Trust, Our #1 Competitive Advantage
I know that I write a lot about lagging versus leading indicators when it comes to people metrics. And although I set myself up for an apology, I’m not going to make the right one. I have a sample thesis. As a leader of an organization, my main priority and focus are on my company’s forward motion.
I want to know every day that we’re increasing the value of shares for shareholders. The best way to increase the value of shares is by increasing revenue while lowering expenses. And so, I track our progress towards those objectives. That has formed the basis for executive management metrics over the last hundred years.
We measure and report on our organizations’ performance, quarter by quarter, up and to the right, hopefully.
Today’s challenge will not be to forecast future performance metrics accurately but adapt and address changes inside their organization faster than their competition. And the first step is to start treating lagging performance indicators like we do the weather forecast. Important, worthy of conversation, and by the time we’re talking about it, it’s already too late.
Today’s leaders must begin looking at the leading indicators that are driving their businesses. Stop paying attention to things that have already happened in their companies and start paying attention to what is going on right now, today, and what will happen three months from now based on current trends and patterns.
In a knowledge-based economy, the actual value of any organization is its people. The leading indicators of organizational performance are primarily people-based metrics. To drive performance by measuring leading, people-focused metrics, we must first stop measuring people metrics as if they were lagging indicators. Annually or quarterly based surveys, with low participation rates and long lead times for analysis, have been the norm in human resources for the past 100 years. Today, we have the capacity by combing leading behavioural science, industrial-organizational psychology, machine learning and artificial intelligence to drive real-time people metrics without ever relying on surveys.
By measuring leading indicators in people metrics in real-time, we can then begin to draw apparent connections between our people and our organizational performance, but in a way that makes my organizational performance actively influenceable at the moment.
For example, Patrick Lencioni says in his bestselling fable, The Five Dysfunctions of a Team, “Not finance. Not strategy. Not technology. It is teamwork that remains the ultimate competitive advantage…”
For this reason, the absence of trust is the foundational team dysfunction in Lencioni’s hierarchy. Therefore, as Lencioni’s thesis would go, the most important leading indicator of organizational performance is trust.
How on Earth do you measure trust in real-time?
At Hölmetrics, we measure vertical, supervisor/employee trust, and horizontal, peer to peer, trust by looking at the free flow of internal communication and how open people are to express themselves. By measuring trust, we empower leaders to build trust within their teams, allowing them to measure progress. By measuring the trust within teams and within organizations, you now measure a leading indicator of organizational performance that can be improved in real-time and results in improved performance metrics at the end of the quarter.