Leading at Scale (Idea #4): Develop relevant, impactful and mission-aligned metrics
What gets measured gets done. What makes this so? Measuring focuses attention as it gives you feedback on whether you are achieving what you intended to achieve or not.
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That said, it’s important leaders measure what they truly intend to measure within their organisations otherwise they will be working with the wrong signals.
There are so many variations of key performance indicators (KPIs) used in organisations today – OKRs, etc. Many leaders have never really asked whether these are the right metrics they should focus on or not.
The metrics are mostly focused on what the organisation will like to achieve for its shareholders as it seeks to grow and serve the community.
Given that the organisation intends to serve the community then this service must always be evaluated. More often than not this is not done.
Are your metrics fit for purpose?
Organisations also need to develop metrics that reflect their contribution to the community. None of the metrics derived directly from financial statements clearly demonstrates the impact of an organisation in the community.
This failure led to the Triple Bottom Line idea that emerged several decades ago and more recently, Environmental, Social and Governance (ESG) Reporting.
These metrics, which focus on people and communities, among others, assist organisations to measure their impact on society and the environment. It originated from the extractive industries.
Today, this has been adopted by many multinationals; however, there is still room for improvement.
Many service-oriented organisations do not pay attention to these because they believe their activities do not directly impact the environment in any negative way. And after all, they are providing a service and not digging up the land.
Integrated Reporting as a Governance Imperative
As a Fellow of the Institute of Directors and Faculty member of the Directorship Education Programme for Qualifying Directors, I have been teaching directors and potential directors to adopt the Integrated reporting framework for over five years now.
Every cohort of directors agrees that the framework is the right approach to reporting about the performance of an organisation.
The challenge is for the leadership to embrace the discipline of Integrated Reporting. In the words of the CEO of Coca-Cola HBC, Dimitris Lois, “Integrated Reporting reflects how a company thinks and does business.
This approach allows us to discuss material issues facing our business and communities and show how we create value, for stakeholders and society as a whole.”
Expand the universe of metrics to align with the mission of your organisation:
Today, leaders and organisations that lead at scale for impact measure what matters to the community and stakeholders. They have a firm belief that they rise by lifting others.
Hence, they develop a whole new set of metrics to track the impact they seek to make in the marketplace and community in line with their organisation’s mission or purpose.
They are also very disciplined in the application of these metrics as demonstrated by several organisations such as Ashesi and mPharma.
Mission-aligned metrics: Case Study I: Focus on Stakeholder Sustainability
Here, let us review the example of the CEO of Mpharma, Gregory Rockson, who has been partnering with many small pharmacies and big pharmaceutical giants to build “an Africa that is in good health”.
Gregory has decided to develop and focus on critical impact metrics that enable Mpharma to properly evaluate the change they seek to create in the community.
Metrics such as the number of patients reached, savings made by patients and growth in the business of partner pharmacies, etc. are published regularly and publicly.
In his words, “I judge our performance each year through the lens of a mutti pharmacy.” You cannot judge your performance by your bottom line when you have espoused a mission to serve the community.
It is disingenuous. Revenue, profits, return on equity and market share, etc., are great indicators, and they matter, however, they do not capture the full story of the organisation's impact on the community.
Mission-aligned metrics: Case Study II: Focus on Disciplined Application
If Ashesi wants to develop ethical entrepreneurial leaders, then they need to measure how this translates into everyday life in the community.
Hence, the leadership team makes the effort to track improvement in ethical behaviour in the community regularly. They do not look appealing but the President of Ashesi University presents data on reported incidents of ethical breaches.
He does this because it matters to the mission of Ashesi. They also measure the number of students engaged in entrepreneurial efforts. These metrics are closely monitored just like any other financial indicator and deliberate actions are taken to ensure these metrics are headed in the right direction.
Ashesi is leading a sub-regional-wide effort to redesign metrics for a university ranking system that suits the interest of all stakeholders and society. Reflecting on their approach, Patrick Awuah said, “We are very disciplined about this.”
Adding community-based impact metrics to the financial statement items enables leaders to keep an eye on the ball and focus on what matters to their community and stakeholders.
The community thrives and the business continues to operate as a going concern.
Leadership Reflection and Actions:
I. Assess what you measure now. How do these metrics align with your organisation’s mission and your contribution to your community?
II. Develop unique impact metrics to evaluate your organisation’s impact on the community and communicate your results to your stakeholders.
III. What new approaches might you adopt to make your organisation accountable for the new metrics that have been created to measure the impact in the community?
In the next article, I will share further ideas on how our case study leaders celebrate their progress on the journey.
The writer is a Leadership Development Facilitator, Executive Coach and Strategy Consultant, Founder of the CEO Accelerator Programme, and Chief Learning Strategist at TEMPLE Advisory.
The mission of The Leadership Project is to harvest highly effective leadership practices and share them in a manner that other leaders can easily incorporate into their leadership practice.
If you have got an idea or leadership practice to share, kindly write to [email protected]. Until you read from us again, keep leading…..from leader to leader, one practice at a time.