Metrics for critical Behaviors, rather than just final Outcomes

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This quote from Gandhi (similar to one made centuries earlier by Lao Tzu),  is the typical formulation we learned in Psychology 101: beliefs precede attitude, which precedes behavior, and the conclusion typically arrived at is that in order to change behavior you need to get to the root cause and change beliefs.

In the real world we tend more often to see the opposite formulation, whether it's Tony Robbins or your HR department: focus on the behavior, it’s the only thing under your control. Change the behavior, and attitude and beliefs may eventually fall into line, and if they don’t, no matter – behavior is what matters.

I once applied this latter approach with a former staff member of mine, someone brilliant at finance (customers and sales reps alike loved them), but lacking a bit on the interpersonal skills when it came to dealing with internal authority.  I was quite transparent in my intervention – I stated frankly that I’m no trained psychologist,  that I didn’t care what the attitude issue might be, that I was going to take the behavioral approach, so how about we work on that.  I made explicit the specific behaviors that needed to change, offered my suggestions as to how to begin and what alternatives might work, and much to my surprise, less than six months into our experiment, it worked!

This topic of behavior modification came up during a discussion I was having about a presentation to us by Lora Cecere, who, along with my SAS colleague Charlie Chase, recently wrote “Bricks Matter - The Role of Supply Chains in Building Market-Driven Differentiation”. Lora had remarked about how relatively unchanged our overall corporate inventory levels have been despite decades of focus on inventory control and management.

My own particular observation on this topic was that, as a finance manager, what I want out of a supply chain or inventory optimization initiative is (near) PERMANENT improvement.  It does me little good when it comes to cash and working capital management if the inventory improvement from four to six turns is not sustainable, and I am forced soon enough to refinance the working capital.

What this means in practical terms is that there needs to be some permanent change in behavior(s) somewhere along the line, which as I got to thinking about it, can be hard to specify and pinpoint, and is clearly a most difficult component for any change management initiative.

What’s the behavioral change when it comes to improving inventory turns?  Either lower safety stock levels or faster cycle times, I would think.  If the organization is unwilling to commit to either of these, perhaps for fear of adversely affecting customer satisfaction and revenue, then what you have is definitely not an inventory improvement initiative (which might be okay, you just to be clear about the revised customer-centric objective).

This is where our typical focus on outcome-related metrics comes back to haunt us.  I’d like to propose that, wherever reasonably possible, we should PAIR our metrics: one for the desired outcome, with one for the most significant behavior we think is causally related to that outcome (or more likely, multiple pairs of metrics depending on the applicable operational function, varying the behavioral element to best suit that function, while holding the outcome measure constant).

Take this example, one of my favorite SAS success stories – Maine Medical Center.  What they did, using SAS Strategy Management, was to focus on one particular behavior, adherence to treatment protocols, that they thought might most influence their outcome objectives of patient health and financial cost.  The baseline situation was that in only about 60% of all admitted patients, once diagnosed, did the staff follow the prescribed treatment protocol.  By simply indicating, via regular and clearly communicated metric reporting, how important this behavior was, compliance rose to 100% in short order.

Monthly meetings with the resident medical staff lamenting the high costs, long stays, and unimpressive patient health outcomes, or berating the staff to “do better” or “work smarter/harder” on objectives that are only distantly connected to their daily activities, would not have been nearly as effective, if at all.  Focusing instead on the behaviors under their immediate control, however, was the winning combination.

I previously noted in this post, “Metrics for the Subconscious Organization”, to consider what sort of metrics and performance measurement system your employees feel they need to do their jobs – not just the metrics you need in order to set and refine corporate strategy.  Now I can offer more specific advice on this matter – the metrics they need will be BEHAVIORAL metrics, measuring not some vague, enterprise-level strategic goal, but the very things they do day in and day out that become the levers that ultimately affect those strategic objectives.

In some cases, as with Maine Medical, these behavioral/operational metrics will be obvious, but I suspect that in most cases, it will take hard work, analysis, and insight to work backwards to those operational causes that matter.  You will need to identify those that correlate strongly with the desired outcomes, and also sort out those that are working at cross purposes with each other across the organization.  But as with my experience with my wayward employee, you just might surprise yourself.  Focus on changing behaviors first, outcomes second, and culture last, using culture not so much as a catalyst for behavioral change, but as a vision and reinforcement for the new world order.

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About Author

Leo Sadovy

Marketing Director

Leo Sadovy currently manages the Analytics Thought Leadership Program at SAS, enabling SAS’ thought leaders in being a catalyst for conversation and in sharing a vision and opinions that matter via excellence in storytelling that address our clients’ business issues. Previously at SAS Leo handled marketing for Analytic Business Solutions such as performance management, manufacturing and supply chain. Before joining SAS, he spent seven years as Vice-President of Finance for a North American division of Fujitsu, managing a team focused on commercial operations, alliance partnerships, and strategic planning. Prior to Fujitsu, Leo was with Digital Equipment Corporation for eight years in financial management and sales. He started his management career in laser optics fabrication for Spectra-Physics and later moved into a finance position at the General Dynamics F-16 fighter plant in Fort Worth, Texas. He has a Masters in Analytics, an MBA in Finance, a Bachelor’s in Marketing, and is a SAS Certified Data Scientist and Certified AI and Machine Learning Professional. He and his wife Ellen live in North Carolina with their engineering graduate children, and among his unique life experiences he can count a singing performance at Carnegie Hall.

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  1. Pingback: Metrics – Too many different ways of keeping score - Value Alley

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