Source : Link
Measurements of business performance (a corporate concept known as “metrics”) can often be a valuable tool used to drive employee behavior toward specific desired outcomes. However, while some metric procedures help promote the right behaviors, the wrong ones can have devastating effects on a company.
A common side effect of poorly planned corporate metrics can inadvertently drive employees to cut corners and compromise quality for the sake of productivity. While well-intentioned, some company policies have unintended negative consequences that can result in customer dissatisfaction, adverse publicity, even fatal accidents and legal action. Here are some notable examples:
30 minutes or less. We all remember the infamous Domino’s Pizza campaign from the 70s and 80s when the company guaranteed that customers would receive their pizzas within 30 minutes of placing an order or they would receive the pizzas free. But in 1992, the company settled a lawsuit brought by the family of an Indiana woman who had been killed by a Domino’s delivery driver, paying the family $2.8 million. In another 1993 lawsuit, brought by a woman who was injured when a Domino’s delivery driver ran a red light and collided with her vehicle, the woman was awarded nearly $80 million (she accepted a payout of $15 million). The guarantee was dropped that same year because of the “public perception of reckless driving and irresponsibility”, according to then-CEO, Tom Monaghan.
Counting customers. Just in the past month, Bath and Body Works has issued an apology after one of its stores was caught refusing service to special needs children. According to The St. Louis Post-Dispatch, 17 special needs students from Fort Zumwalt North High School had taken a field trip to the Chesterfield Mall in Missouri to learn life lessons, but they ended up learning the wrong one. Teachers said that the store was concerned that the students, who were not buying anything, would trigger the door sensors, and add to the day’s customer count. Because the students were not buying anything, Bath and Body Works staff complained that the students would negatively impact sales numbers. This wasn’t the first time this happened either. Back in March, a store manager in Alabama asked a group of special needs students to leave the store also due to worries about throwing off the location’s metrics.
Cost cuts. Most notably, General Motors infamous 2014 record breaking automobile recalls were caused, in part, by the penetration of a culture of cost. Specifically, GM internal correspondence confirmed that a 90 cent per piece fix would have avoided the recall. However, GM’s metrics at the time could not justify this expense, as compared to a 10-15 cent warranty savings. GM CEO Mary Barra recognized these flawed metrics and the erroneous decisions that resulted. Barra said recently, “We’ve moved from a cost culture to a customer culture.”
In these examples, metrics potentially drove the wrong behaviors. Our challenge as business leaders is to weave the right metrics into to our corporate DNA. In doing this, we cannot ignore the fact that the best-intentioned gauges of measure may have unforeseen consequences. The key is to guard against these risks when developing company metrics and not after we’ve faced issues of customer dissatisfaction, accidents, legal action or adverse publicity.
Metrics and culture are tightly interwoven. Culture is about behavior. Metrics often drive that behavior. If metrics are not aligned with a company’s culture, it is very likely that undesirable behaviors will result.
To ensure that you have actionable metrics that consistently promote your culture and the right behaviors, consider this:
Side-effects. As you develop or refine your key operating metrics, consider the side-effects up front. For example, if you design a metric to increase production, will that metric inadvertently incentivize team members to cut corners and compromise quality? If so, your metric is not necessarily wrong but you’ll have to build in safeguards that protect against the potentially unwanted side effect.
Your front lines. Share your metrics at the earliest possible stage with the employees who are most directly affected. Allow them to comment and to understand the “why” behind the metric. Your front lines can actually help you improve the metric and find the hidden risks. When people understand the “why” they tend to be more aligned and supportive. If your offer your customers a delivery guaranty, the team needs to understand that you are not throwing common sense quality and safety standards out the window. You can be both highly productive and safe.
Company culture. Be sure your metrics are aligned with your company values. For instance, many of us espouse teamwork as a value. Do our promotion and bonus plans only focus on an employee’s individual contribution, or do they also focus on his or her role as a team player? It becomes terribly confusing when we espouse one set of values but reward another. Be sure that every metric supports core company values.
Timeliness. What worked yesterday may not work as well today. Don’t be afraid to evaluate your metrics to be sure that they are still relevant. The “30-minutes-or-it’s-free” guarantee was a cornerstone of Domino’s early commitment to its customers. Many people still think of Dominos and that tag line, however, Dominos knew when it was time to abandon that delivery guarantee (albeit after litigation) and replace it with other customer centric metrics.
You can’t manage it if you can’t measure it. This old axiom will always ring true however, some of your measures may be covertly hurting your business. It is our role as business leaders to carefully evaluate our metrics from a 360-degree perspective and to root out any unwanted side effects.
Commentary by Brian Fielkow, the president of Jetco Delivery, a multimillion-dollar transportation-logistics company specializing in regional trucking, heavy haul and national freight. He is also the author of “Driving to Perfection: Achieving Business Excellence By Creating A Vibrant Culture.” Follow him on Twitter @Brian_Fielkow.