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How Measurement Destroys Trust

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Speaking with a marketing firm today, it struck me again how deeply embedded within the business culture has become the notion of measurement.

The obsession goes well beyond the mantra “if you can’t measure it you can’t manage it” (which is nonsense on the face of it). It has become a knee-jerk reaction to a new idea, concept, or perspective. In particular, ideas having to do with people.

Remember these workplace slogans?

  • The war for talent
  • People are our most important assets
  • Customer loyalty
  • Customer relationship management
  • People development
  • Human capital
  • Employee engagement

Every one of these ostensibly business buzzwords has been subjected by the business world to death by measurement. The prevailing wisdom asserts that if you can’t figure out a metric for something, it isn’t worthwhile; for all practical purposes, it doesn’t exist.

(For those amused by analogies, there was a school of philosophy in the ‘20s centered around the “verifiability criterion of meaningfulness,” which said if you couldn’t verify it, it sort of didn’t even exist. Which certainly ruled out god and poetry, probably trees falling in an un-peopled forest, and quite possibly any interesting sex life.)

The average view in management today is that none of those “humanistic” terms have any utility—or even any meaning—if they can’t be quantitatively linked to economic performance. Of the firm. This quarter.

Hence “measurement” becomes the handmaiden of a means and ends argument. The end is the strategic/financial performance of the corporate entity to which you swear fealty. The means are—well, any of those human-type things.

Hence you hear the most deeply human virtues “justified” by the numbers—as if they weren’t justified as ends in themselves.

Loyalty gets judged as valuable only to the extent it makes money. Employee engagement? Good because it benefits the firm. Attraction and? Cuts human capital costs to the firm.

Like Pavlovian dogs, we have come to substitute “measurement” as a proxy for “shareholder value.” Ring the “metric” bell and we salivate for sustainable competitive advantage. Because after all—how can you argue against measurement? If you can’t measure it, you can’t manage it—and so on, and so on.

Unlike P.T. Barnum, I am constantly amazed at the ability of business in the past few decades to subordinate the most advanced, human, even spiritual concepts, to a “greater good”—the enhanced economic value of a non-human entity called a corporation.

I first heard it when someone said, “Trusted advisor—that sounds like a good idea; anything that’ll increase share of wallet, I’m all for it.”

I heard it when I saw "loyalty" debased as simply repeated, and harnessed to price-driven frequent-buyer programs.

I hear it again in the oxymoron "human capital."

I see it in lenders and borrowers alike walking away from loans because “it no longer adds up.”

Trust happens to be a fabulous economic strategy—the strategy for our times— don’t get me wrong. But if your only reason for being trusted is to make money, then nobody’s going to trust you. It’s that paradox thing.

"Love! Cool!

Well, sounds good, but—you know—how you gonna measure it?

Come back to me when you can make that love thing work on the Street, in a business process, or in a marketing campaign. Show me the love levers, the love success factors (LSFs). 

Have you got some love diagnostics so we can do a love gap analysis and a love needs assessment?  You need to break it down with some behavioral metrics; what are best practices love behaviors?  

Have you got something that really makes the business case for love?  Who out there is a success story, really doing the love thing and making a ton of money at it?  How can we be sure love isn’t just another fad? 

How fast can you roll out the love campaign? 

What’s the payback?"

I saw a new book out the other day called "Spiritual Capitalism." I haven’t yet read a word of it; I’m a little afraid to do so. I can conceive of how it might be a good book, but I’m suspicious it’s going to justify spirituality on the grounds that it makes money. Which spirituality does, but if making money becomes the end, then you end up not just spiritually bankrupt but not so good in your checking account either.

There’s nothing wrong with measurement per se. In the long run, measures work and are meaningful. A great idea will measurably win out in the long run. But what results from repetitive microscopic measurement tends to be just the belief that people exist for the company—not the other way ‘round.

Attract and Retain: People Strategy, or Roach Motel Ad?

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The phrase “attraction and retention” falls naturally off the lips of HR people. It’s also common with the customer relationships crowd.

Yet it’s also perfect ad copy for selling flypaper or roach motels; “they can check in—but they can’t check out.”

So which is it? High-minded strategy for people and customers? Or unfortunate parallel with the extermination business?

The phrase “attraction and retention” grew out of McKinsey’s 1990s “war for talent,” crystallized in the 1997 book of that name.

Excerpt:

…a company’s ability to attract, develop and retain talent will be a major competitive advantage far into the future. “The only thing that differentiates Enron from our competitors is our people, our talent,” said Enron Chairman Kenneth Lay recently.

Ouch…score a few points for the insect hypothesis.

Let’s have a look at how the phrase has evolved in ten years. Today:

It’s still about employee attraction and retention—in the HVAC contracting business.

For the 7-county Milwaukee area, Deloitte Consulting offers a 5-step process for attracting and retaining new business and industry residents.

It’s about website visitors

And it’s definitely about customers

But just how does one attract and retain?

Well, for customers, you could use one-to-one marketing:

Remember all of those advertising brochures you’ve found in your mailbox over the years from them? Those are the results of a one-to-one personalized marketing strategy. Most likely your relationship with Radio Shack began when you walked into one of their locations and purchased a stereo.

Yup, that’s probably where it started, all right. Though I haven’t been back in years…wonder why…

To attract and retain employees, you could create a retirement plan .

You could also “attract and retain more supporters, members, and donors, through a BrandXcellence consulting relationship.”

Here’s how Brunswick does it:

• Business and financial leadership development programs
• Products managed and engineered by local and regional talent
• Performance management process

You could do it through CRM.

You could read about the Five Key Elements of A&R.

But wait a minute—why is it that are we doing this? What purpose does attraction and retention serve? Ask that question, and we get some consistent answers:

the long-term sustainability of an organization’s business strategy and market differentiation hinge on effective recruitment, talent development, and retention.

Human capital continues to be the single-largest investment a company makes, and now management can quantify the return on investment of its human capital and connect it to business results…"

We use tools such as the Watson Wyatt Human Capital Index ® – which links the effectiveness of human capital practices to shareholder value creation

A primary challenge facing almost every organization today is quantifying human capital investments and their effect on shareholder value.

Ah, yes, that’s it—the reason we want to attract and retain employees and customers is so that we can raise shareholder value. People and customers are the means;  business success  is the end. Therefore the value of employees and customers can be measured by their contribution to financial value creation.

Does it not dawn on these people that they’ve gotten it backwards?  That financial performance is a result, an indicator, of success in serving employees and customers?  That companies should serve people—including shareholders—rather than the other way ‘round?  Causality flowing one way doesn’t mean it flows the other too; people who like things hang around for more, but just because people are hanging around doesn’t mean they like things (prisons, for example, have high retention rates).  

The sin of the roach motel approach is that it focuses on symptoms, not causes—and in so doing, perverts means and ends.

It all comes down to motives, and motives can be slippery. Even the same person, moments apart, can treat customers like ends—or like means.

One of the best—and most vacuous—recommendations is to engineer your entire company culture around doing things that attract people and encourage them to stay. Best, because it’s absolutely correct. Vacuous, because if you don’t start with a profits-exist-for-people mindset, you’re never going to get there by pursuing X-step processes in support of increased shareholder value.

You either live it or you don’t. People are attracted by genuine motives—not by some technician measuring their attraction levels. People stay most if they genuinely want to stay—not because of a program that locks them in in order to increase shareholder value.

The roach motel crowd is dominating the dialogue. In our pursuit of minute measurement of the effectiveness of flypaper, we’ve forgotten motives.

People come if we really, really like them and treat them well. Period. People stay if we really, really like them and treat them well. Period. Not for the sake of shareholder value. For their sake. Period.

Then—and only then—the shareholder value thing works best too.  As an outcome—not as a goal.