Chief Executives and other senior executives who think that the keys to the kingdom of success and job security is to consistently “make their numbers” — revenue, expenses, contribution margin — may want to consider a reset.
There are a surprising number of CEOs looking for work who did exactly that, at least for some period of time: they made their numbers. But in the end, that was not enough. Based on interviews with some of the aforementioned CEOs as well as executive coaches and other recruiters, I have come to this conclusion:
Sometimes as leaders we cannot get out of our own way. We get locked in (read: fixated) on a certain approach and we quickly forget there is more to successful, sustainable leadership than the object that blinds us — metrics.
In my career I cannot tell you how many times I have heard “if you can’t count it, you can’t manage it.” CEOs and their teams seem to think that they live or die with their numbers. Clearly no executive or manager wants to answer tough challenging questions from their board or the boss about missing their numbers. In some cases this failure to make the numbers could mean the loss of their job so there is plenty of incentive for survival to expend a great deal of energy and angst over the hourly, daily, weekly, bi-weekly, monthly, and quarterly metrics.
When the management-by-the-metrics philosophy arrived on the scene in health care in the 1970s, it replaced an approach that I like to describe as best effort management. The former emphasized a new laser focus on accountability, the latter, I believe, due to a surprising number of hospital administrators across the country who actually took their not-for-profit tax status literally. Not to defend the indefensible but I should point out here that healthcare management information systems at the time were fairly primitive so there was, up to a point, a reason for what today would be considered lackadaisical management. When I moved into healthcare, I did not get my department’s monthly financial reports until the third week of the following month. By then the horse was out of the barn and running loose three counties away. There just were not that many variables — metric points — to be managed or that could be managed in a timely or cost-effective manner.
So, over the years hospitals refined their ability to use metrics to improve performance. They enhanced this management tactic in the 1990s with the introduction of the Balanced Score Card approach that broadened the number of metric points monitored.
But oh how that has all changed today, from daily expense and revenue reports and flex staffing based on census and/or patient acuity, to the number of reportable quality instances that occur within a 24-hour period, we all are held to a higher standard.
This is a good thing, until it isn’t.
What was, and remains, an important accountability tool, has become a be-all, end-all for many CEOs. It has become all about the numbers.
I once heard the minister of a large Methodist church tell his parishioners that anything taken to excess, including religion, is a sin. While I am not qualified to debate the theological basis for his pronouncement, I can say that his statement, when applied to the discipline and art of leadership, is absolutely true.
As I was thinking about this issue I was reminded of a story that a CEO told me. In his annual business plan presentation to his company’s divisional President, CFO and several analysts, the CEO was discussing his emphasis on employee engagement and development. As the CEO explained his strategy, the division’s CFO became noticeably agitated. Finally he could not contain himself and slammed his hand on the desk and with no lack of exasperation ask:
“You do know that we are running a business here?”
Clearly this CFO was a metrics man and he apparently saw this investment in employee engagement as nothing more than an expense that would dilute the unit’s EBITA contribution (and maybe his bonus potential). The CEO saw it as an investment that would ensure sustainable success. Happy, educated and appreciated employees, he reasoned, would help him meet or exceed his ambitious business goals.
He was right, the CFO’s emotional outburst notwithstanding. This CEO’s business unit was number one in the company across every major category, from profits to customer satisfaction.
A balanced approach between the discipline of metrics and employee engagement, it would seem, has real merit. Sometimes we take this thing we call leadership and confuse it with command and control management because it is easier.
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Good leadership is hard. Just as in a successful marriage, it requires a balanced approach for it to survive. If you are only focusing on one thing — the numbers — you can, and probably will, miss the reason your performance is not better than it is.
Leadership is about so much more than numbers. Yes, the numbers are important but CEOs or other senior leaders cannot succeed in a sustainable way using the “strong man” model, surrounding him or her self with compliant workers who will accept the grinding harangues about the metrics and who, more than likely, will not be invested in the success of the boss or the business.
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As the transformation of healthcare moves forward, and as the feds and the commercial payers reduce what they are willing to pay, and as more of the work is shifted to value-based reimbursement payment formulas, a metrics discipline approach will be essential. But we should avoid the temptation to become obsessed with the numbers and ignore the real key to success: our employees. It must be balanced.