Accountability Part 3: Metrics and Management

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(This is the third of a five-part series on accountability in the new world, the increasing need for fundamental accountability in small business as the business landscape breaks apart into cyber vs. physical. Part 1 was War of the Worlds, and Part 2 was Both Sides Now.)

What if I told you I’ve built you a straw man? In my first two posts on accountability I looked at the vaporization of accountability on splintering of work into real physical presence vs. virtual or remote. As if physical presence means accountability, and working remote means the lack of it. But what if that’s not the real problem?

The real problem, is a simple combination of metrics and management. Simple to say, hard to do. Not unlike diet and exercise, or having more patience with the kids; everybody knows what’s right, but doing it is so much harder than knowing what you’re supposed to do.

And I say it’s a lot worse in small business, and entrepreneurship, than anywhere else. Why? Because in a small business setting you end up working with friends, and it’s really hard to give negative feedback to friends.

Some examples will help:

  • When I was in my 20s I knew a man who ran the 500-employee Mexican subsidiary of one of the 100 largest companies in the world.  He tried to teach me that a boss can never be a friend. In Spanish we have both the formal (Usted) and familiar (tu) forms of speech. He would never drop the formal with anybody related to the company. He had a saying he used that doesn’t translate well, but means “I can’t ever be your friend if I might have to fire you (for you Spanish speakers, it was along the lines of “A ud. no lo puedo tutear porque mañana lo tengo que correr.” )
  • I say he tried to teach me because I failed to learn that lesson. One of the strongest drivers in my building my own business was wanting to create a pleasant place to work, surrounded by like-minded people, so it wouldn’t feel so much like work. I hired people I liked. I liked them more as we worked alongside each other. I think I was pretty good at sharing the credit, but I know I was bad at holding people accountable for poor performance. Particularly when they were well-meaning honest people who came on time and worked hard during the day. Unfortunately working hard doesn’t always mean getting the right things done on time.
  • Seriously: what do you do about somebody who’s trying hard, means well, but doesn’t hold up the job? You know the answer, and so do I, but can you do it?

So through the years, watching what I don’t do well, I’ve developed my respect for metrics and management.

Metrics

It’s been a lot of years with a  lot of concentration on what’s good about business planning, and how it works in a business when it works well, that I’ve realized the magic of metrics. A good business planning process generates metrics throughout the business: not just the obvious sales and cost of sales and expenses, but milestones with dates and deadlines, and tracking of metrics like calls, presentations, programming modules, trips, key word insertions, downloads, page views, conversion rates, subscriptions, leads, and so on. For every job there’s the hope of an objective metric that people can live and work with. A good business planning process goes from the high-level general to the specific steps and then to the metrics, and tasks, and responsibilities. Make commitments.

Riddle: in the classic bacon and eggs breakfast, what’s the difference between the pg and the chicken?
Answer: the chicken’s involved, the pig is committed.

Metrics are magic. Build metrics and a planning process, and, as if by magic, you and your team members (friends, or not) are suddenly standing together looking at the metrics. The positive and negative feedback is there in the numbers. You both see them together. You both remember what the goal was, and you look together at performance.

Management

Metrics are magic, yes, but not the whole solution. Accountability means what do you — your organization, your team, your company — do about poor performance? And that’s management.

You have to ask some questions: were the metrics based on real assumptions? Were they fair and reasonable? Did everybody understand them? Did the playing field (such as budgets, tools, access) change in the meantime?

And then, as you look together at performance based on those metrics, you have to be able to be the manager and do the hard thing. I don’t think I did that all that well throughout my career. I had some successes with changing the job description for poor performers, which meant that once or twice we found a round job description for a round person who’d been in a square-person job. But I’ve also had some failures. The last time my company was named one of the 100 best companies to work for in Oregon, that honor was based on a confidential poll in which our employees gave us the worst marks for not weeding out poor performers.

I think it’s the baby-boomer ex-hippy in me, still, that many years later. As I came to adulthood in the late 60s, we all hated authority and mistrusted the establishment. That in the background makes it hard to be the hard nose manager when the company needs it.

But if you look at the long term, most companies need it. Build the metrics as the first step, track them as the second, and then follow up, the very hard third step, to hold people accountable.

Paradox

Business is full of paradox. Especially strategy and management. I find it delightfully ironic that the splintering of the workplace into virtual and remote may actually increase the likelihood of tools and metrics to help build accountability. It can separate the physical presence from the performance, and make metrics easier to accomplish. That’s for my fourth part of the series, next Thursday.

And another paradox, sort of a postscript: That highly successful business leader I mentioned in my example above, the one who said a boss can have no friends — he committed suicide.

* * * * *

Tim Berry, Entrepreneur and Founder of Palo Alto Software, bplans.com and Borland International About the Author: Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is also the author of books and software on business planning including Business Plan Pro and The Plan-as-You-Go Business Plan; and a Stanford MBA. His main blog is Planning Startups Stories. He twitters as Timberry.

16 Comments ▼

Tim Berry


Tim Berry Tim Berry is Founder and President of Palo Alto Software, Founder of bplans.com, and co-Founder of Borland International. He is a Stanford MBA, and principal author of Business Plan Pro. He blogs at Planning Startups Stories.

16 Reactions

  1. Wow. Wonderful post and valuable insight. Thanks for sharing this and I definitely agree with you, especially on the accountability.

  2. Tim,

    It is funny, I heard that riddle about the “chicken & pig” today at a business mingle breakfast this morning. It was a meeting arranged by e.g., Business International Network, World Trade Center, and about 10 other organizations. I was an manifestation against the downturn of the economy. I don’t know how many people who gathered at the meeting, but I think at least a couple of hundred people.

    I heard the riddle from a representative from the “computer (data) association” in Sweden.

    This topic is interesting to me. I studied organizational leadership as a specialization during my time at Southern New Hampshire University. I recommend you to read the book, Principles of Organizational Leadership. You could read my post on this book if you click the link “Martin Lindeskog” Says.

  3. Hey Tim,
    I’m not trying to pitch a client of mine, but one of his favorite sayings is: “If you don’t measure it, you can’t manage it.” He and I both talk with prospects of his sales management solution and often they are not willing to ask for accountability. They believe that all their people are honest and therefore hold themselves accountable. You may have already mentioned that same quote before.

    But you’ve hit the nail on the head — if you are not building in ways to measure (metrics), then you have nothing to refer to, or stand on, when the performance doesn’t, well, measure up, to your expectations.

    The problem that I frequently see is that we don’t measure the right things. We measure that you made, or I made, 20 calls this week to prospects, but we don’t insist on knowing if important things were discussed, did we move the sales process forward (or not), by specific variables.

    You have done a fine job of boiling all of this down and I’m eager for your fourth installment.
    Thanks

  4. Another insightful post. I especially appreciate your revealing the your personal challenges in this journey.

  5. Warm-hearted AND astute Tim – what a helpful post in these dire times.

    The advice your (formal) Spanish boss attempted to instill in you re befriending subordinates reminded me of when I worked as a reporter in Europe. Formality. “we do it this way.” l. Top down. Often class distinctions – all were the common traits in business there.

    Synchronistically I was forwarded an email from a friend re a new book on the same theme re empathy in workplace, Wired to Care.

    I share your belief that when people go out of their way to find the sweet spot of mutual interest rather than the sticky spots of disagreement they are more likely to become higher-performing and happier together.

    They are more likely to like each other.

    They are more likely to accomplish something greater together than they can on their own.

    Surely that is the most efficient way for a firm or any kind of organization to optimize its performance.

    In this still-worsening economy more business leaders would benefit from reading your post on accountability and metrics that includes the obvious – the human factor.

  6. An insightful post. I appreciate you sharing your thoughts with us in this series. I look forward to reading more next week.

  7. Hi Tim, what kind of tools do you use for metrics?

    I love the idea of metrics, and I’ve developed a number of my own.

    But how do YOU set them up, what do you use to track them, what do you use for reporting, etc?

    Anita

  8. Anita, thanks for asking. At Palo Alto Software we use Email Center Pro (www.emailcenterpro.com) to add metrics to our email response function, netsuite (www.netsuite.com) for the main admin and accounting, Google analytics (analytics.google.com) and some more specialized tools for web analytics, and Business Plan Pro (www.paloalto.com) to bring it all together into an orderly planning process with plan vs. actual management.

    And of course the bad news is that the tools are easy; it’s the actually managing the hard parts, the human parts, that are hard)

    Thanks, Tim

  9. I have heard bad things about having your friends work for you and it is starting to make more sense to me now.

    Especially if you hire family, what are you going to do when you need to fire them?

    Also, i always wondered about people that go into jobs and say i am not here to make friends, just get the job done. Sounds harsh but in reality the business is there to make money not friends.

  10. This is very valuable insight and this has also been a great series and taught me a thing or two. Looking forward to next Thursday!

  11. Thanks Tim; for both the negative feedback example and the focus on metrics and management. I like to work with people I like but I have had to fire some of those people for under-performing, wrong fit, etc. I used metrics to make the story a lot less emotional for the individual – and for me. Metrics do tell a story. Then it’s up to us to deal with what the metrics are telling us.

  12. Great article.

    I agree it’s critical to track and report your key business metrics and numbers, such as incoming leads, conversions, sales, expenses and cashflow.

    It’s the single most important thing you can do to bring a feeling of understanding and control of your business.

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