Why vs How

What’s your number?  In business, organizational leaders rely on the financial and quantitative metrics that reveal how they’ve done in the recent or not so recent past.  Skilled analysts can then parse the data to reveal trends that can benefit or hurt the company’s profitability and sustainability.

Numbers matter.

But do you rely exclusively on quantitative data to manage your enterprise OR to change it in response to market threats?  If so, you’re missing valuable information and clues that can strengthen or sabotage success.

Company performance is more than just counting widgets and exploring finances.  High-performing companies also do deep dives into their qualitative metrics:  those “squishy” characteristics that reveal corporate culture, the real meaning of your company’s brand, and the emotional attitudes of your workforce.

The challenge is how to track and measure these critical qualitative factors that ultimately determine organizational success or failure.

Why Organizations Skew Toward Quantitative Data

Accounting and financial reports tend to focus on the way money flows in and out of a company and, as a result, are inherently quantitative.  Such monetary and unit measurements are also relatively easy to obtain.  When used in decision-making, the focus is on counts (e.g., number of calls made by a customer service rep in an hour or the percentage increase in sales) rather than context.

When these quantitative-based methods are applied to workforce assessment, the tools used generally rely on employees ranking their responses to questions about culture or their work experiences (e.g., surveys that ask participants to rank a variety of items on a scale of 1-5 ranging from “very dissatisfied” to “very satisfied”).

Because the results are numbers or percentages, organizational leaders tend to believe that these are absolute values that accurately depict their area of inquiry.  But are they really that accurate?

For example, most employees hate the dreaded 4-point scale (even more than the 5- or 7-point scale) to “rate” their feelings.  Even a presumably simple question such as “Are you satisfied in your job?” leads to a plethora of questions in the employee’s mind:  Does this mean the work that I do…OR the people I work with…OR my relationship with my boss…OR my compensation and benefits…what if I’m satisfied in some areas but dissatisfied in others?  The employee will weigh these choices before attempting to “quantify” how they feel on the imposed ranking system.

But sometimes they just give up and choose the neutral option (e.g., a “3” ranking on a 5-point scale).  Depending on the level of trust in the organization, they might also just rank everything at the highest level — because they’re not fully certain that their responses will be anonymous (or even confidential).

Can organizational leaders rely on the results of these surveys as the basis for future decision-making?

To create a more holistic and inclusive view of the forces that contribute to a company’s performance, Kaplan and Norton introduced the balanced scorecard.  While recognizing the importance of financial metrics to assess performance, they also emphasized the insights that can be gleaned from adding customer satisfaction, employee learning, and other “squishy” qualitative forces to the mix.  The goal is to create a more holistic and realistic picture of the organization.

Consider this all too familiar scenario:

  • Company X has been trending toward decreased sales and increased turnover, which have negatively impacted profitability.
  • The company does NOT conduct exit interviews with employees who have voluntarily left the company:  it’s too difficult to put their words into a quantitatively-based formula that can then be analyzed.
  • Since payroll is one of the largest line items in a company’s budget, the decision is made to NOT re-hire employees who have left the company; financially it makes sense to decrease these costs in order to boost profits.

In this scenario, the data has been analyzed through a purely financial lens.  Decreasing costs (such as payroll) will initially increase profits if everything else remains the same.  But what if these qualitative (i.e., non-quantitative) considerations were added to the analysis:

  • Company X’s largest competitor has increased its advertising budget to advertise new technology in its product — a technology that Company X has not yet added.
  • Social media posts from dissatisfied customers have increased substantially in number and in anger — but the company spends very little time or money on its social media persona.
  • The company’s founder was eliminated by the Board of Directors and replaced with a new CEO whose mission is to aggressively cut costs in all areas except IT — where it is planning to increase spending.
  • There have been several unexpected rounds of layoffs and downsizing as the workforce has been trimmed by over 35%.
  • Employees grumble that the company has “changed” and that they no longer enjoy their jobs nor believe in the corporate vision — but they are also afraid to share these views publicly due to stories of recrimination against the “naysayers.”

Such qualitative factors challenge the assumptions arising from purely financial analysis.  To include these non-quantifiable factors requires a new method of assessing organizational performance that looks beyond what we count…to asking why these results are occurring.

Organizational leaders, therefore, need to thoroughly understand not only what to measure but also how to measure it — especially when the factors affecting performance are inherently NON-quantifiable or qualitative.

The challenge is developing effective metrics that allow corporate leaders to not only identify the qualitative factors affecting performance, but also accurately include them in managerial reports and use them in decision-making.  These qualitative metrics enhance the ability to notice trends — which consequently elicits a deeper dive into what’s really affecting those quantitative results (the “why”).

In other words, success in the modern rapidly changing marketplace requires a balanced, holistic approach to metrics.

Developing a Holistic Approach to Metrics

Ranking is a common method to quantitatively measure something that is inherently qualitative.  In other words, the method attempts to objectively measure something that is inherently subjective.

But as I previously mentioned, there are a variety of factors that influence why a worker responds in a specific way to the questions.

Consider this example:

  • Company X believes that employee satisfaction is low — but they don’t know why their employees are dissatisfied.
  • They decide to use an off the shelf employee satisfaction survey that was established for their industry — so they assume that the questions and criteria will reflect their workplace situation.
  • The results reveal that 22% of workers responded to the survey — but 80% stated that they were “satisfied” or “very satisfied.”

How would you interpret these results?

  • Should Company X be relieved by the overall high employee job satisfaction ranking?
  • Or is the 22% participation rate an area of concern?
  • Is one metric more important than the other?

Perhaps Company X should partially trust the findings.  However, they need to analyze the data as starting points for further conversations:

  • What factors contributed to the low participation rate?  Is this comparable to surveys within their industry?  If it’s lower, workers might believe that the company doesn’t care about their responses and, as a result, nothing will change as a result of their feedback.
  • Were the employees confident that their surveys would remain anonymous – or were they only assured that their responses would be confidential?  This could indicate a major trust issue in the company that affected employee responses and skewed the data.
  • Did the employees simply respond in a way that they believed that management wanted them to respond?  Were they afraid of repercussions by management or their fellow employees if they responded truthfully?  This could reveal a culture of groupthink, fear of reprisal, or even burnout.
  • Finally — but most importantly — what is the definition of “job satisfaction?”  Was management’s definition the same as employees?  Are the expectations related to “job satisfaction” different based on department or job title?  Without a common definition, the assumptions used to answer the questions would not lead to accurate results.

By delving into a more qualitative analysis of the survey’s quantitative data, it is more likely that Company X will discover trends and specific actionable items to address the real issues affecting employee satisfaction.

By focusing on issues that are not related to the underlying problem, organizational leaders instead focus on symptoms — which can be alleviated, but will not resolve the fundamental issue.  By not addressing the root cause (or the “why”), companies “spin their wheels” and wonder why their efforts did not lead to their desired outcomes.

It is, therefore, essential that qualitative factors be incorporated into routine managerial reports.  What gets measured, gets done.

Balancing Quantitative and Qualitative Metrics During Organizational Change 

Change initiatives are perhaps one of the most challenging projects in any organization.  The transition period (or “no man’s land”) is particularly fraught with challenges as the enterprise and its workforce move from the known past to the unknown future.

As in any project, the planning stage also identifies the metrics used to determine if the desired result is on track during the implementation phase.  The identification of performance metrics is critical to not only successfully moving forward toward manifesting the desired changes, but also to identify and respond to pockets of change resistance and ensure that employees do not burn out during organizational change.

It is, therefore, not enough to simply lead the change initiative but to also manage it.  The primary difference between leadership and management lies in its focus.  Leaders are inspirational, charismatic, and focus on the desirability of the future.  Managers are operational and responsible for the stability of the organization.  Therefore, change leaders must identify why the organization needs to change and change managers must ensure how the organization needs to change.

BOTH leadership and management are necessary for successful organizational change.

Consider these questions to help you develop clear metrics to guide the implementation of your next change initiative:

  1. Why does the organization need to change — what are the anticipated results of the change initiative?  What are employee expectations from their work experience:  prior to, during, and after the change initiative?  How will the change initiative attempt to modify these expectations?  This is the no man’s land of the transition stage of change and requires clear leadership to manage expectations.
  2. Why are some organizational functions changing…but not others?  How was the criteria established to make this decision?  Decisions made for expediency will often backfire and potentially sabotage the success of the change initiative.  Be absolutely clear of the “trickle down” effects of modifications in one area that create changes in others.
  3. Why are some positions being eliminated…but not others?  How will the organization ethically and humanely terminate these workers AND calm the fears of those remaining?  Purely financial reasons (such as cost cutting) will cause fear and discord in the downsized employee survivors, leading to change resistance, turnover, and burnout.
  4. Why was a particular timeline developed to establish the changes within the organization?  Was “wiggle room” added and, if so, how much?  How will the company ensure that the project is on track — and what will be done if it isn’t?  Few projects evolve exactly as planned; “wiggle room” arising from not only operational delays but also change resistance should be anticipated.
  5. Why should the employees agree to make these desired changes?  And how is the organization responding to employees’ questions of “what’s in it for me?”  Organizations are legal entities that cannot exist without its workers.  By addressing employee fears and providing them with a desirable future in which they can still be a part, change leaders and managers are better able to adapt and keep the initiative on track.  In other words, they can fill in the gap with an action plan to bridge the current reality and future outcomes for individual workers and the company as a whole.

By balancing quantitative and qualitative metrics, a more holistic and accurate picture of the true issues affecting organizational performance emerges — leading to better decision making and responsiveness to the inevitable challenges and opportunities facing the enterprise.

Dr. Geri Puleo, SPHR, is the President and CEO of Change Management Solutions, Inc., an eLearning and Coaching company focused on eradicating workplace burnout through the B-DOC Model.  An entrepreneur for over 25 years, keynote speaker, author, blogger, business coach, university professor, and researcher, you can see her “in action” by watching her TEDx Talk on YouTube.  To contact Dr. Puleo, please go to www.gapuleo.com

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