October 24, 2024 • 48 mins
How do you measure a company's performance effectively?
Join us for a lively exploration of performance measurement in organisations, complete with a humorous sketch that pokes fun at the murky world of target setting. We unravel the history of performance measurement, tracing its roots from the chaos of the Industrial Revolution to the precision of today's AI-driven insights. Discover how methodologies have evolved over centuries and how companies today strive to balance efficiency with societal goals like sustainability and corporate social responsibility.
From the post-war emphasis on customer satisfaction to the balanced performance measures of the 1980s, we highlight how the landscape has dramatically shifted. The conversation then takes a modern twist with the introduction of tools like the balanced scorecard and OKRs, and how real-time insights provided by big data and advanced analytics are disrupting traditional metrics. Are OKRs poised to replace KPIs, or do they coexist in a complex performance ecosystem? What the hell does that even mean?
Finally, we dive into the challenges inherent in the traditional focus on quarterly targets, particularly in large public organisations. The implications for employee morale and the systemic pressures tied to these targets are scrutinised, as is the critical relationship between learning and growth. With a blend of humour and insight, we critique the flaws of conventional metrics and advocate for a more holistic approach that values employee well-being and customer experience.
Tune in for an episode that promises to transform the way you think about performance measurement and its role in personal and organisational growth.
For more info, free resources, useful content & our blog posts, please visit realitytraining.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bob, thanks for coming in this morning.
I'm going to be with you forjust a few minutes and give you
something to go away and digest.
So here you go, If I just giveyou those.
Those are the new targets.
Speaker 3 (00:15):
Oh, these are the new targets for the next 12 months.
Speaker 1 (00:19):
A full year, absolutely the full year in your
hands.
Speaker 3 (00:22):
You know exactly where you are and how we're
going to measure performanceokay, and how have you managed
to arrive at these interestingsets of figures you've just
given me?
Speaker 1 (00:34):
well, it's not something I'd normally share,
but fine, I'm happy to disclosesome of what we do.
We it's quite complicated.
We look at a whole range ofthings, a whole range and we
pour over figures and we look atlast year and we play with some
variables.
We look at different percentageuplifts and we have to also
(00:56):
factor in the different peoplein your teams and how they're
behaving and what they'reactually doing, and then we
arrive at the right figures thatwill enable us to have a very
good grip on what kind ofperformance we're after of.
Which targets are you know?
A part of that?
Speaker 3 (01:14):
I see.
Well, I'd very much like tohave a look at some of the data
that's driven your choices.
Speaker 1 (01:20):
I'll stop you there.
So I've already shared enough.
This is really bored stuff.
We do this work.
If your career continues toprogress, as I'm sure it may,
you'll be there one day, butit's not your territory for now.
I've really told you enough.
It's, as I said, quite complexhow we arrive at this.
Speaker 3 (01:37):
All right, so there's a kind of a club who is
involved in this and those thatare in it.
Speaker 1 (01:42):
I think you're now being slightly cheeky, so look,
I'll catch you later.
All right, Okay.
Speaker 3 (02:18):
Welcome to the reality of business.
Speaker 1 (02:23):
This is Bob Morrell, and I'm joined by my friend and
colleague, Jeremy Blake, goodday and thank you for pressing
play and hopefully the title hassome interest for you.
Speaker 3 (02:33):
So we are going to spend this episode looking at
how companies measure theirperformance, and this is a
subject that we come up againstquite a lot in our work.
We meet different organizationsand they talk to us about their
targets and their KPIs and allthe things that they do to
(02:54):
measure how well they're doing.
And this feeds into the sketchthat we did at the beginning,
because, of course, these KPIsand things feed into targeting,
and, in fact, the first everpodcast that we did was on the
subject of targeting, and it'ssomething that we come back to
again and again because it'ssuch a controversial subject.
There are so many differentways that you can look at it, so
(03:17):
we thought it would be a goodidea to take this subject of
performance measurement fororganizations and see if we can
delve into it a bit and find outwhere it all comes from.
Where do these ideas ofperformance measurement come
from and what are the differentmethods that you can use?
So that's what we're going tobe focusing on today.
Anything to add to that, jay?
Speaker 1 (03:37):
well, my question is, bob, because this is you, this
is your.
You've probably worked ourformat out.
Now, listeners, it's changed'schanged.
So I'm just intrigued, bob,where did you?
Speaker 3 (03:46):
start.
Well, I'm going to be entirelyhonest.
So listeners will, I'm sure,have listened to our recent
episode on AI.
We did a very in-depth dive forbeginners into the world of
artificial intelligence, and sofor this episode, I have put
everything into the world of AI,chat, GPT and, apart from my
(04:10):
own knowledge and experience ofthis, I have got the entire
history of performancemeasurement in companies over
the last couple of hundred yearsand I've asked it a key
question as well that we'regoing to look at the answers to
and that's going to give us allof that info.
Speaker 1 (04:26):
Well's my point, ai, as we've talked about, is it?
You know, a research tool ifyou like, but it's such a broad
topic.
What was the thing that youthought I've got to start here?
What did you?
Was it the history?
Because you're a history buff,did you start with history?
Speaker 3 (04:40):
well, the question that I've asked is for the, the
bot, to research the history ofhow companies measure
performance over the last 200years.
What are the major differences,what are the most effective
methods, and how else shouldcompanies measure their
performance and their people?
(05:01):
So it's a very broad questioncovering all those different
topics, and I've been given avery broad and comprehensive set
of answers to those questions.
Speaker 1 (05:11):
As you're reading through.
What will interest me is whichbits you concurred with, as
DiCaprio would say in hiswonderful film.
Do you concur?
Did you agree with it or didyou go?
What that's not my, that willinterest me.
Did you agree with it or didyou go?
What that's not my, that willinterest me.
Speaker 3 (05:24):
So there's one thing that you and I have come up
against a lot, and that isorganizations who have quarterly
targets, so they measure theirperformance by quarterly targets
.
I now know the reason for that.
Oh glorious, yes, please.
Speaker 1 (05:42):
Categorically.
So don't hide away, let's gostraight.
Okay, let's give the listenerswell let me.
We've worked with obsessionalnorth.
Speaker 3 (05:48):
We have, we have but I now understand where this
comes from.
So let's first of all go back200 years, because 200 years we
are back in the time of theindustrial revolution, and this
is a period that you, of course,know lots about jeremy and um
what do you want to know?
Speaker 1 (06:07):
well, what was the major conflict?
Speaker 3 (06:08):
that was going on at that time, so going back to 200
years, 1810 to 1820.
What was what was at its height?
Speaker 1 (06:16):
which country do?
Speaker 3 (06:17):
you want me to go to uk for starters?
Speaker 1 (06:18):
yeah, well, we've got um.
What's it called?
What what's it called?
Wellington was involved.
It's the Napoleonic Wars,jeremy.
Oh yeah, I thought you weretalking about just the UK
problem.
Speaker 3 (06:31):
Yes, but we were at war with France.
That was the major conflict atthe time.
So it was the Napoleonic War.
Speaker 1 (06:36):
Hang on, peterloo.
And all of that is just comingout of that, isn't it?
Yes, it is Peterloo Massacre.
Speaker 3 (06:47):
It's, yes, it is exactly in that period, yeah, so
what you've got there is thestart of industrialization.
So a lot of coal mining goingon, a lot of power being created
, a lot of textiles being woolenmills created and sold, and
also, of course, hugeindustrialization in terms of
ironwork, steelwork, thecreation of weapons.
All these things taking placein Birmingham and Liverpool and
Manchester.
(07:07):
The creation of weapons, oh,proper weapons, proper guns,
with, you know, rifled barrelsand things like that.
It was a very, very industrioustime.
So if you were running your19th century factory, jeremy,
and I can just imagine youstrolling about the halls of
workers in your top hat, nicewaistcoat.
(07:28):
Just had a nice lunch roastpotatoes, the usual stuff.
You're going to be thinking aremy workers actually being as
productive as they can beBecause I'm paying them a few
pence a day to turn up andmanufacture these things?
How do I know that my outputand my productivity is working?
(07:49):
So how do you think performancewas measured in the 19th
century?
What were the major ways theydid it?
Speaker 1 (07:57):
Well, I'm going to start with.
Speaker 3 (07:58):
It's basic.
Speaker 1 (07:59):
Yeah, I'm just saying they only looked at output.
Probably they looked only atwhat could a man or a woman?
So let's take its wool andlet's just say it's the first
stage of the wool production.
Let's just say a sheaf orwhatever.
How many sheaves can a manproduce in a day?
(08:19):
I'd get my measure and then I'dwant others to replicate that
same output interestingexpression yeah, I mean alan
partridge, I think.
Speaker 3 (08:30):
I think we'll use the word product.
What?
How many products can thisperson produce?
Yeah so that's called piecerate.
Yeah, okay, so workers werepaid based on the number of
units they produced in a certaintime scale.
Speaker 1 (08:46):
Okay, did they look at a good worker to get the
initial measure, or did they noteven bother that?
Speaker 3 (08:50):
well, it's funny you should say that because at the
same time, in the late 19thcentury, so a little bit later,
we have the first time andmotion studies created,
introduced by your friend,frederick winslow taylor, named
after the local town inBuckinghamshire where he used to
go to the George, and thosestudies analysed the efficiency
(09:13):
of tasks and aimed to optimiseworker productivity.
And in fact there's a very goodfilm, charlie Chaplin.
I think it's Modern Times,that's it, where they really
take the mickey out ofmaximizing the time a worker is
in place and um and so whatyou're looking at this point is
simple production counts, basicaccounting systems to track
(09:36):
costs and rudimentary financialstatements right the way through
.
Speaker 1 (09:41):
But you're right, they're all doing that.
Speaker 3 (09:43):
They're all stuck on the piece rate the quantity of
output and labor, with limitedconsideration for quality or
innovation, because ultimatelyyou've got to produce the stuff
and get it out and get it off orany other measures of health
and environment of the worker,and so on, and so on absolutely
so.
Then we move into the early tomid 20th century and what you
(10:06):
get there and this must bebecause you have the emergence
of public companies and stockmarkets you have a shift towards
financial metrics becausecompanies become bigger and
become more complex.
So then you get the first usageof things like ROI return on
investment Really which waspopularized by a gentleman
(10:29):
called Alfred Sloan of GeneralMotors in the 1920s and it
became central.
So ROI is 1920s yeah, centralmetric for evaluating business
performance, your return oninvestment, and at the same time
you also get cost accounting soyou can more closely attract
(10:49):
and track how you're paying forthings, the things that come in
and then what you're being paidfor things going out, which
allows you to then monitor yourcosts and your profits more
closely.
Speaker 1 (11:02):
So just a question here.
So I'm interested aboutcompetitive forces.
Let's say I and I want to justkeep it really basic so that we
step change our understanding aswe go.
I own a woolen mill, you own awoolen mill, I want to sell more
units than you.
I've got my piece rate.
Okay, am I just flogging toincrease the peace rate?
(11:25):
But not knowing how I mightincrease the peace rate, I'm not
even innovating.
You're saying no or am I?
No, I'm literally that Okay.
Speaker 3 (11:33):
But I think what you've got, especially in the
industrial revolution, you haveno shortage of demand.
Okay.
So, whatever you're creating,you are going to be able to sell
because there is a demand forit.
Whether it be in this countryor another country, there is a
demand for the product.
Speaker 1 (11:49):
But I might have greed to produce more output
because of the demand.
Yeah, and so, therefore, isthis a ruthless time where.
Speaker 3 (11:57):
Yeah.
Yeah, but is the demand for workand do workers have the power
to change and move and Well,right the way through the 19th
century, you have the chartistmovements, you have various
revolutions in other countriesagainst this, because,
ultimately, things that areproducts that everybody needs
(12:18):
will have a rate, will have aprice, and if I can get my
workers to produce those thingsfor a few pence less per person
per day, it's going to make memore money.
That's my lever and that's whereI think you get the emergence
of communism, for example, whichapproaches it in a more fair
(12:38):
and equitable way.
But yes, as we move into the20th century, we get those new
ways of measuring return oninvestment.
We get the first properfinancial statements, profit and
loss accounts and balancesheets, and so the shift is from
output to financial outcomes,with performance largely
(13:00):
measured by profit, efficiencyand return on investment.
Efficiency and return oninvestment, so those more basic
factors of how much I'm payingto produce something.
You look at it moreholistically that this is what
I'm getting back for theinvestment I'm making.
Speaker 1 (13:14):
Going back to the sketch we did at the beginning,
I'm still saying I want 10 outof you a day.
I've still got my initialmeasure of performance.
Yeah, but I'm not necessarilythinking beyond technological
improvement of the lathe orwhatever to increase that output
.
Speaker 3 (13:30):
No, and in fact I don't know that that particular
element of imposing a targetupon someone has actually ever
changed, regardless of themethods the post-World War II
(13:51):
era, from 1950s onwards and wemove into much more modern
strategic planning anddiversification.
So then we have a friend of thepodcast, peter Drucker appears
in the 1950s and he created thisidea of management by
objectives.
So you have a clear, measurableobjective for employees and you
go look guys, this is what wemeasurable objective for
employees.
And you go look guys, this iswhat we're going after, and you
move towards it.
Now I think you could also say,now that extends into things
(14:14):
like project management and andstuff like that that we all
understand that you have a clearobjective, beginning and middle
and end, and off you go lots ofpeople still aren't even on
Drucker's page.
Speaker 1 (14:24):
You know the guy guy who was still doing conferences
and interviews up to about 100.
Some people still don't evenknow what the objective is and
what they're actually doing orwhy they're bothering.
Speaker 3 (14:35):
Which is why at the same time you get the emergence
of strategic business units.
So a large corporation willthen organize around a business
unit with its own performancetargets and its own metrics,
which then feeds into a whole.
So, very much like we haveclients who have retention
departments, new businessdepartments, technical and
(14:55):
support departments, eachdepartment will have its own
business to some extent and thenthat's run effectively.
Speaker 1 (15:03):
And less effectively in some, as collaboration
becomes harder and you end upwith silos, but that's probably
something else to talk aboutanother time.
Speaker 3 (15:12):
Well, yes, but then you see at this point.
So you move from the idea ofnow we can measure financial
stuff, now the financial metricsare dominant because that's the
key factor.
But at this point stuff likemarket share starts to come in
product quality because you getmore competition.
(15:32):
Customer satisfaction begins atthis point.
What year does that?
This is now 50s to 70s, theidea that our customers are
going to be happier Before youwant the world to take it Now.
Speaker 1 (15:45):
The customer satisfaction of your product
over someone else's.
Wow, okay, so that's when youget.
That's still new, isn't itStill relatively new?
It's still.
Speaker 3 (15:52):
But then if you think about it, you know it's that
competitive drive where certainbrands are market leaders for
years and then competitors comesin and then it does become a
market, and then you have tomeasure other things to see and
also the shift from commoditycommodity product, like I need
to eat a loaf of bread yeah Ineed some milk too.
Speaker 1 (16:14):
There's now six people making chairs just in my
town, so my the customersatisfaction of that production,
of that unit becomes a measure.
That that's fascinating.
There's people alive today whowere born when that became a
measure for the first time.
That's bizarre.
Speaker 3 (16:31):
So then we move into the 1980s up to the early 2000s
now, so there's a good 20, 30years of this now and we then
move into balanced performancemeasures.
So this is the combination offinancial and non-financial
indicators.
So that's your balancescorecard, which was developed
by Robert Kaplan and DavidNorton in the early 1990s, and
(16:55):
this introduced a more holisticapproach, looking at all these
different elements, internal andexternal, and they also
included things like learningand growth perspectives as well.
So that's an interestingaddition.
And then you have a thingcalled TQM, total Quality
Management, so the continuousimprovement and quality across
(17:16):
all areas of an organization.
And actually I'm sure at thispoint you'd have some Japanese
management stuff being thrown inhere as well, so working on the
work with the workers stuffbeing thrown in here as well, so
working on the work with theworkers.
So you then have this shift inthis period to a more balanced
view of performance and you'rerecognizing that of course there
are financial factors, butthere are also non-financial
(17:37):
factors which play a part.
Speaker 1 (17:40):
In performance.
Yeah, that's the point.
Speaker 3 (17:42):
So then you come into the last 20 odd years and
there's a huge emphasis onsustainability, stakeholder
value and digital transformation.
So over the last 20 years, asmarkets shift from traditional
to digital, then you're going tohave a huge shift in people and
(18:04):
what they're doing and howthey're doing things and how
you're selling things and howpeople are accessing what you do
.
So then you've got methods likethings I've never heard of.
Have you ever heard of triplebottom line?
No, sounds likea dance.
The triple bottom line is amethod that expands the focus
beyond profits to include socialand environmental impact, so
(18:25):
you're measuring the performancebased on people, planet and
profit.
I know you'd like that.
So then we've got agileperformance management, oh yes,
so that's continuous feedback,goal-setting performance reviews
, and that's dynamic andflexible and it aligns to the
needs of modern, fast-pacedorganizations.
Then another one I never heardof OKRs yes, I know that.
(18:48):
Objectives and Key Results.
So that's used by Google andthey're used to set ambitious
goals and track progress withspecific, measurable outcomes.
And then, of course, huge dataanalytics, the use of big data
and advanced analytics.
That gives you real-timeperformance tracking and
predictive insights, which, ofcourse, is where things like AI
(19:12):
starts to come in.
Speaker 1 (19:14):
Have OKRs replaced KPIs, or not really?
I suppose loads of companiesstill talk about it.
Speaker 3 (19:20):
I would imagine they're interchangeable.
So the summary of the modernperformance measurement is a
more comprehensive data-drivenaligned with broader societal
goals, not just the goals of theorganization, including things
like sustainability and CSRcorporate social responsibility,
(19:40):
which is another big thing thatwe come up against.
So there's quite a few thingshere to look at.
Speaker 2 (19:52):
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Speaker 3 (20:14):
There are big differences in how you measure
performance.
So you've got the scope and thefocus of how you measure things
.
Things like customersatisfaction, employee
engagement we see lots of thosesurveys.
Sustainability you know how doyou go about measuring the scope
of that?
How sustainable are we as anorganization?
What's our social impact?
You know these are quite hardthings to go out and do a survey
(20:37):
in order to get a number anumber of results.
Yeah, then you've got time frame, because of course people have
annual statements and annualaccounts, we do that sort of.
But then you have what aboutreal time?
What about now?
What about predictive stuff onwhere we are now for next week
or the week after?
We're much better able, usingtools like AI, to be able to use
(21:02):
that tomorrow?
Speaker 1 (21:03):
that's an interesting question.
So without naming the client,do you remember one of our very
first jobs, when we proposedthere was only seven months left
in their financial year?
Yeah do you know I'm talkingabout already yeah, I know
exactly who you're talking about.
Yeah and we were said we have toget the roi within the
(21:24):
financial year.
We went okay, so do younaturally add on the months that
we no, no, no, I'm afraid we'rein it.
I went what?
And they had to get some returnon investment within the time
period or we'd never get morework and it would be a failure
and bizarre.
So talk about time.
You've talked about theinvention of the quarter,
(21:45):
because it was quarterly outputand I guess that seasonal
variations for sort ofindustrial revolution type
products, they would haveseasons perhaps.
Speaker 3 (21:54):
Is that part of it?
Speaker 1 (21:54):
of why they were quartered.
Speaker 3 (21:56):
No, there's another reason why they're quartered.
I'm going to come into that.
It's very dull, I'm afraid.
Speaker 1 (22:00):
why they're quartered , but the question I'm trying to
come to you with and I'mthinking aloud the obsession
with time.
To you with and I'm thinkingaloud the obsession with time.
Why do so many companies onlyproduce a year long measurement?
We have our financial year, wehave our calendar year.
We've done this in a year.
Why is only a year?
And why can't we look at thingsover a longer period?
(22:20):
Because in our families, in ourhomes, in our society, we look
at the renewal and regenerationof a village over years.
We look at our children'seducation over years.
We look at the renewal andregeneration of a village over
years.
We look at our children'seducation over years.
We look at a university degreeover three years.
We look why performance in ayear?
Why do?
Speaker 3 (22:33):
we just stop press the button.
So you and I run a privatecompany.
I think it's fair to say we areless concerned about our annual
performance, broadly okay, ifwe had a public company, jeremy,
we would be obsessed withnothing else, I'm afraid but why
why?
Because your shareholdersexpect a dividend within that
(22:54):
year they want it in their bankwithin that, of course.
Speaker 1 (22:57):
Okay, so it comes back to a date of payout it does
right it's down to money in theend.
Speaker 3 (23:03):
now there's a few other things here.
There's now much more use ofbroader uses of employees who
are involved in givingcontinuous feedback and aligning
goals with the organizationalobjectives, and that's something
we've seen a lot of morerecently.
And, of course, technology.
So technology is improving.
(23:23):
Ai is coming in managing bigdata, giving people deeper
insights and more precisemeasurements, which then makes
it easier to measure performanceas well.
Speaker 1 (23:34):
So that's a really fantastic and quite quickly done
sort of overview of it all andgoing off to tangents, what's
the bit that seems nonsensicalto you, that actually should be
ripped up and binned?
Speaker 3 (23:45):
Well, ok.
So I asked it what's the mosteffective modern methods?
And it said the top four arethe balance scorecard still used
hugely the objectives and keyresults.
So, again, just setting anobjective and going for it,
agile performance management anddata-driven decision-making
(24:07):
those four are the top four.
Okay, and in answer to yourquestion, if you look at how
well should companies measureperformance, you then come into
those areas that we've alreadytouched upon, which are really
hard to measure.
So how would you measure youror my holistic employee
wellbeing, jeremy?
How would you measure that?
Mental health, work-lifebalance, career development, all
(24:28):
that stuff?
That's difficult, isn't it?
Speaker 1 (24:31):
I think what's interesting if you're a small
company listening and we are,you suddenly think about that we
don't have huge numbers totally up.
We've got a small group ofpeople, but how do you measure
holistic Employee well-being?
Holistic employee well-being,employee well-being that's just
one.
Speaker 3 (24:49):
Jay.
The next one is impact onsociety and environment, Our
innovation and adaptability.
To some extent we could saysomething about.
But the fourth and fifth,cultural and ethical alignment
and stakeholder satisfaction.
Which could be a shareholder?
It could be other employees,suppliers, partners.
(25:09):
There's all those differentelements that come in here.
Speaker 1 (25:13):
The first thing you're talking about is
well-being.
You couldn't state terms to acompany saying this is how we're
measuring your well-being.
You'd have to allow that, as youwere saying a minute ago about
360 continuous improvement,you'd have to allow anyone to
vote on what they think might bea measure because if if
somebody said, well, we haven'thad many people taking days off
work, that fails in the nhs, whofamously take less days off
(25:36):
than anyone when they're sick,they have an incredible service
attitude.
Even when they're feeling rough, they go into work, which
actually, as adam k alwaysstates, doesn't help because you
pass your cold to six morepeople, the more nurses go and
doctors and health care andadmin.
So you couldn't just have ameasure like oh, we have only
had two days off, that wouldn't,that wouldn't cut it.
Speaker 3 (25:56):
You'd have to allow employees to input into those
measures so those are the mainmethods that the companies use
to measure their performance,and we can see that there's been
a technological and actually Iwould say an ethical move over
the last few years to change howwe monitor things.
(26:17):
However, I still see everycompany having a financial
target, yeah, having a thingthey're aiming for, whatever it
may be be.
Now let's move on to this areaof quarterly targets, because
this is a bugbear of ours.
I know the reasons why now, butI just want to look at it from
the perspective of outsiderslooking in.
So let's do another littlesketch.
(26:39):
Jeremy, I want you to tell methat over the last quarter, your
team's done amazingly well, butyou've just fallen short of
hitting your target and I'llrespond Okay, so I'm your boss,
jeremy, how's it looking forthis quarter?
It's the last day.
Speaker 1 (26:54):
How's it going?
Phenomenal, in short,absolutely extraordinary.
Everybody has lifted up theirresults.
It's been an incredible teameffort and as I looked at, I was
up late around midnight.
We are literally six grand offand it doesn't seem like we'll
claw the 6K back in today.
(27:15):
But it's such a near miss.
To me it's a hit, it's justglorious.
Speaker 3 (27:21):
Well, it's really nice to hear you look at it that
way, and thanks for you know,and please pass on my my thanks
to the team for all of theirefforts and I, indeed I extend
my thanks to you, but you willbe aware that I I will have to
report back that we failed inthis quarter to achieve what we
set out to do, so this will belooked upon as a failure.
I'm afraid.
Speaker 1 (27:41):
Hey, hey, hang on, hang on, hang on.
Who you're reporting this backto?
Speaker 3 (27:45):
this goes back to the board and to the shareholders.
Speaker 1 (27:47):
They don't need to know.
We've worked really hard.
No, no, no.
Speaker 3 (27:50):
We're a public organisation and they are
entitled to know that we havefailed to hit target this
quarter which is disappointing.
You know the way that thisorganisation works.
If you don't hit your quarterlytargets, it is viewed as a
failure.
You're going to give peoplewho've gone over their bonuses.
(28:13):
Surely We'll come on to thatNow.
We'll stop it here Now.
This is what we know.
Some organisations do.
They work to very strictquarterly targets and if you
don't hit them, regardless ofthe effort that you have made,
bearing in mind that all targetsare really guesses you will
view that as a failure and youmight have employees killing
themselves to do business andtry and hit that target.
(28:34):
But if they don't do it theywill be viewed as failures,
despite their brilliant effortsfor you.
We always thought this was ascandalous thing that took place
.
However, I have asked thequestion why do many large
organizations have quarterlytargets?
Okay, these are the reasons.
If you have a quarterly target,that gives you a frequent
(28:58):
checkpoint allowing you toassess the performance and make
adjustments before problems mayescalate.
And this helps if you havemarket changes, competitive
pressures or internal challengesand in fact, we do see
organizations bring in offers atvarious points and what have
you?
Also, if you've got a quarterlytarget, you've got time to
(29:21):
performance monitor individualsand teams over that period as
well.
Rather than waiting for anannual review, you can try and
improve things on a quarterlybasis.
The main reason for havingquarterly is that public
organizations produce quarterlyearnings reports and these are
(29:45):
required to report to themarkets so that then managers
and investors and shareholderscan decide how well a company is
doing.
And, of course, it affectsshare price.
That is the main reason that itis quarterly, because those
earnings will contribute to anupward swing or downward swing
(30:08):
in a share price, which couldincrease or decrease a company's
valuation.
Jeremy.
Speaker 1 (30:14):
So the innovation potentially required?
And I'm thinking of an Italiangentleman we worked with who
missed his target.
Every single summer in Italy hesold to universities a lot.
He sold a particular softwarebut the staff would not return
from the summer break to beginthe university reset till about
(30:37):
September the 3rd and they hadnever in the history ever signed
anything until about Septemberthe 7th.
So it didn't matter what he did, he would miss.
And what would be marvelous isif, even though all that stuff
you've just said continued, butadjustments were made in the
performance measurements ofindividuals, then some of the
(31:01):
other scorecards you're talkingabout, like mental well-being
and all that would, would see anuplift.
But again, who's going to dothat if they're a big business?
Speaker 3 (31:08):
arguably that's when you broaden these conversations
to more employees and get thatkind of feedback so that you
could possibly do that, but weknow that in many cases that
doesn't happen.
Now there's also a few othergeneral things.
There's a belief that if youhave a quarterly target, it
keeps your teams focused andmotivated.
They've got a near-term goal.
(31:29):
It's tangible, easier toachieve than the long-term
annual target and it can preventcomplacency, so you get
consistent effort throughout theyear.
Speaker 1 (31:39):
You and I know that that doesn't necessarily sound
accurate.
Speaker 3 (31:43):
I agree.
Now you could argue that yourfriend who knows he's going to
have a dip in a certain month ofthe year, if he thought about
it, he could perhaps pre-emptthat by having certain
conversations a bit earlier.
You know, there are ways andmeans of doing it.
Speaker 1 (31:58):
It's just the systemic of how an officious
university system works.
Speaker 3 (32:02):
Absolutely Now.
Then of course you cancelebrate if you do hit and if
you have a quarterly target hit,you can have short-term success
celebrations, which boostsmorale and that reinforces a
culture of achievement.
So remember for all the teamswho don't hit target in a
quarter those that do will belauded and taken abroad and go
(32:23):
for big nights out.
Speaker 1 (32:25):
I was a beneficiary of this.
Of course, members around mewho were not was a beneficiary
of this, of course, membersaround me who were not, and I
would stand there with my cheapframes, um, with my, you know,
whatever the award was for thequarter, and you'd look around
at the other teams because itwas never really done off site,
it was always done on the lowcost, you know, yeah, and you
might be handed a bottle atlunchtime and spin around your
swivel chairs and other teams.
(32:45):
Look at you go.
Speaker 3 (32:47):
I just missed but you see, I know organizations, if
they hit their quarterly target,they will take people off to
barcelona for the weekend andspend tens of thousands, because
those costs are nothingcompared to the share price
holding of the company overall.
(33:07):
So that's why hitting it isquite important.
Now there's a few other things.
There's things about adaptingto change and being flexible.
There's a bit about testingtesting strategies in a quarter.
You can learn from thoseoutcomes and refine it and
approach it differently in thenext quarter.
So that would be good if peopledid that more.
(33:27):
And then what you've got isother things like short-term and
longer-term objectives.
If you've got a quarterlytarget, that might help you
bridge a gap between alonger-term goal and general.
You know shorter-term stuff.
So that's quite a nice way oflooking at it.
There's a few other elementshere.
You can organise yourincentives accordingly.
Speaker 1 (33:50):
You can give more regular feedback you're sounding
like a fan of these now.
Speaker 3 (33:56):
I'm not a fan, but what I didn't understand is all
of the reasons, of which thereare many why this works so well,
can work so well allocatingresource.
Now I'll take your point here.
Lots of organisations will havea quarterly target, with none
of the things that we've talkedabout no.
Speaker 1 (34:13):
So you talked about allocating resource.
We are 10 miles to go.
The front rider's tired.
Let's change the rider.
You know, whatever that happensin sport, there's none of that.
You've got to still hit it,mate.
There's no, Nessie, brilliantagile mixing of resources In
some companies.
There are.
There's no, necessarilybrilliant agile mixing of
resources In some companiesthere are, but I don't know.
It'd be quite interesting tolook at the do quarterly
(34:35):
measures work?
That could be a whole paper,couldn't it?
It could be.
Speaker 3 (34:39):
I think that's actually quite an interesting
thing because it's reliant onyour market.
If you're a public company, ifyou have a market that is happy
for investors to sit and go,yeah, we'll wait a year, let's
see how you do in a year, thenyou might not have to report so
regularly.
But I think we have veryvolatile markets that are very
(35:02):
data driven.
Can't see a trend, an incline,whether it's up or down, then
that is going to make the valueof a company, especially if it's
a very, very large company, beaffected hugely, and that's why
but I also think society drivesmultiple changes.
Speaker 1 (35:23):
So if we're talking about post-pandemic work and
measures which is all part ofthis, then measuring performance
, presenteeism isn't a measureanymore.
We've talked about that in thepast.
Some of the measures are harderto track.
We're not putting cameras onpeople, we don't know who's in
(35:43):
the office, all those classicmeasures that you began with of
person sat in position infactory.
Let's measure their piece rate.
We don't see that person sat.
The factory is now their home,being a service economy for many
, many companies andorganizations.
We're not measuring output ofunits, and so it gets more and
more complex, doesn't it?
(36:04):
So if you were to say whatmeasures matter most for
performance today in this hybridworking world, where would you
go?
Speaker 3 (36:15):
Well, it's funny, you should say that.
So I also ask the question whatis the best way for companies
to measure their performance?
So we've talked about all thedifferent options that you've
got and we've talked about whyyou might want to do it
quarterly, and actually thethings that have come back are
the things we discussed earlierBalance scorecard, but in
particular, finance, customerinternal processes, learning and
(36:40):
growth.
If you've got those four thingsmeasured, then you've got a
pretty good idea how you'redoing, whether you're a public
or a private company.
Speaker 1 (36:48):
Give them to me again , sorry.
Financial customer, financialYep, customer Satisfaction, that
sort of stuff Yep.
Speaker 3 (36:54):
Internal processes.
How effective are they?
Speaker 1 (36:57):
Yep.
Speaker 3 (36:58):
And learning and growth.
Speaker 1 (36:59):
Okay, let's come to the last one, because that's our
business.
Okay, of course, I came off acall yesterday.
Company isn't going to do theproject with us or anyone.
Yeah, that company doesn'tmeasure learning in any
connection to growth whatsoever.
I think lots of companies notjust them, but they were very
(37:23):
vociferous and honest that theydon't.
Lots of companies don't equatelearning to growth.
We beat the drum of that.
We talk about learning overtime improves knowledge,
attitude, skills, performanceand so on, and the company grows
, the individual grows,individual grows, company grows.
What about that?
Do we need a new design of somekind of new performance measure
(37:47):
?
Because there isn't an A-level.
You know you and I have youththat take exams and lots of
listeners.
Do you know?
I've got a daughter who's beenmeasured on two years of work
and it's you've got theseresults.
The other daughter, the samethere is no exam with the
business we're in.
The financial director wantsthe conversion rate to go up,
(38:09):
wants the managers to be betterleaders and the delegations all
this stuff, but there is noactual measure for that.
So you've talked a lot about awhole number of different
measures, but what could be anew invention to measure
learning's connection to growth?
Speaker 3 (38:26):
but then I look at all the other options here and
in here.
It's the same stuff kpis, okrs,your triple bottom line, which
is my favorite.
It's the same thing.
It's people, planet, profit.
That's it now.
If you remember, many years agowe used to watch a film with
indra nui of pepsi cola, talkingabout her focus on doing better
(38:52):
.
By doing better with theenvironment, you can be
successful as a company and notput cost on society.
That's your people, that's yourplanet, and if you use those
thoughts, you can actually useit to drive profitability as
well.
Those things all kind of worktogether.
Now, that's a holistic approach, isn't it?
Speaker 1 (39:11):
It is, is retention a key measure of learning?
If you're learning, you want tostay.
Speaker 3 (39:15):
Well, that comes under the triple bottom line.
That includes employeewellbeing.
So yes, it does.
Speaker 1 (39:21):
Again.
I guess some people you can'tchange their minds if there's no
value placed upon learning,because I think lots of people
will hope that there's anothergroup of people who will fill
their shoes and therefore,although people are leaving and
it's costing me money to recruitthere's enough people on the
planet I'll find some more to dothe job, however good they may
(39:41):
be.
I don't mind if I haven't grownthese individuals while they're
under my care.
Speaker 3 (39:46):
Well, let me give you another little thought on this.
One of the other things you canmeasure and this is number six
in the list of the best ways tomeasure is your friend of mine,
mps.
Oh, please, wow.
So you have organizations, andwe know them.
(40:07):
Organizations right now who aremonitoring their performance
based on the net promoter scorethe likelihood of a customer to
recommend their products orservices to a member of the
family or a friend.
Now, we've done a number ofepisodes on this.
Nps is an extremely flawedmeasure.
(40:29):
Nps is an extremely flawedmeasure.
It actually measures the wrongthing more often than not and is
not a measure that should berelied upon.
Lots of companies willmanufacture their NPS.
How many times on a call hassomeone said to you oh, we're
going to send you through alittle survey just to let you
know.
Nines and tens are good.
Speaker 1 (40:47):
Giving you a little nudge there, the whole thing's
manufactured and we go intodetail on an upcoming in our
upcoming book.
Whose side are you on?
Absolutely loyal bonding andstrategic lies.
It's interesting that that'sstill in there.
So some companies.
I had a thing the other day.
I was asked if I wanted toenter a competition and I said
yeah, great, and he said we fillin this.
(41:07):
I said this isn't a competition.
How many winners he goes, Ihave no idea, but it was NPS.
Speaker 3 (41:14):
Yeah, absolutely so.
Sadly, when you ask thequestion, what is the best way
to measure a performance?
It is different variations onsimilar things Finance,
operational work, the customerand the employee.
If you work on those fourthings, you're going to be
relatively successful.
What I would hope is thatorganizations wouldn't look at
(41:37):
those things and go right, weneed to do something for the
employees, I know, let's sendout a survey, let's tick that
box right.
Or we need to do something forthe customer.
Let's do an offer that ticksthat box.
Or we need to be a bit moreefficient.
Okay, customer, let's do anoffer that ticks that box, or we
need to be a bit more efficient.
Um, okay, let's do a project todrive performance in this area.
Yeah, let's do that, and weneed to make some more money.
So let's work out how we makesome more money in terms of
(42:01):
conversion.
Or, uh, let's drop the price onsomething and so, or bundle
something, so I don't know well,you, you can.
Speaker 1 (42:09):
You can cheat the well-being performance.
So we know of a number ofcompanies who enter the Sunday
Times best place companies towork for and they time the pay
rise and the bonuses just asthey fill in the forms and that
matches very nicely what theSunday Times measure and puts
you into a good company to workwith.
Speaker 3 (42:25):
Well, we've worked for people, Jeremy, who've said
it's funny, I'm going to sendout my employee survey just when
your project finishes.
So people have just beentrained, just been developed,
they've just seen Jeremy and Irunning around on a stage
somewhere and for a moment theyfeel slightly better towards
(42:45):
their employers than perhapsthey had done, and the survey
comes back relatively positiveas a result, and sometimes you
think, well, where's the harm inthat?
And there is no harm in it.
However, what I think is theoverriding theme I've learned
from going through thisinformation is that these
measures and the way they areimplemented and I think that's
the key thing how are theyimplemented?
(43:06):
Are they implemented fairly?
Are they implemented in the waywe you know, demonstrated for
you where just missing is afailure and that language is
used and, which is verydemotivating, that the world is
variable by its very nature thenI think they're pretty good
(43:30):
guides.
If you use them rigidly andstrictly, I think they can be
draconian, painful anddemotivational.
And I think part of the talentof a decent manager, a decent
director, a decent board is togo right.
What are we going to measure?
How are we going to measure itand what is our style going to
be in doing this?
(43:52):
Because we don't want it to besomething which restricts us and
demotivates people and ends upbecoming a cost.
Because if you get some ofthese things wrong, as we can
see it, is going to be costly.
Speaker 1 (44:05):
It is fascinating and I'm a bit aware of my brain's
whirring, and whirring is theidea of what we can't see you
know, and I'm thinking of sportand how advanced sport is and
continues to advance.
I'm thinking some of thepost-olympic interviews of
athletes and you know that ideaof continual.
I think you called it somethingearlier about this continual,
(44:26):
continual improvement orwhatever.
There was a did you call it tqm?
Something about continuousimprovement and the way that's
fed back you don't mean thetriple bottom line no, there was
something about continuousimprovement.
Okay, objectives and key results.
No, it was tqm and I wrote itdown.
But the idea that in sportwe're looking for, you know,
little gains, little things.
(44:47):
The bit that I'm sort of stuckon is that the way sport
advances and improves, thatlearning and growth into
performance, which isn't justthe goal, it's the team effort,
all of that.
I think business has a lot tolearn and could take some of
those attitudes and measuresinto business, of how you
measure performance, translatingthem, which is very hard to do
(45:07):
because sport is, you know,elite athlete and we're talking
very much non-elite humans in inmany roles and yet we want more
out of them well in researchingthis, I think.
Speaker 3 (45:19):
The other thing which I think we must come back to is
what we started the podcastwith targeting how do you target
and how do you manage targetsand Jeremy played an interesting
senior person talking about howthey all got together and used
some kind of secret method tobring together the targets to
(45:42):
then impose them upon theiremployees.
Targeting is a very, verydifficult and, in some cases,
dangerous pastime.
Speaker 1 (45:52):
I think what you've proven is that it's almost
becoming the most basic poormeasure of performance that
exists.
Speaker 3 (46:00):
Yeah, because it is a guess.
It is an educated guess always.
Speaker 1 (46:05):
And whether I hit or miss, my performance may be
wonderful, it may still be good,but technically it was 500 quid
off or whatever it was.
Or you know why is it a miss?
Speaker 3 (46:16):
Because somebody stuck a different number in a
box and the funny thing abouttargeting is that sometimes,
especially when it comes tosales targets, sometimes people
just don't want to buy when youwant them to.
Speaker 2 (46:28):
sometimes people just don't want to buy when you want
them to.
Speaker 3 (46:30):
I remember when we do training sometimes we say look,
there's three things thatyou've got to answer for your
customer.
Why should they buy thisproduct, why should they buy it
from you and why should they buyit now?
And that's the key thing hereSometimes now doesn't suit me.
I may like the product, I maylike you, but I might want to
(46:51):
buy it next month and that mightnot suit you.
It's still a sale.
But it's funny how sometimes wego well, that's a failure.
No, it's not.
They're going to buy.
It's just a perception of howthat may or may not work, so
interesting.
Speaker 1 (47:07):
It's great, great topic.
Speaker 3 (47:08):
Thank uh it's a pleasure dived in there and we
will return to this at somepoint.
What I think I'd love us to dois come back with a new episode
on targeting at some point andhow that's done, because I think
that is it's almost.
Speaker 1 (47:22):
What could the new target even be in light of all
these other measures?
But the other one I'minterested in is how do you
measure the application oflearning to make any attempt to
hit those targets?
Yeah, I suppose the sadness ofthe integrity around it.
What was the Sophocles quoteyou found last night?
It's something like to failwith integrity is far better
(47:45):
than to achieve with fraud.
Speaker 3 (47:47):
I think it's very interesting that we're talking
about Sophocles Jeremy while I'mlooking this up, here we are.
Who was Sophocles Jay?
Speaker 1 (47:56):
He was a Greek he was .
He walked around, didn't wearmuch.
Speaker 3 (48:00):
No, sophocles was a playwright, he was the Greek
Shakespeare.
Okay, ancient Greek ShakespeareWas he?
Thank you?
Yes, he was.
And he, he said this ratherfail with honor than succeed by
fraud.
There you go lovely, there wego wonderful.
On that bombshell, we'll leaveyou.
We'll see you for anotherpodcast soon, but in the
(48:22):
meantime, thank you forlistening.
Cheery bye, thank you.
Bob, thanks for coming in this morning.
I'm going to be with you forjust a few minutes and give you
something to go away and digest.
So here you go, If I just giveyou those.
Those are the new targets.
Speaker 3 (00:15):
Oh, these are the new targets for the next 12 months.
Speaker 1 (00:19):
A full year, absolutely the full year in your
hands.
Speaker 3 (00:22):
You know exactly where you are and how we're
going to measure performanceokay, and how have you managed
to arrive at these interestingsets of figures you've just
given me?
Speaker 1 (00:34):
well, it's not something I'd normally share,
but fine, I'm happy to disclosesome of what we do.
We it's quite complicated.
We look at a whole range ofthings, a whole range and we
pour over figures and we look atlast year and we play with some
variables.
We look at different percentageuplifts and we have to also
(00:56):
factor in the different peoplein your teams and how they're
behaving and what they'reactually doing, and then we
arrive at the right figures thatwill enable us to have a very
good grip on what kind ofperformance we're after of.
Which targets are you know?
A part of that?
Speaker 3 (01:14):
I see.
Well, I'd very much like tohave a look at some of the data
that's driven your choices.
Speaker 1 (01:20):
I'll stop you there.
So I've already shared enough.
This is really bored stuff.
We do this work.
If your career continues toprogress, as I'm sure it may,
you'll be there one day, butit's not your territory for now.
I've really told you enough.
It's, as I said, quite complexhow we arrive at this.
Speaker 3 (01:37):
All right, so there's a kind of a club who is
involved in this and those thatare in it.
Speaker 1 (01:42):
I think you're now being slightly cheeky, so look,
I'll catch you later.
All right, Okay.
Speaker 3 (02:18):
Welcome to the reality of business.
Speaker 1 (02:23):
This is Bob Morrell, and I'm joined by my friend and
colleague, Jeremy Blake, goodday and thank you for pressing
play and hopefully the title hassome interest for you.
Speaker 3 (02:33):
So we are going to spend this episode looking at
how companies measure theirperformance, and this is a
subject that we come up againstquite a lot in our work.
We meet different organizationsand they talk to us about their
targets and their KPIs and allthe things that they do to
(02:54):
measure how well they're doing.
And this feeds into the sketchthat we did at the beginning,
because, of course, these KPIsand things feed into targeting,
and, in fact, the first everpodcast that we did was on the
subject of targeting, and it'ssomething that we come back to
again and again because it'ssuch a controversial subject.
There are so many differentways that you can look at it, so
(03:17):
we thought it would be a goodidea to take this subject of
performance measurement fororganizations and see if we can
delve into it a bit and find outwhere it all comes from.
Where do these ideas ofperformance measurement come
from and what are the differentmethods that you can use?
So that's what we're going tobe focusing on today.
Anything to add to that, jay?
Speaker 1 (03:37):
well, my question is, bob, because this is you, this
is your.
You've probably worked ourformat out.
Now, listeners, it's changed'schanged.
So I'm just intrigued, bob,where did you?
Speaker 3 (03:46):
start.
Well, I'm going to be entirelyhonest.
So listeners will, I'm sure,have listened to our recent
episode on AI.
We did a very in-depth dive forbeginners into the world of
artificial intelligence, and sofor this episode, I have put
everything into the world of AI,chat, GPT and, apart from my
(04:10):
own knowledge and experience ofthis, I have got the entire
history of performancemeasurement in companies over
the last couple of hundred yearsand I've asked it a key
question as well that we'regoing to look at the answers to
and that's going to give us allof that info.
Speaker 1 (04:26):
Well's my point, ai, as we've talked about, is it?
You know, a research tool ifyou like, but it's such a broad
topic.
What was the thing that youthought I've got to start here?
What did you?
Was it the history?
Because you're a history buff,did you start with history?
Speaker 3 (04:40):
well, the question that I've asked is for the, the
bot, to research the history ofhow companies measure
performance over the last 200years.
What are the major differences,what are the most effective
methods, and how else shouldcompanies measure their
performance and their people?
(05:01):
So it's a very broad questioncovering all those different
topics, and I've been given avery broad and comprehensive set
of answers to those questions.
Speaker 1 (05:11):
As you're reading through.
What will interest me is whichbits you concurred with, as
DiCaprio would say in hiswonderful film.
Do you concur?
Did you agree with it or didyou go?
What that's not my, that willinterest me.
Did you agree with it or didyou go?
What that's not my, that willinterest me.
Speaker 3 (05:24):
So there's one thing that you and I have come up
against a lot, and that isorganizations who have quarterly
targets, so they measure theirperformance by quarterly targets
.
I now know the reason for that.
Oh glorious, yes, please.
Speaker 1 (05:42):
Categorically.
So don't hide away, let's gostraight.
Okay, let's give the listenerswell let me.
We've worked with obsessionalnorth.
Speaker 3 (05:48):
We have, we have but I now understand where this
comes from.
So let's first of all go back200 years, because 200 years we
are back in the time of theindustrial revolution, and this
is a period that you, of course,know lots about jeremy and um
what do you want to know?
Speaker 1 (06:07):
well, what was the major conflict?
Speaker 3 (06:08):
that was going on at that time, so going back to 200
years, 1810 to 1820.
What was what was at its height?
Speaker 1 (06:16):
which country do?
Speaker 3 (06:17):
you want me to go to uk for starters?
Speaker 1 (06:18):
yeah, well, we've got um.
What's it called?
What what's it called?
Wellington was involved.
It's the Napoleonic Wars,jeremy.
Oh yeah, I thought you weretalking about just the UK
problem.
Speaker 3 (06:31):
Yes, but we were at war with France.
That was the major conflict atthe time.
So it was the Napoleonic War.
Speaker 1 (06:36):
Hang on, peterloo.
And all of that is just comingout of that, isn't it?
Yes, it is Peterloo Massacre.
Speaker 3 (06:47):
It's, yes, it is exactly in that period, yeah, so
what you've got there is thestart of industrialization.
So a lot of coal mining goingon, a lot of power being created
, a lot of textiles being woolenmills created and sold, and
also, of course, hugeindustrialization in terms of
ironwork, steelwork, thecreation of weapons.
All these things taking placein Birmingham and Liverpool and
Manchester.
(07:07):
The creation of weapons, oh,proper weapons, proper guns,
with, you know, rifled barrelsand things like that.
It was a very, very industrioustime.
So if you were running your19th century factory, jeremy,
and I can just imagine youstrolling about the halls of
workers in your top hat, nicewaistcoat.
(07:28):
Just had a nice lunch roastpotatoes, the usual stuff.
You're going to be thinking aremy workers actually being as
productive as they can beBecause I'm paying them a few
pence a day to turn up andmanufacture these things?
How do I know that my outputand my productivity is working?
(07:49):
So how do you think performancewas measured in the 19th
century?
What were the major ways theydid it?
Speaker 1 (07:57):
Well, I'm going to start with.
Speaker 3 (07:58):
It's basic.
Speaker 1 (07:59):
Yeah, I'm just saying they only looked at output.
Probably they looked only atwhat could a man or a woman?
So let's take its wool andlet's just say it's the first
stage of the wool production.
Let's just say a sheaf orwhatever.
How many sheaves can a manproduce in a day?
(08:19):
I'd get my measure and then I'dwant others to replicate that
same output interestingexpression yeah, I mean alan
partridge, I think.
Speaker 3 (08:30):
I think we'll use the word product.
What?
How many products can thisperson produce?
Yeah so that's called piecerate.
Yeah, okay, so workers werepaid based on the number of
units they produced in a certaintime scale.
Speaker 1 (08:46):
Okay, did they look at a good worker to get the
initial measure, or did they noteven bother that?
Speaker 3 (08:50):
well, it's funny you should say that because at the
same time, in the late 19thcentury, so a little bit later,
we have the first time andmotion studies created,
introduced by your friend,frederick winslow taylor, named
after the local town inBuckinghamshire where he used to
go to the George, and thosestudies analysed the efficiency
(09:13):
of tasks and aimed to optimiseworker productivity.
And in fact there's a very goodfilm, charlie Chaplin.
I think it's Modern Times,that's it, where they really
take the mickey out ofmaximizing the time a worker is
in place and um and so whatyou're looking at this point is
simple production counts, basicaccounting systems to track
(09:36):
costs and rudimentary financialstatements right the way through
.
Speaker 1 (09:41):
But you're right, they're all doing that.
Speaker 3 (09:43):
They're all stuck on the piece rate the quantity of
output and labor, with limitedconsideration for quality or
innovation, because ultimatelyyou've got to produce the stuff
and get it out and get it off orany other measures of health
and environment of the worker,and so on, and so on absolutely
so.
Then we move into the early tomid 20th century and what you
(10:06):
get there and this must bebecause you have the emergence
of public companies and stockmarkets you have a shift towards
financial metrics becausecompanies become bigger and
become more complex.
So then you get the first usageof things like ROI return on
investment Really which waspopularized by a gentleman
(10:29):
called Alfred Sloan of GeneralMotors in the 1920s and it
became central.
So ROI is 1920s yeah, centralmetric for evaluating business
performance, your return oninvestment, and at the same time
you also get cost accounting soyou can more closely attract
(10:49):
and track how you're paying forthings, the things that come in
and then what you're being paidfor things going out, which
allows you to then monitor yourcosts and your profits more
closely.
Speaker 1 (11:02):
So just a question here.
So I'm interested aboutcompetitive forces.
Let's say I and I want to justkeep it really basic so that we
step change our understanding aswe go.
I own a woolen mill, you own awoolen mill, I want to sell more
units than you.
I've got my piece rate.
Okay, am I just flogging toincrease the peace rate?
(11:25):
But not knowing how I mightincrease the peace rate, I'm not
even innovating.
You're saying no or am I?
No, I'm literally that Okay.
Speaker 3 (11:33):
But I think what you've got, especially in the
industrial revolution, you haveno shortage of demand.
Okay.
So, whatever you're creating,you are going to be able to sell
because there is a demand forit.
Whether it be in this countryor another country, there is a
demand for the product.
Speaker 1 (11:49):
But I might have greed to produce more output
because of the demand.
Yeah, and so, therefore, isthis a ruthless time where.
Speaker 3 (11:57):
Yeah.
Yeah, but is the demand for workand do workers have the power
to change and move and Well,right the way through the 19th
century, you have the chartistmovements, you have various
revolutions in other countriesagainst this, because,
ultimately, things that areproducts that everybody needs
(12:18):
will have a rate, will have aprice, and if I can get my
workers to produce those thingsfor a few pence less per person
per day, it's going to make memore money.
That's my lever and that's whereI think you get the emergence
of communism, for example, whichapproaches it in a more fair
(12:38):
and equitable way.
But yes, as we move into the20th century, we get those new
ways of measuring return oninvestment.
We get the first properfinancial statements, profit and
loss accounts and balancesheets, and so the shift is from
output to financial outcomes,with performance largely
(13:00):
measured by profit, efficiencyand return on investment.
Efficiency and return oninvestment, so those more basic
factors of how much I'm payingto produce something.
You look at it moreholistically that this is what
I'm getting back for theinvestment I'm making.
Speaker 1 (13:14):
Going back to the sketch we did at the beginning,
I'm still saying I want 10 outof you a day.
I've still got my initialmeasure of performance.
Yeah, but I'm not necessarilythinking beyond technological
improvement of the lathe orwhatever to increase that output
.
Speaker 3 (13:30):
No, and in fact I don't know that that particular
element of imposing a targetupon someone has actually ever
changed, regardless of themethods the post-World War II
(13:51):
era, from 1950s onwards and wemove into much more modern
strategic planning anddiversification.
So then we have a friend of thepodcast, peter Drucker appears
in the 1950s and he created thisidea of management by
objectives.
So you have a clear, measurableobjective for employees and you
go look guys, this is what wemeasurable objective for
employees.
And you go look guys, this iswhat we're going after, and you
move towards it.
Now I think you could also say,now that extends into things
(14:14):
like project management and andstuff like that that we all
understand that you have a clearobjective, beginning and middle
and end, and off you go lots ofpeople still aren't even on
Drucker's page.
Speaker 1 (14:24):
You know the guy guy who was still doing conferences
and interviews up to about 100.
Some people still don't evenknow what the objective is and
what they're actually doing orwhy they're bothering.
Speaker 3 (14:35):
Which is why at the same time you get the emergence
of strategic business units.
So a large corporation willthen organize around a business
unit with its own performancetargets and its own metrics,
which then feeds into a whole.
So, very much like we haveclients who have retention
departments, new businessdepartments, technical and
(14:55):
support departments, eachdepartment will have its own
business to some extent and thenthat's run effectively.
Speaker 1 (15:03):
And less effectively in some, as collaboration
becomes harder and you end upwith silos, but that's probably
something else to talk aboutanother time.
Speaker 3 (15:12):
Well, yes, but then you see at this point.
So you move from the idea ofnow we can measure financial
stuff, now the financial metricsare dominant because that's the
key factor.
But at this point stuff likemarket share starts to come in
product quality because you getmore competition.
(15:32):
Customer satisfaction begins atthis point.
What year does that?
This is now 50s to 70s, theidea that our customers are
going to be happier Before youwant the world to take it Now.
Speaker 1 (15:45):
The customer satisfaction of your product
over someone else's.
Wow, okay, so that's when youget.
That's still new, isn't itStill relatively new?
It's still.
Speaker 3 (15:52):
But then if you think about it, you know it's that
competitive drive where certainbrands are market leaders for
years and then competitors comesin and then it does become a
market, and then you have tomeasure other things to see and
also the shift from commoditycommodity product, like I need
to eat a loaf of bread yeah Ineed some milk too.
Speaker 1 (16:14):
There's now six people making chairs just in my
town, so my the customersatisfaction of that production,
of that unit becomes a measure.
That that's fascinating.
There's people alive today whowere born when that became a
measure for the first time.
That's bizarre.
Speaker 3 (16:31):
So then we move into the 1980s up to the early 2000s
now, so there's a good 20, 30years of this now and we then
move into balanced performancemeasures.
So this is the combination offinancial and non-financial
indicators.
So that's your balancescorecard, which was developed
by Robert Kaplan and DavidNorton in the early 1990s, and
(16:55):
this introduced a more holisticapproach, looking at all these
different elements, internal andexternal, and they also
included things like learningand growth perspectives as well.
So that's an interestingaddition.
And then you have a thingcalled TQM, total Quality
Management, so the continuousimprovement and quality across
(17:16):
all areas of an organization.
And actually I'm sure at thispoint you'd have some Japanese
management stuff being thrown inhere as well, so working on the
work with the workers stuffbeing thrown in here as well, so
working on the work with theworkers.
So you then have this shift inthis period to a more balanced
view of performance and you'rerecognizing that of course there
are financial factors, butthere are also non-financial
(17:37):
factors which play a part.
Speaker 1 (17:40):
In performance.
Yeah, that's the point.
Speaker 3 (17:42):
So then you come into the last 20 odd years and
there's a huge emphasis onsustainability, stakeholder
value and digital transformation.
So over the last 20 years, asmarkets shift from traditional
to digital, then you're going tohave a huge shift in people and
(18:04):
what they're doing and howthey're doing things and how
you're selling things and howpeople are accessing what you do
.
So then you've got methods likethings I've never heard of.
Have you ever heard of triplebottom line?
No, sounds likea dance.
The triple bottom line is amethod that expands the focus
beyond profits to include socialand environmental impact, so
(18:25):
you're measuring the performancebased on people, planet and
profit.
I know you'd like that.
So then we've got agileperformance management, oh yes,
so that's continuous feedback,goal-setting performance reviews
, and that's dynamic andflexible and it aligns to the
needs of modern, fast-pacedorganizations.
Then another one I never heardof OKRs yes, I know that.
(18:48):
Objectives and Key Results.
So that's used by Google andthey're used to set ambitious
goals and track progress withspecific, measurable outcomes.
And then, of course, huge dataanalytics, the use of big data
and advanced analytics.
That gives you real-timeperformance tracking and
predictive insights, which, ofcourse, is where things like AI
(19:12):
starts to come in.
Speaker 1 (19:14):
Have OKRs replaced KPIs, or not really?
I suppose loads of companiesstill talk about it.
Speaker 3 (19:20):
I would imagine they're interchangeable.
So the summary of the modernperformance measurement is a
more comprehensive data-drivenaligned with broader societal
goals, not just the goals of theorganization, including things
like sustainability and CSRcorporate social responsibility,
(19:40):
which is another big thing thatwe come up against.
So there's quite a few thingshere to look at.
Speaker 2 (19:52):
You're listening to the reality of business brought
to you by Reality Training.
Selling certainty.
We're a leading sales trainingand coaching company based in
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Speaker 3 (20:14):
There are big differences in how you measure
performance.
So you've got the scope and thefocus of how you measure things
.
Things like customersatisfaction, employee
engagement we see lots of thosesurveys.
Sustainability you know how doyou go about measuring the scope
of that?
How sustainable are we as anorganization?
What's our social impact?
You know these are quite hardthings to go out and do a survey
(20:37):
in order to get a number anumber of results.
Yeah, then you've got time frame, because of course people have
annual statements and annualaccounts, we do that sort of.
But then you have what aboutreal time?
What about now?
What about predictive stuff onwhere we are now for next week
or the week after?
We're much better able, usingtools like AI, to be able to use
(21:02):
that tomorrow?
Speaker 1 (21:03):
that's an interesting question.
So without naming the client,do you remember one of our very
first jobs, when we proposedthere was only seven months left
in their financial year?
Yeah do you know I'm talkingabout already yeah, I know
exactly who you're talking about.
Yeah and we were said we have toget the roi within the
(21:24):
financial year.
We went okay, so do younaturally add on the months that
we no, no, no, I'm afraid we'rein it.
I went what?
And they had to get some returnon investment within the time
period or we'd never get morework and it would be a failure
and bizarre.
So talk about time.
You've talked about theinvention of the quarter,
(21:45):
because it was quarterly outputand I guess that seasonal
variations for sort ofindustrial revolution type
products, they would haveseasons perhaps.
Speaker 3 (21:54):
Is that part of it?
Speaker 1 (21:54):
of why they were quartered.
Speaker 3 (21:56):
No, there's another reason why they're quartered.
I'm going to come into that.
It's very dull, I'm afraid.
Speaker 1 (22:00):
why they're quartered , but the question I'm trying to
come to you with and I'mthinking aloud the obsession
with time.
To you with and I'm thinkingaloud the obsession with time.
Why do so many companies onlyproduce a year long measurement?
We have our financial year, wehave our calendar year.
We've done this in a year.
Why is only a year?
And why can't we look at thingsover a longer period?
(22:20):
Because in our families, in ourhomes, in our society, we look
at the renewal and regenerationof a village over years.
We look at our children'seducation over years.
We look at the renewal andregeneration of a village over
years.
We look at our children'seducation over years.
We look at a university degreeover three years.
We look why performance in ayear?
Why do?
Speaker 3 (22:33):
we just stop press the button.
So you and I run a privatecompany.
I think it's fair to say we areless concerned about our annual
performance, broadly okay, ifwe had a public company, jeremy,
we would be obsessed withnothing else, I'm afraid but why
why?
Because your shareholdersexpect a dividend within that
(22:54):
year they want it in their bankwithin that, of course.
Speaker 1 (22:57):
Okay, so it comes back to a date of payout it does
right it's down to money in theend.
Speaker 3 (23:03):
now there's a few other things here.
There's now much more use ofbroader uses of employees who
are involved in givingcontinuous feedback and aligning
goals with the organizationalobjectives, and that's something
we've seen a lot of morerecently.
And, of course, technology.
So technology is improving.
(23:23):
Ai is coming in managing bigdata, giving people deeper
insights and more precisemeasurements, which then makes
it easier to measure performanceas well.
Speaker 1 (23:34):
So that's a really fantastic and quite quickly done
sort of overview of it all andgoing off to tangents, what's
the bit that seems nonsensicalto you, that actually should be
ripped up and binned?
Speaker 3 (23:45):
Well, ok.
So I asked it what's the mosteffective modern methods?
And it said the top four arethe balance scorecard still used
hugely the objectives and keyresults.
So, again, just setting anobjective and going for it,
agile performance management anddata-driven decision-making
(24:07):
those four are the top four.
Okay, and in answer to yourquestion, if you look at how
well should companies measureperformance, you then come into
those areas that we've alreadytouched upon, which are really
hard to measure.
So how would you measure youror my holistic employee
wellbeing, jeremy?
How would you measure that?
Mental health, work-lifebalance, career development, all
(24:28):
that stuff?
That's difficult, isn't it?
Speaker 1 (24:31):
I think what's interesting if you're a small
company listening and we are,you suddenly think about that we
don't have huge numbers totally up.
We've got a small group ofpeople, but how do you measure
holistic Employee well-being?
Holistic employee well-being,employee well-being that's just
one.
Speaker 3 (24:49):
Jay.
The next one is impact onsociety and environment, Our
innovation and adaptability.
To some extent we could saysomething about.
But the fourth and fifth,cultural and ethical alignment
and stakeholder satisfaction.
Which could be a shareholder?
It could be other employees,suppliers, partners.
(25:09):
There's all those differentelements that come in here.
Speaker 1 (25:13):
The first thing you're talking about is
well-being.
You couldn't state terms to acompany saying this is how we're
measuring your well-being.
You'd have to allow that, as youwere saying a minute ago about
360 continuous improvement,you'd have to allow anyone to
vote on what they think might bea measure because if if
somebody said, well, we haven'thad many people taking days off
work, that fails in the nhs, whofamously take less days off
(25:36):
than anyone when they're sick,they have an incredible service
attitude.
Even when they're feeling rough, they go into work, which
actually, as adam k alwaysstates, doesn't help because you
pass your cold to six morepeople, the more nurses go and
doctors and health care andadmin.
So you couldn't just have ameasure like oh, we have only
had two days off, that wouldn't,that wouldn't cut it.
Speaker 3 (25:56):
You'd have to allow employees to input into those
measures so those are the mainmethods that the companies use
to measure their performance,and we can see that there's been
a technological and actually Iwould say an ethical move over
the last few years to change howwe monitor things.
(26:17):
However, I still see everycompany having a financial
target, yeah, having a thingthey're aiming for, whatever it
may be be.
Now let's move on to this areaof quarterly targets, because
this is a bugbear of ours.
I know the reasons why now, butI just want to look at it from
the perspective of outsiderslooking in.
So let's do another littlesketch.
(26:39):
Jeremy, I want you to tell methat over the last quarter, your
team's done amazingly well, butyou've just fallen short of
hitting your target and I'llrespond Okay, so I'm your boss,
jeremy, how's it looking forthis quarter?
It's the last day.
Speaker 1 (26:54):
How's it going?
Phenomenal, in short,absolutely extraordinary.
Everybody has lifted up theirresults.
It's been an incredible teameffort and as I looked at, I was
up late around midnight.
We are literally six grand offand it doesn't seem like we'll
claw the 6K back in today.
(27:15):
But it's such a near miss.
To me it's a hit, it's justglorious.
Speaker 3 (27:21):
Well, it's really nice to hear you look at it that
way, and thanks for you know,and please pass on my my thanks
to the team for all of theirefforts and I, indeed I extend
my thanks to you, but you willbe aware that I I will have to
report back that we failed inthis quarter to achieve what we
set out to do, so this will belooked upon as a failure.
I'm afraid.
Speaker 1 (27:41):
Hey, hey, hang on, hang on, hang on.
Who you're reporting this backto?
Speaker 3 (27:45):
this goes back to the board and to the shareholders.
Speaker 1 (27:47):
They don't need to know.
We've worked really hard.
No, no, no.
Speaker 3 (27:50):
We're a public organisation and they are
entitled to know that we havefailed to hit target this
quarter which is disappointing.
You know the way that thisorganisation works.
If you don't hit your quarterlytargets, it is viewed as a
failure.
You're going to give peoplewho've gone over their bonuses.
(28:13):
Surely We'll come on to thatNow.
We'll stop it here Now.
This is what we know.
Some organisations do.
They work to very strictquarterly targets and if you
don't hit them, regardless ofthe effort that you have made,
bearing in mind that all targetsare really guesses you will
view that as a failure and youmight have employees killing
themselves to do business andtry and hit that target.
(28:34):
But if they don't do it theywill be viewed as failures,
despite their brilliant effortsfor you.
We always thought this was ascandalous thing that took place
.
However, I have asked thequestion why do many large
organizations have quarterlytargets?
Okay, these are the reasons.
If you have a quarterly target,that gives you a frequent
(28:58):
checkpoint allowing you toassess the performance and make
adjustments before problems mayescalate.
And this helps if you havemarket changes, competitive
pressures or internal challengesand in fact, we do see
organizations bring in offers atvarious points and what have
you?
Also, if you've got a quarterlytarget, you've got time to
(29:21):
performance monitor individualsand teams over that period as
well.
Rather than waiting for anannual review, you can try and
improve things on a quarterlybasis.
The main reason for havingquarterly is that public
organizations produce quarterlyearnings reports and these are
(29:45):
required to report to themarkets so that then managers
and investors and shareholderscan decide how well a company is
doing.
And, of course, it affectsshare price.
That is the main reason that itis quarterly, because those
earnings will contribute to anupward swing or downward swing
(30:08):
in a share price, which couldincrease or decrease a company's
valuation.
Jeremy.
Speaker 1 (30:14):
So the innovation potentially required?
And I'm thinking of an Italiangentleman we worked with who
missed his target.
Every single summer in Italy hesold to universities a lot.
He sold a particular softwarebut the staff would not return
from the summer break to beginthe university reset till about
(30:37):
September the 3rd and they hadnever in the history ever signed
anything until about Septemberthe 7th.
So it didn't matter what he did, he would miss.
And what would be marvelous isif, even though all that stuff
you've just said continued, butadjustments were made in the
performance measurements ofindividuals, then some of the
(31:01):
other scorecards you're talkingabout, like mental well-being
and all that would, would see anuplift.
But again, who's going to dothat if they're a big business?
Speaker 3 (31:08):
arguably that's when you broaden these conversations
to more employees and get thatkind of feedback so that you
could possibly do that, but weknow that in many cases that
doesn't happen.
Now there's also a few othergeneral things.
There's a belief that if youhave a quarterly target, it
keeps your teams focused andmotivated.
They've got a near-term goal.
(31:29):
It's tangible, easier toachieve than the long-term
annual target and it can preventcomplacency, so you get
consistent effort throughout theyear.
Speaker 1 (31:39):
You and I know that that doesn't necessarily sound
accurate.
Speaker 3 (31:43):
I agree.
Now you could argue that yourfriend who knows he's going to
have a dip in a certain month ofthe year, if he thought about
it, he could perhaps pre-emptthat by having certain
conversations a bit earlier.
You know, there are ways andmeans of doing it.
Speaker 1 (31:58):
It's just the systemic of how an officious
university system works.
Speaker 3 (32:02):
Absolutely Now.
Then of course you cancelebrate if you do hit and if
you have a quarterly target hit,you can have short-term success
celebrations, which boostsmorale and that reinforces a
culture of achievement.
So remember for all the teamswho don't hit target in a
quarter those that do will belauded and taken abroad and go
(32:23):
for big nights out.
Speaker 1 (32:25):
I was a beneficiary of this.
Of course, members around mewho were not was a beneficiary
of this, of course, membersaround me who were not, and I
would stand there with my cheapframes, um, with my, you know,
whatever the award was for thequarter, and you'd look around
at the other teams because itwas never really done off site,
it was always done on the lowcost, you know, yeah, and you
might be handed a bottle atlunchtime and spin around your
swivel chairs and other teams.
(32:45):
Look at you go.
Speaker 3 (32:47):
I just missed but you see, I know organizations, if
they hit their quarterly target,they will take people off to
barcelona for the weekend andspend tens of thousands, because
those costs are nothingcompared to the share price
holding of the company overall.
(33:07):
So that's why hitting it isquite important.
Now there's a few other things.
There's things about adaptingto change and being flexible.
There's a bit about testingtesting strategies in a quarter.
You can learn from thoseoutcomes and refine it and
approach it differently in thenext quarter.
So that would be good if peopledid that more.
(33:27):
And then what you've got isother things like short-term and
longer-term objectives.
If you've got a quarterlytarget, that might help you
bridge a gap between alonger-term goal and general.
You know shorter-term stuff.
So that's quite a nice way oflooking at it.
There's a few other elementshere.
You can organise yourincentives accordingly.
Speaker 1 (33:50):
You can give more regular feedback you're sounding
like a fan of these now.
Speaker 3 (33:56):
I'm not a fan, but what I didn't understand is all
of the reasons, of which thereare many why this works so well,
can work so well allocatingresource.
Now I'll take your point here.
Lots of organisations will havea quarterly target, with none
of the things that we've talkedabout no.
Speaker 1 (34:13):
So you talked about allocating resource.
We are 10 miles to go.
The front rider's tired.
Let's change the rider.
You know, whatever that happensin sport, there's none of that.
You've got to still hit it,mate.
There's no, Nessie, brilliantagile mixing of resources In
some companies.
There are.
There's no, necessarilybrilliant agile mixing of
resources In some companiesthere are, but I don't know.
It'd be quite interesting tolook at the do quarterly
(34:35):
measures work?
That could be a whole paper,couldn't it?
It could be.
Speaker 3 (34:39):
I think that's actually quite an interesting
thing because it's reliant onyour market.
If you're a public company, ifyou have a market that is happy
for investors to sit and go,yeah, we'll wait a year, let's
see how you do in a year, thenyou might not have to report so
regularly.
But I think we have veryvolatile markets that are very
(35:02):
data driven.
Can't see a trend, an incline,whether it's up or down, then
that is going to make the valueof a company, especially if it's
a very, very large company, beaffected hugely, and that's why
but I also think society drivesmultiple changes.
Speaker 1 (35:23):
So if we're talking about post-pandemic work and
measures which is all part ofthis, then measuring performance
, presenteeism isn't a measureanymore.
We've talked about that in thepast.
Some of the measures are harderto track.
We're not putting cameras onpeople, we don't know who's in
(35:43):
the office, all those classicmeasures that you began with of
person sat in position infactory.
Let's measure their piece rate.
We don't see that person sat.
The factory is now their home,being a service economy for many
, many companies andorganizations.
We're not measuring output ofunits, and so it gets more and
more complex, doesn't it?
(36:04):
So if you were to say whatmeasures matter most for
performance today in this hybridworking world, where would you
go?
Speaker 3 (36:15):
Well, it's funny, you should say that.
So I also ask the question whatis the best way for companies
to measure their performance?
So we've talked about all thedifferent options that you've
got and we've talked about whyyou might want to do it
quarterly, and actually thethings that have come back are
the things we discussed earlierBalance scorecard, but in
particular, finance, customerinternal processes, learning and
(36:40):
growth.
If you've got those four thingsmeasured, then you've got a
pretty good idea how you'redoing, whether you're a public
or a private company.
Speaker 1 (36:48):
Give them to me again , sorry.
Financial customer, financialYep, customer Satisfaction, that
sort of stuff Yep.
Speaker 3 (36:54):
Internal processes.
How effective are they?
Speaker 1 (36:57):
Yep.
Speaker 3 (36:58):
And learning and growth.
Speaker 1 (36:59):
Okay, let's come to the last one, because that's our
business.
Okay, of course, I came off acall yesterday.
Company isn't going to do theproject with us or anyone.
Yeah, that company doesn'tmeasure learning in any
connection to growth whatsoever.
I think lots of companies notjust them, but they were very
(37:23):
vociferous and honest that theydon't.
Lots of companies don't equatelearning to growth.
We beat the drum of that.
We talk about learning overtime improves knowledge,
attitude, skills, performanceand so on, and the company grows
, the individual grows,individual grows, company grows.
What about that?
Do we need a new design of somekind of new performance measure
(37:47):
?
Because there isn't an A-level.
You know you and I have youththat take exams and lots of
listeners.
Do you know?
I've got a daughter who's beenmeasured on two years of work
and it's you've got theseresults.
The other daughter, the samethere is no exam with the
business we're in.
The financial director wantsthe conversion rate to go up,
(38:09):
wants the managers to be betterleaders and the delegations all
this stuff, but there is noactual measure for that.
So you've talked a lot about awhole number of different
measures, but what could be anew invention to measure
learning's connection to growth?
Speaker 3 (38:26):
but then I look at all the other options here and
in here.
It's the same stuff kpis, okrs,your triple bottom line, which
is my favorite.
It's the same thing.
It's people, planet, profit.
That's it now.
If you remember, many years agowe used to watch a film with
indra nui of pepsi cola, talkingabout her focus on doing better
(38:52):
.
By doing better with theenvironment, you can be
successful as a company and notput cost on society.
That's your people, that's yourplanet, and if you use those
thoughts, you can actually useit to drive profitability as
well.
Those things all kind of worktogether.
Now, that's a holistic approach, isn't it?
Speaker 1 (39:11):
It is, is retention a key measure of learning?
If you're learning, you want tostay.
Speaker 3 (39:15):
Well, that comes under the triple bottom line.
That includes employeewellbeing.
So yes, it does.
Speaker 1 (39:21):
Again.
I guess some people you can'tchange their minds if there's no
value placed upon learning,because I think lots of people
will hope that there's anothergroup of people who will fill
their shoes and therefore,although people are leaving and
it's costing me money to recruitthere's enough people on the
planet I'll find some more to dothe job, however good they may
(39:41):
be.
I don't mind if I haven't grownthese individuals while they're
under my care.
Speaker 3 (39:46):
Well, let me give you another little thought on this.
One of the other things you canmeasure and this is number six
in the list of the best ways tomeasure is your friend of mine,
mps.
Oh, please, wow.
So you have organizations, andwe know them.
(40:07):
Organizations right now who aremonitoring their performance
based on the net promoter scorethe likelihood of a customer to
recommend their products orservices to a member of the
family or a friend.
Now, we've done a number ofepisodes on this.
Nps is an extremely flawedmeasure.
(40:29):
Nps is an extremely flawedmeasure.
It actually measures the wrongthing more often than not and is
not a measure that should berelied upon.
Lots of companies willmanufacture their NPS.
How many times on a call hassomeone said to you oh, we're
going to send you through alittle survey just to let you
know.
Nines and tens are good.
Speaker 1 (40:47):
Giving you a little nudge there, the whole thing's
manufactured and we go intodetail on an upcoming in our
upcoming book.
Whose side are you on?
Absolutely loyal bonding andstrategic lies.
It's interesting that that'sstill in there.
So some companies.
I had a thing the other day.
I was asked if I wanted toenter a competition and I said
yeah, great, and he said we fillin this.
(41:07):
I said this isn't a competition.
How many winners he goes, Ihave no idea, but it was NPS.
Speaker 3 (41:14):
Yeah, absolutely so.
Sadly, when you ask thequestion, what is the best way
to measure a performance?
It is different variations onsimilar things Finance,
operational work, the customerand the employee.
If you work on those fourthings, you're going to be
relatively successful.
What I would hope is thatorganizations wouldn't look at
(41:37):
those things and go right, weneed to do something for the
employees, I know, let's sendout a survey, let's tick that
box right.
Or we need to do something forthe customer.
Let's do an offer that ticksthat box.
Or we need to be a bit moreefficient.
Okay, customer, let's do anoffer that ticks that box, or we
need to be a bit more efficient.
Um, okay, let's do a project todrive performance in this area.
Yeah, let's do that, and weneed to make some more money.
So let's work out how we makesome more money in terms of
(42:01):
conversion.
Or, uh, let's drop the price onsomething and so, or bundle
something, so I don't know well,you, you can.
Speaker 1 (42:09):
You can cheat the well-being performance.
So we know of a number ofcompanies who enter the Sunday
Times best place companies towork for and they time the pay
rise and the bonuses just asthey fill in the forms and that
matches very nicely what theSunday Times measure and puts
you into a good company to workwith.
Speaker 3 (42:25):
Well, we've worked for people, Jeremy, who've said
it's funny, I'm going to sendout my employee survey just when
your project finishes.
So people have just beentrained, just been developed,
they've just seen Jeremy and Irunning around on a stage
somewhere and for a moment theyfeel slightly better towards
(42:45):
their employers than perhapsthey had done, and the survey
comes back relatively positiveas a result, and sometimes you
think, well, where's the harm inthat?
And there is no harm in it.
However, what I think is theoverriding theme I've learned
from going through thisinformation is that these
measures and the way they areimplemented and I think that's
the key thing how are theyimplemented?
(43:06):
Are they implemented fairly?
Are they implemented in the waywe you know, demonstrated for
you where just missing is afailure and that language is
used and, which is verydemotivating, that the world is
variable by its very nature thenI think they're pretty good
(43:30):
guides.
If you use them rigidly andstrictly, I think they can be
draconian, painful anddemotivational.
And I think part of the talentof a decent manager, a decent
director, a decent board is togo right.
What are we going to measure?
How are we going to measure itand what is our style going to
be in doing this?
(43:52):
Because we don't want it to besomething which restricts us and
demotivates people and ends upbecoming a cost.
Because if you get some ofthese things wrong, as we can
see it, is going to be costly.
Speaker 1 (44:05):
It is fascinating and I'm a bit aware of my brain's
whirring, and whirring is theidea of what we can't see you
know, and I'm thinking of sportand how advanced sport is and
continues to advance.
I'm thinking some of thepost-olympic interviews of
athletes and you know that ideaof continual.
I think you called it somethingearlier about this continual,
(44:26):
continual improvement orwhatever.
There was a did you call it tqm?
Something about continuousimprovement and the way that's
fed back you don't mean thetriple bottom line no, there was
something about continuousimprovement.
Okay, objectives and key results.
No, it was tqm and I wrote itdown.
But the idea that in sportwe're looking for, you know,
little gains, little things.
(44:47):
The bit that I'm sort of stuckon is that the way sport
advances and improves, thatlearning and growth into
performance, which isn't justthe goal, it's the team effort,
all of that.
I think business has a lot tolearn and could take some of
those attitudes and measuresinto business, of how you
measure performance, translatingthem, which is very hard to do
(45:07):
because sport is, you know,elite athlete and we're talking
very much non-elite humans in inmany roles and yet we want more
out of them well in researchingthis, I think.
Speaker 3 (45:19):
The other thing which I think we must come back to is
what we started the podcastwith targeting how do you target
and how do you manage targetsand Jeremy played an interesting
senior person talking about howthey all got together and used
some kind of secret method tobring together the targets to
(45:42):
then impose them upon theiremployees.
Targeting is a very, verydifficult and, in some cases,
dangerous pastime.
Speaker 1 (45:52):
I think what you've proven is that it's almost
becoming the most basic poormeasure of performance that
exists.
Speaker 3 (46:00):
Yeah, because it is a guess.
It is an educated guess always.
Speaker 1 (46:05):
And whether I hit or miss, my performance may be
wonderful, it may still be good,but technically it was 500 quid
off or whatever it was.
Or you know why is it a miss?
Speaker 3 (46:16):
Because somebody stuck a different number in a
box and the funny thing abouttargeting is that sometimes,
especially when it comes tosales targets, sometimes people
just don't want to buy when youwant them to.
Speaker 2 (46:28):
sometimes people just don't want to buy when you want
them to.
Speaker 3 (46:30):
I remember when we do training sometimes we say look,
there's three things thatyou've got to answer for your
customer.
Why should they buy thisproduct, why should they buy it
from you and why should they buyit now?
And that's the key thing hereSometimes now doesn't suit me.
I may like the product, I maylike you, but I might want to
(46:51):
buy it next month and that mightnot suit you.
It's still a sale.
But it's funny how sometimes wego well, that's a failure.
No, it's not.
They're going to buy.
It's just a perception of howthat may or may not work, so
interesting.
Speaker 1 (47:07):
It's great, great topic.
Speaker 3 (47:08):
Thank uh it's a pleasure dived in there and we
will return to this at somepoint.
What I think I'd love us to dois come back with a new episode
on targeting at some point andhow that's done, because I think
that is it's almost.
Speaker 1 (47:22):
What could the new target even be in light of all
these other measures?
But the other one I'minterested in is how do you
measure the application oflearning to make any attempt to
hit those targets?
Yeah, I suppose the sadness ofthe integrity around it.
What was the Sophocles quoteyou found last night?
It's something like to failwith integrity is far better
(47:45):
than to achieve with fraud.
Speaker 3 (47:47):
I think it's very interesting that we're talking
about Sophocles Jeremy while I'mlooking this up, here we are.
Who was Sophocles Jay?
Speaker 1 (47:56):
He was a Greek he was .
He walked around, didn't wearmuch.
Speaker 3 (48:00):
No, sophocles was a playwright, he was the Greek
Shakespeare.
Okay, ancient Greek ShakespeareWas he?
Thank you?
Yes, he was.
And he, he said this ratherfail with honor than succeed by
fraud.
There you go lovely, there wego wonderful.
On that bombshell, we'll leaveyou.
We'll see you for anotherpodcast soon, but in the
(48:22):
meantime, thank you forlistening.
Cheery bye, thank you.
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