To Measure or Not to Measure – The Dilemma Continues

Einstein said ‘everything that counts cannot be counted and not everything that can be counted counts’. But common wisdom has it that ‘you cannot manage what you cannot measure’.

Much of human nature and most of the business world thrives on the measurable. The stock market is after all the most quantified of company success measures.

And herein lies a key dilemma for the corporate responsibility practitioner; for CR to succeed within the business we need to demonstrate our value to the business with measurable outcomes. But for businesses to fully embrace corporate responsibility within the wider world, the business and its stakeholders need to embrace that not everything that counts can be counted.

I have written a number of posts on the topic; a commentary for GE’s sustainability report on the role of ROI in corporate responsibility; a piece for this blog on my view that SMART (where the M stands for measurable) objectives can undermine sustainability objectives; I have also written a number of times on my views on quantified corporate responsibility rankings.

This past Sunday the New York Times carried two articles expressing the same dilemma, but in different fields.

In Metric Mania in The Way We Live Now section of the magazine, Johan Allen Paulos explores the extent to which we use metrics, and presents some examples of how easily they can be misleading. His examples come mostly from social issues; medicine and poverty for example. He uses a ranking of the ’20 Most Lovable Neighborhoods’, “Friendliest Colleges’ and finally Standard and Poor’s Credit Ratings to illustrate the extent to which selecting and adjusting (I would say ‘weighting’) the criteria impacts the outcomes. Very similar to my concerns about CR ranking programs.

The Book Review carried a review of a book on testing and choice in education by Diane Ravich. According to the review, the book claims that testing has been gamed (my word) by teaching to the test, and apparent improvement achieved by changing testing procedures. These ideas parallel my concerns about the sustainability downside of measurable objectives. Illustrating the dilemma further, the author of course has to call on data to reach her conclusions!

Read both pieces. They are well worth it. They show that the measurement issues we are struggling with in corporate responsibility are not unique to us. We would do well I am sure to watch and learn from findings in other fields. Paulos concludes “This doesn’t mean we shouldn’t be counting – but it does mean we should do so with as much care and wisdom as we can muster”.

Naked Men in Locker Rooms and Why I Think SMART Objectives Can Undermine Sustainable Behavior

SMART Objectives are a popular management tool in business and have been for some time now. If you are not familiar with the concept, SMART is an acronym for Specific, Measurable, Achievable, Realistic and Timebound. Typically, SMART objectives are metrics cascaded through an organization that set objectives for individual employees. They are used to manage performance and contribute towards determining pay and bonus.

SMART objectives simplify an individual’s contribution to a metric, measure performance against that metric over defined time periods and isolate the contribution of individuals independent of the whole.

If you compensate an individual according to their performance against a metric, they will get the message and focus on that metric. If it is timebound, then they will meet the objective within the time defined, losing sight of the implications on the next time period. This can make it hard to take account of the more holistic impacts of one’s activities and creates counterproductive behaviors. It reinforces a behavior that the whole doesn’t matter. And isolating the individual’s performance to their metrics distracts from seeing the bigger picture.

Employees are pretty savvy – after all, that’s why we picked them. At its worst, if you judge an employee based solely on performance against an individual metric the individual will find a way to meet and exceed the specific achievement of that metric perhaps even at the expense of the underlying intent.

In a post back in February, “Legal doesn’t equal sustainable”, I commented that sustainable thinking requires seeing both sides of an issue, resolving problems holistically and looking for solutions that none of the participants may have conceived of alone. I think SMART objectives, overzealously applied, undermine this approach and companies need to get smarter at how they are applied.

Of course I understand that the opposite end of the spectrum – judging everyone by the performance of the whole - can lead to mediocrity. But I think companies have gone too far the other way. I wrote a piece recently for GE’s 2008 Citizenship report on metrics and particularly the role of ROI in sustainability. In that post I stated that I believe ROI has role to play to inform, but not to lead our business sustainability decisions. I think the same of SMART objectives. They have a role to play to inform, but not to lead our actions.

And as for “naked men in locker rooms?” Well, I keep getting asked about the hit rate on my blog. Apparently that’s an important measure of how successful it is. I heard once through the grapevine that ‘naked men in locker rooms’ is a popular search term and I figured if I added that term to the title, I’d see a boost in traffic.

Just goes to show, that if you only focus on one metric, you could jeopardize the value that you bring as a whole.