Our Latest Articles and Insights | RESULTS.com

How to Get KPIs
Right the First Time

In order [for people to] contribute according to their potential, a leader must care about others, trust others to do their part, and behave in ways that earn trust.

– Linda Fisher, 7 Lenses

 

Practically every business leader I’ve ever met has used disclosure, or the lack of it, as a way to rank people on their team. Those higher up know more than those lower down. The boss holds the secrets and shares them with the worthy.

That basic hierarchy has existed for centuries, and for solid business and psychological reasons. On the business side, the owners need the freedom that privacy gives them to make decisions. On the psychological side, most employees just want to know that their job is safe, and they have no interest in sharing the boss’ stress about everything else.

These days the hierarchy is still there, and still mostly the same, but the level of disclosure that today’s employee expects and needs is radically different than it was just five or ten years ago. We deal with a lot of executives as they confront this reality. They want to be “transparent” and they want to to manage with “metrics” (or Key Performance Indicators).

But they’re confused, and deeply concerned, about what that actually means. Fortunately, there’s one simple technique you can use to calibrate how much you need to share.

You Still Need Privacy

To understand it, you need to think about your own psychology, and also the psychology of your team members.

In our experience, executives almost always believe that they have to reveal far more information than they actually do. If you’re like that, then you can steady yourself with this observation: back in the day, the boss had very little data. All of it was closely guarded because all of it was at the core of his P/L.

Many executives reflexively lump all of it into that category. They think it’s safer to keep it all under wraps. That’s especially true if they don’t know how to choose which data points to share.

Now think about it from the employee’s point of view. First, they all survived a nearly decade-long economic downturn. The Millennials grew into adulthood during it. That makes them want to know that their job is safe. It makes them want to know that their company is going someplace. And post-crisis, assurances from the boss that everything is OK just won’t cut it.

That’s because, over the course of that same decade, business leaders practically drowned in a flood of data. IBM says that 90% of all data ever created since the beginning of humanity was created in the last two years.

Everyone knows this, so if you don’t share data with today’s employee, they see it as a giant red flag. They don’t work harder to get a promotion to gain access to your secrets. They assume you’re hiding something, and they fear you’re setting them up for another disaster like the downturn.

That’s why modern management is all about metrics that matter. Data builds confidence. If you keep people in the dark, you’ll lose the best ones. Simple as that.

Reveal What’s Right

Instead, what you want to do is reveal precisely – and only – the data that will make your employees confident and productive.

McKinsey found that “many people do not want to know the full details of how their firm is doing, nor do they want to be held fully responsible for its outputs. Instead, they want to know enough to do their job well and they want to have the right to know more."

To accomplish that, most executives assume that they have to hold a retreat with their leadership team and hire an expensive consultant to facilitate it.

There’s a much better way, and we’ve been using it for decades. Have your managers meet with their employees and ask questions like these:

  • What do you do that matters most to the company?
  • How should your production be measured?
  • What else would you want to know to do your job better?

When you have those answers, you’ll be relieved. Your employees will either identify a great metric, or they’ll give you all the clues you need to find it for them.

And, even though you don’t ask for this directly, they’ll also let you know how much of your “secret data” they need in order to feel confident. Believe it or not, this will relieve you even more. You'll probably find out that no one needs the data you want to keep private. Usually a simple relative metric, like monthly % change in YoY sales, or something similar, is more than enough to give people confidence that they understand how the business is doing.

Using data in this way may push you out of your comfort zone a bit, but probably not nearly as far as you feared it would. 

The benefits are massive. On the business development side, employees get metrics that drive exactly the productivity that leads to success. And on the cultural side, everyone gets to feel like they're worthy of knowing what's really going on.