What's Wrong With Metrics Management?

Metrics can be useful, in fact valuable. They are objective measurements, usually presented as numbers, that tell us something about our process. What we do with this information is where "Metrics Management" gets us into trouble.


Metrics Management, as I understand it, is a management philosophy that says, "We can't manage what we can't measure, but with numbers (metrics) we can manage just about anything." Its central approach is that, with objective measurement of each aspect of our business we can identify those aspects that are less than optimal. We can then improve the sub-optimal parts of the process, and see the results in our measurements and at the bottom line.


Metrics Management proponents will surely quibble with my overly simplified distillation of a significant aspect of management theory. Please feel free to search the Internet, find articles on metrics-based management, and form your own definition. However, no matter what definition of Metrics Management you use, the process breaks down in practice, and the unintended consequences are harmful to the business.


The core problem with "Metrics Management" as used in any complex and sophisticated enterprise, is that the numbers can't possibly tell the whole story. There is more to any business than the sum of the objectively measurable aspects. But metrics based management encourages those who don't intimately understand the business to think that they can manage based on the numbers, and that's exactly what they do. Decisions are made, policies put into place, and large sums of money are spent in pursuit of "the numbers".


It is unfortunate that the numbers are never able to adequately measure all the things we are trying to achieve. The process is too complex, with too many unmeasurable variables. The numbers can't capture the real "value add" that makes the business work, but we must have objective numbers! So we settle for a proxy, a quantifiable substitute, an objectively measurable event that only tells part of the story. Then improving that measurement becomes the new goal. The boss says we have to get our numbers up! You will be held accountable!


And quickly, almost immediately, employees shift their focus from achieving the real goals of the organization to achieving the numbers that they will be evaluated by, the numbers they must be "accountable" to. Imposition of metrics management on creative people is like squeezing a balloon. The people you've hired to add value to your organization are forced to find creative ways to manipulate the measurements, and they do so to the company's detriment. Nobody wants to do it this way, but they are forced to in order to maintain their employment and income. Everyone has to "play the game". The result is improving metrics, but damaged morale, and then the host of bad results that always follow damaged morale.


Every employee, from the most highly educated and experienced to the new hire at minimum wage, quickly becomes unhappy when the criteria by which they are measured do not closely, almost perfectly correspond to the actions they know to be in the best interest of the company. And this is the inevitable result of trying to "measure and incent" the individual tasks performed
in any complex or creative endeavor. The metrics become a stresser instead of a motivator, a counterproductive mandate that violates the employees' values, and impedes them from doing what they know to be the right thing to do.


Why is it so impossible to develop metrics that truly measure each employee's contribution to the corporation? One reason is due to the inherent complexity of most any modern business. But perhaps a more important reason is because it is impossible to "measure" judgment, and initiative, and loyalty, and teamwork objectively. Those attributes must be measured subjectively, which pretty much puts them outside the realm of Metrics Management. Even the lowliest job requires judgment, yet metrics measurements are rigid, with no capability to reward people who go beyond the scope of their metrics.


What message does imposition of metrics based management send to each employee? That they are "just a number". That the corporation doesn't trust them to use judgment or initiative. That teamwork is not really a priority, and only individual contribution (your numbers) matter. That the employer prefers to sacrifice what is right and what is best for what can be objectively measured. The result is that Metrics Management dehumanizes employees and hurts morale, causes increased turnover, and reduces productivity over the long term. If you doubt this conclusion, study what happened at Home Depot under Nardelli.


In the end, metrics are the refuge of those who don't know how to manage. (With appreciation to the source of most of that phrase). Nothing beats respect, teamwork, and a generous spirit. A caring and intelligent management team that fosters empowerment, initiative, and cooperation will always produce the best results.