Are You Measuring Outputs or Impacts?

Everyone’s role is defined by a set of objectives. Perhaps you’re told what your objectives are, maybe you set your own objectives, or possibly you are dictating the objectives of other people. As it relates to the roles and responsibilities of a job, it might sound something like this: visit x number of customers, fix y percent of widgets, or train z number of new brand ambassadors.

As managers, the first thing we do is take these various tasks and create Key Performance Indicators (KPIs) that are easily quantified to show the value our team brings to the organization; it becomes our personal currency, our justification for the various needs of our department, i.e. headcount, budget, etc. We build elaborate spreadsheets showing extravagant extrapolations and questionable correlations in order to show the value our people bring to the company. We do this because it works, because we believe in our people, and because we believe that what they are doing makes a difference. The question is, what is the true impact of what they are doing? What is the first derivative, or the “output of the output” so to speak? I’ll explain with an example:

You have a company that sells wholesale flowers all over the world, and business is booming. You’ve just had your best year ever, and tulips are up over 200% YOY. Congratulations! You see another big year on the horizon, and in order to capitalize on the growth of your brand you go to the Netherlands and hire a team of top-notch flower ambassadors to carry your message to florists the world over.

Now the question is, is it working? What are you measuring? Let’s say the first level of measurement is the direct output of the team, e.g. your friendly ambassadors visited 100 florists and trained 125 people on your new line of exotic roses. These sound like great KPIs, and it’s where many managers might put pen to paper and start building out their budget increase for the following year so that they might further their team’s reach. My challenge to you is to look past the first level and start trying to understand what this work is actually producing. Your team visited many flower shops, but how many of those florists are now actively recommending your brand over Super Sunflowers as a result? Are they passing the message of your patented “Five Week Tulip” on to the customer, or are your value propositions forgotten as soon as your rep has left? If sales increase in Peru in Q2, can you prove that your team’s efforts were responsible?

There’s a lot more to be said about this, but let’s draw the line today with the following thought exercise: “How effective is your team?” I’m not asking you how hard they work, the number of boxes they check, or the number of hours they put in; I’m asking you to consider, “What is the true impact of the work they are doing, and is that the story your KPIs are telling?”

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