What Gets Measured is What Gets Done

This post was written by Jacob McNulty

A friend of mine sells large-scale consulting services for a big firm.  She was extremely frustrated with the company’s President on Friday because he refuses to invest in some up-front costs that would payoff down the line in the form of more deals won and more projects delivered effectively.

In her mind he is “an idiot” for making these decisions and I don’t blame her for feeling that way.  She and others on the frontline are the ones that are impacted the most.  It’s her covering for a lack of resources during the sales cycle and her still when necessary resources are absent from projects.

Further into the conversation she mentioned, “all he cares about is NOI” (net operating income).  How much do you want to bet that NOI is a big factor in how much money he makes?  I’d bet big if I were you.

I’ve never met the man so I can neither confirm nor deny whether he’s an idiot or how his pay is calculated.  I can say that based on the decisions he’s making in regard to NOI, he’s probably performing to the metrics that were given to him.  He knows that increasing NOI translates into a much bigger paycheck.  Who wouldn’t be tempted to do the same thing?

What does this have to with learning and development?  Before I begin projects with clients I have them take a hard look at what type of behavior their measurement/incentive policies are encouraging.  You can have the best learning strategy ever conceived but if you are measuring and rewarding behaviors that contradict with the ones you want, you’re fighting a losing battle. 

Start by developing metrics and incentives that reward the behaviors or results you want to see.  Then provide the tools, resources and knowledge for people to perform to those metrics.  Metrics will influence people’s motivation and goals while learning and development is there to make it easier for people to attain their goals.

A method I was introduced to at the CLO Institute is Economic Value added (EVA) which provides the incentive for the behavior that is in the best interest of the overall organization and its shareholders. 

EVA is “a financial performance method to calculate the true economic profit of a corporation.  EVA can be calculated as net operating after taxes profit minus a charge for the opportunity cost for the capital invested.”

Whatever model is used, it’s up to the organization to ensure that the metrics that are in place to reward employees are aligned with the behaviors that will create value for shareholders.  Otherwise, no amount of learning and development will make the difference you want to see.

Tags: business training, corporate training, development, economic value added, EVA, Incentive Alignment, incentives, learning, learning strategies, metrics, NOI, organizational learning, professional development, workforce development

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