How you discuss metrics can inspire, motivate, and focus your people. It can also breed cynicism and incentivize the wrong behavior.
I used to be a project manager at a public consulting firm. Leadership's most important metric to was the burn rate: how much we were billing clients each month.
Why? The company earned a management fee calculated as a percentage of project spend, so the more we billed, the more revenue we booked.
In some companies, more money is universally and unequivocally viewed as a sign of success. Not so among employees in my former company. And not so for many mission-driven firms.
You see, my former company’s primary client was the US Agency for International Development. The projects I managed? Crime and violence prevention on the US/Mexico border and local government projects to improve education, sanitation, and water services in Guatemala, Peru, and Bangladesh.
As a young, idealistic professional who wanted to make the world a better place (still do, by the way), I had a really hard time reconciling the emphasis on "burn rate" with doing good work in the world. “Isn’t spending less money a good thing?” I wondered. “Wouldn't spending less mean that we can do more good work?”
Ultimately, this disconnect led me to leave the company. I dedicated the next several years of my career to program impact measurement, convinced there were better metrics for success.
With more than a decade of hindsight, I now understand this:
Yes, a high and consistent burn rate ensured we met revenue targets for shareholders. It also meant we were delivering our services as planned and budgeted. These plans and budgets were developed by local and international experts and designed to produce meaningful results on the ground, not maximize revenue. A low burn rate didn't just mean lower revenue, it also usually meant less of the good work I cared so much about was getting done.
People leaving over this type of metrics disconnect isn’t the only consequence. If you aren’t precise about why a metric matters, you also risk incentivizing the wrong behavior.
Take another example. I’ve worked with various national workforce development nonprofits over the years. One key metric tracked by all: program retention. Why? Someone can’t get connected to high-quality, full-time employment after the program if they don’t finish the program. Therefore, retention is a critical leading indicator for program outcomes. It's also a lagging indicator of a recruitment and admissions process that identified people who were a good fit for the program.
But what happens when you don’t make that full story clear to the team and simply celebrate a high retention rate? Staff may avoid coaching out people who aren’t a good fit for the program or aren’t meeting the requirements for graduation, which in turn means graduating people who are less likely to achieve full-time employment outcomes. The disconnect dilutes the indicator's value.
Leadership takeaway
It is critical that everyone on your team can plausibly connect the dots between your stated mission and values, the cause that brought them in the door, and the metrics you talk about most often.
Ask yourself:
Which metric do I bring up most in meetings?
Challenge to you:
Can you explain its connection to your mission more explicitly in one meeting this week?
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Want to get more intentional about how you talk about data? Click here for more ideas.
Want to learn more about which metrics to hold people accountable for? Check out this episode of Coaching for Leaders featuring Stacey Barr.
