What Gets Measured Gets Managed

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Management guru Peter Drucker once said, “[only] what gets measured, gets managed.” It’s for this reason that smart leaders take the time to:

  • Find the “key indicators” for operations, sales, customer experiences, etc. so they can measure them
  • Compile the data in a format so key decision makers can monitor the firm’s performance over time
  • Meet regularly to review the trends and make decisions to constantly improve the processes, including developing superior indicators.

David Lancefield, in an article entitled Incentives for a Strong Leadership Culture, observes that this process should also be used to monitor and improve compensation plans. It’s especially invaluable if you’re planning to elevate workers to greater and greater levels of potential contribution to the company. 

Today, more and more companies are adopting RPA, ML and other AI  tools to enable “digital labor” to take on repetitive tasks, “grunt” work and other jobs better suited to computers. By simultaneously enrolling the affected workers in leadership development and “re-skilling” programs, they can assume add significantly more value to the company. Such advancements lead to increased loyalty, retention, and culture improvement – for which new compensation packages may be appropriate. 

Indeed, by monitoring the impact of different compensation plans within and across companies, you may identify superior models that encourage greater productivity and contributions from individuals and/or teams.

Measuring the extent to which bases vs. commission should be used and/or using formulas based on various amounts of contribution by the team vs. individual performance, may allow even faster and more complete growth.  This may not have been an area of focus before, but may be invaluable to measure and manage  in the future. It requires separating the value of work done through digital labor vs. individuals and/or individual and group human capital (e.g., collaboration, teamwork, wisdom/experience sharing, etc.) and understanding the value of incentives which include pay, time-off, flexibility, etc.

If your firm is preparing for the multigenerational, AI, distributed location, human-centric “future of work”, this is something worth looking into.  And if you are, share with us what you’re doing so we can share it with other members of our Presentation Excellence, Vistage, and Age Brilliantly communities.