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The right mix of metrics

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in Leaders & Managers,Management Training

by Morey Stettner

After AnnTaylor Stores installed a performance measurement tool for its employees in 2007, all hell broke loose. If you read the recent front-page article in The Wall Street Journal, you know what I mean.

The system evaluates each salesperson on average sales per hour, units sold and dollars per transaction. The top producers (based on the system’s criteria) get assigned to work the busiest hours.

Predictably, employees rebelled. Well-liked salespeople who invested more time helping customers and cultivating long-term relationships fared poorly in the new system—and some quit. Others found that after one of them greeted a shopper, a co-worker would try to steal away the customer to make the sale.

It doesn’t take a genius to figure out that AnnTaylor’s performance metrics were misguided. You don’t want to create measures that penalize outstanding workers and cause employees to compete ruthlessly with each other for every customer.

While pondering this cautionary tale, I read an article in Fortune about Home Depot. Under its former CEO, Bob Nardelli, store managers were measured on 30 metrics—none of which involved customer service. The new CEO, Francis Blake, uses just eight—one of which relates to customer service survey results.

You can probably figure where I’m going with this. To manage effectively, you must measure what matters. In an age when customer service can give your organization a competitive advantage, that’s surely worth tracking.

Data-driven managers serve a vital role. But if you get too caught up in the numbers—and fall in love with software programs that treat performance measurement as an exercise in pure analytics—you almost guarantee that morale will plummet and the best people will leave.

Bottom-Line Idea

Just as the snappiest advertising jingles can lodge in your head, think of fun rhymes that help employees retain key information. For example, some welders who restore metal antiques learn the catchphrase, “A before O or up you’ll go.” That reminds them to use acetylene before oxygen or the tanks might explode. A little humor can actually make your rules fun to follow!

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