Soft Metrics and Hard Culture
26/09/2017
I wrote last week about hard metrics and soft culture, which is a good description of how we need to think about PDRs and the personal management process. But today, let us look at this the other way round!
Soft Metrics? Yes, in fact all metrics are soft. What does the “I” in KPI stand for? The answer is “indicator”, so it isn’t real performance. We need to realise that actually all metrics are soft – some softer than others, but soft all the same.
Accountants will be getting a little concerned at this point, but even accounting measures are made up. How do we calculate overhead allocation? There are rules, we apply those rules, but there isn’t a totally scientific way of doing this. We have choices on the basis of which we do this and these choices change the calculation. It is the same for costing, and for nearly every other accounting measure (save I hope for the cash in the bank figure).
So just realise, the measures aren’t perfect, they give us insights into the truth, but how they are calculated makes a difference. Variance in the data can make a number wobble a bit and variability in measurement does that too. So all metrics are soft to some extent.
So, now how about a Hard Culture!
Some of the most successful firms I know do have a hard culture. But this isn’t about the way they deal with people, it is their attitude to performance. ‘Good’ isn’t good enough. There is a constant striving to do things better, not to shovel poor performance under the carpet, to really get to the cause of a problem, not be fobbed off with some superficial answer.
This culture goes right through the organisation. It is about constant challenge, learning from mistakes, asking searching questions and being paranoid about the competition.
Yes, these organisations are tough places to work – but it isn’t personal. It is about systems and processes, not about blame. The only difficult personal conversation arises when you are not trying – that is unforgiveable. But these organisations understand that people make mistakes, they need to experiment and they need to have a constant drive to improve.
So how does you culture work? Is it really driving you forwards?
Mike Bourne
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Mike,
Some really profound points here – here’s just two that stand out for me:
1. Schroedinger and Heisenberg, in the development of Quantum Mechanics made a true observation about the world if ever there was one (slightly re-worded for this post) – as soon as you measure the behaviour of a process, you influence/change that process’ behaviour;
2. The world is full of approximations – our business model is an approximation for the real-world business processes, the measures we use are the best approximation of what we really want to measure, the data we collect to populate those measures is an approximation to what is actually going on – etc., etc. For example, the Media (and hence the Public) get excited about Police Reported Crime going up or down as if that is the true picture of crime. But in the real-world, actual crime is a lot higher because not all crime gets reported (for various reasons) – and the British Crime Survey is a closer approximation than Police Reported Crime.
So, yes, all metrics are soft in multiple ways. But that should never stop us trying to improve them (and that includes not only improving the metrics we have, but looking for better approximations on the way).