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Have to make those numbers!

Many managers seem to think that setting concrete numerical goals and riding their employees to deliver on them is the key to good management. If their employees don’t deliver, they need to be “talked to”. That’s definitely an approach, but it isn’t always an effective approach. The reasons why are complicated, but they come down to two key areas: appropriate focus and motivation.

Appropriate focus, you ask? Let me explain. Quantifiable goals are great. They allow a team to easily see if they are succeeding. The problem with quantifiable goals though, is that they can sometimes be too specific. If goals are too specific, it is conceivable that a team could deliver the asked for results at the expense of the business’ mission.

For example, Mike’s Tasty Burgers had a mission to: “Deliver the highest quality burger at a price that everyone can afford.” Unsatisfied with stagnating sales, the owner decided that the problem wasn’t the quality of the burgers, but the high price. So, he set a goal for his managers of reducing expenses by 30%. After 3 months, his restaurant managers only cut expenses by 10%. So, he screamed at them to shape up and cut more. When some managers stated that cutting costs by so much while maintaining quality was impossible, he exclaimed that cutting costs by that much was necessary.

Similar meetings took place every quarter until the year end. At that point, expenses were finally cut by 30% and the owner claimed victory. There was only one problem, he told his managers. Revenue had dropped by 40%. Time for further cost cutting to fight the poor economy, he stated. And if they didn’t cut costs more, he warned that they could all lose their jobs.

The problem with the owner’s goal in this case was that its achievement was only possible at the expense of the company’s mission. While the goal he set was met, the company suffered for it and in more ways than just reduced revenue. It also destroyed the happiness and motivation of his employees.

The managers had worked for Mike’s Tasty Burgers because they loved great burgers and wanted to be a part of delivering the best burgers that their area had ever known. It wasn’t because of the wages, which weren’t really that high. They had felt like a family and had taken their jobs seriously, constantly working to keep costs low without sacrificing quality. When they had tried to tell this to the owner though, he refused to listen and talked over them, insisting that they hadn’t tried hard enough. Costs had to come down by 30% and the quality had to be kept high.

No matter how hard the managers worked, the owner was never happy. It was so demoralizing to have none of their efforts recognized and impossible demands held up as if they were reasonable. What was the point in trying? So, the managers cut food quality, understaffed the restaurants and neglected advertising. The demoralization of the managers infected their staffs as well. In the end, the drive to meet the numbers led to the end of Mike’s Tasty Burgers as a destination for high quality burgers.

As you can see, watching the numbers can be taken too far. All of us know this. So, why do situations like this happen? Well, usually it happens in organizations with management that is too separated from those producing the product or service. All that upper management sees are numbers. That makes it common to look at a given year’s numbers and simply play around with what future numbers might make enough of an improved profit to earn themselves a nice bonus. Of course, this is done without any real awareness of what those changes in goals might mean to the actual workers or the quality of the product. Sometimes, it’s done without any actual understanding of how those changes could actually decrease profit. Cutting too deep can sometimes mean higher costs in employee turnover, workers compensation or even consumer lawsuits. Unfortunately, those numbers are sometimes ignored. You can tell the good companies from the bad, by which take things like that into consideration.

The key to management can be explained by so many cliches, but I’ll sidestep all of them. A manager needs to look deeper than a single number or even a few numbers. Numerical goals are set, not because they are magical, but because they are believed to represent the symptoms of a desirable outcome. When a manager is looking at how they manage their team or rate the team’s performance, they need to look not at whether or not the team is meeting specific numbers, but at whether or not the team is delivering on the spirit of the numbers. They missed a goal of reducing costs by 10%? Why was that a goal? If it was because it was believed to be the only way to improve profits and profits had actually gone up because of the actions of the team, then maybe the team didn’t fail. Maybe the team just succeeded in a way that you hadn’t known was possible. Consider that when you speak with your team and when you set goals for the future. That will make for better management and a more successful company.

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