What Gets Measured Gets Managed: The Power of Good Metrics

The following is adapted from The Rack We Built.

When I worked at the managed hosting company Rackspace, we lived and breathed a set of core values that kept us on track: offering fanatical support, embracing change for excellence, favoring substance over flash, and treating other Rackers like friends and family.

But before you start thinking that Rackspace hit a bull’s eye with every core value, let me set the record straight. We had one utterly meaningless, downright fake core value: passion for our work. What does that even mean? Passion is subjective; how does it provide direction to employees on the front lines serving customers day-to-day? And honestly, wouldn’t every company want to say they are passionate about what they do? 

How does that core value help employees do their jobs or make decisions? The point is, it doesn’t, and that’s okay. Most companies include one or two fallible core values. They fall into this trap because they think that’s what people want to hear. 

You might be familiar with the phrase, “What gets measured, gets managed.” If you want your company to be well managed—and to actually live up to the core values—they have to be real, actionable, and most importantly, measurable. The right core values can help you build a thriving company culture and a successful business, but only when have the data to show that you’re living up to them. 

Values versus Beliefs and Aspirations

Core values are not the same as simply being a good human. All too often, companies decide that “nice” traits like passion, honesty, or diversity are core values. In fact, those are just questions of basic ethics and belief. While you may hope that your employees are all honest and kind, you can’t take direct action to implement those values. For example, you would never start an Honesty Department at your company.

Whenever you try to introduce an aspiration belief as a core value, it’s confusing and hard for your employees to translate into concrete, day-to-day behaviors. Real core values can be measured, and it’s hard to measure a belief. That’s why most companies track metrics or data of some sort. If you’re not sure where the goal line is, how do you know if you’ve ever scored a touchdown? 

 So, before I even get into what kinds of metrics work best, take a second and evaluate your company’s core values. If your company has a fake core value, I give you permission to kill it right now. Put a big red marker through it and have one less core value. Trust me, no one will notice, and it will also send the signal that your core values are more than just pretty words on the conference room walls.

Metrics Connect an Employee’s Tasks to the Company’s Goals

Without metrics, you have people exerting a tremendous amount of energy into tasks, but who knows whether those tasks are important and contributive to the company or not? Metrics allow you to connect an employee’s tasks to the goals of the company. 

Good leadership is essential in setting and measuring qualified metrics. You have to give people the right metrics, look at them, and see what story they are telling you. For example, Rackspace measured fanatical support in a couple of ways. First, we asked the traditional question: are our customers staying and growing? There were metrics for new revenue, upgrades, downgrades, churn, and net revenue. 

Then Graham Weston, one of Rackspace’s founders, found Net Promoter Score (NPS), which is the ultimate loyalty metric. NPS asks customers a simple question: on a scale of zero to ten, would you refer Rackspace to a friend or colleague? NPS was the true measure of fanatical support and required our customers to put their reputation on the line. The nuanced, analytical tool gave us great insight into how the customers viewed us—I thought of it as X-ray vision into our customer base. 

You need metrics because people need to know what scoring a touchdown looks like on an individual level. Decide early on the metric you’ll use to measure your core value and communicate it to your team.

Seeing Metrics in Action

Lazy metrics are almost as bad as having no metrics at all, so it’s worth showing how metrics work when they’re well defined. When I started at Rackspace, I got assigned almost one thousand customers, a completely unmanageable load. 

Someone told me, “Lorenzo, we have noticed that when we talk to customers, they stay longer. So, we want you to call all your customers.” It was a disaster. To say I was giving them all fanatical support by randomly calling them could not have been more untrue. 

Once our company was divided into teams, we started to refine and introduce more specific metrics to measure whether I was performing well or not, which was a way better strategy than just calling them for no reason. The first and most important metric was churn (the rate at which customers stop doing business with you). My job was to keep customers happy and loyal for as long as possible. As a team, we also had net revenue metrics to measure our growth. 

I learned that the best leaders look at multiple metrics as a guide. When leaders get lazy, they see tasks as “pass/fail.” Did you meet your quota? How many customers did you reach out to? A good leader would look at an account manager’s performance and say, “Your churn is really high, but your customer loyalty metrics are fantastic. The amount of return credits you’re giving is really low, and your customer base is growing.” 

Strong leaders know a discerning metric tells you a good part of the story. Your job is to interpret the full story either with that metric or others, plus your knowledge of the person and their job.

Make Your Core Values Actionable and Recognized

Core values shouldn’t be lip service or simply words painted on a conference room wall; they should be actionable, measurable, and recognized when lived by employees. They give you an opportunity to point out what’s being done and celebrate with the team when they’re done well. 

When someone works over the weekend to show their fanatical support to a client, celebrate them. When someone goes out of their way to help other team members meet their goals, celebrate it. Metrics aren’t just about ticking off some “achievement” box. They’re about figuring out who your company’s heroes are and inspiring others to live the company’s values the same way. That’s when you know you’re all working toward success.  

For more advice on metrics, you can find The Rack We Built on Amazon.

Lorenzo Gomez was one of the first one-hundred employees hired at Rackspace. During his nine years there, he served as a team leader and senior manager, pioneered the account manager/business development consultant split, and finished as a director of project management. As one of the leaders in creating San Antonio’s tech scene, Lorenzo deployed the principles he learned at Rackspace as CEO of Geekdom and chairman of the 80/20 Foundation. In addition to his work, Lorenzo has authored two Amazon bestsellers: The Cilantro Diaries in 2017 and Tafolla Toro in 2019.