Is it a metric or is it a goal?
Charles Goodhart, a British economist, said “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” This has become known as Goodhart’s Law, and it’s usually phrased as “When a measure becomes a target, it ceases to be a good measure.”
Large organizations often make the mistake of basing goals on metrics. In pursuit of share price, quarterly returns, market share, or nebulous criteria like Net Promoter Score, they lose sight of the things that actually help them sustain the business.
Leaders who take care of their employees, invest in their facilities and share plans for the future show commitment within the company. This is the most effective form of motivation for employees to pursue continuous improvement in product quality and customer service—the most reliable drivers of long-term success.
The Engineer’s Guide to Authentic Leadership has several examples of this idea in action. Our interviews with Dianne Chong and Cliff Anderson are favorites. And Ken Iverson applied these principles at Nucor to help the company survive a recession without any layoffs.
Next time, we’ll show how this idea can inspire policy. Watch for it!