the course of action.   Measures are used to gauge the performance of a given strategy and strategies are employed to create a desired outcome.  

For example, if the objective is to increase employee morale, and actions are taken, the measures should tell the story of whether the strategy and its application are working or not. 

In this scenario, if employee satisfaction measured before the strategy was 52% and 49% after the strategy, one might surmise the following: 
  1. That not enough time as lapsed for the strategies to take hold.
  2. That the strategies are counter productive to the objective. 
  3. That perhaps the issues are misunderstood and a new strategy is needed.
In my experience, if the executive is truly concerned about the actual issues behind the results, and the measure is used for "good"  then the outcome (49%) would not be a surprise because they would know whether the strategy is having any impact at all prior to measurement. They would be adjusting the strategy progressively to create a sustainable and positive impact.   

To continue the analogy of "good versus evil", sometimes measures are used for the latter. That is to say, sometimes measures are set for appearances, but with no intention of making a difference.

Employers who are in this camp may change the measure as opposed to the strategy and possibly justify their decision by saying that the measure was not the correct measure, or the measurement tool was all wrong, or that the receivers of the strategy were out of line in some way. 

A shell game ensues at this point making the truth hard to discern. If the measurement tool were based on the strategy, then the measure is of the strategy itself, and the creators of the strategy are by design guilty or to be celebrated for their strategy, except when external reasons are affixed to its failure, in which case, neither the measure, nor the strategy, nor their creators are responsible for its failure.

The problem with this line of reasoning is this: every strategy assumes the environment can shift, so it is expected that the strategy adjusts to these challenges.  Failure to adjust is a failure to lead. 

Sometimes strategy measures reveal uncomfortable findings, such as lack of trust in leadership and lack of communication regarding direction. These are clearly top leadership issues. Findings of this nature create an opportunity to prove leadership integrity.

Enter the good and evil conundrum and the role of governance accountability. Given that human beings can make mistakes from time to time, it begs the question, where does the final word come from on the measures of the company?

According to good governance practice, the governing body accountability (Board, Shareholder, etc.) has a responsiblity to ask questions about the actions of the leadership team and its strategies, and to make the changes in leadership when strategies continue to deliver ineffective results. This is called Performance Management. 


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