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Mike Figliuolo

Management

The Importance of Setting Quantitative and Qualitative Goals

Integration can provide a more complete picture of overall performance

Published: Tuesday, January 30, 2018 - 13:03

When you set goals, there’s commonly two types: quantitative and qualitative. By setting both types of goals for your organization, you can achieve a balance of results driven by people focusing on the behaviors that matter.

Quantitative goals and driver metrics

When you set quantitative goals, they’re going to focus on things like financial results, operational metrics, customer dynamics, or quality. You can typically track these types of goals pretty easily. That doesn’t mean you don’t have to be thoughtful about these metrics. A focused set of critical driver metrics is more valuable than a broad set of less relevant metrics that your team can’t affect. Let me share an example.

Let’s imagine you have a sales team. The overall goal for the division is to grow revenue. The driver metrics that affect revenue are price and volume. We’re talking about the sales team here. They have no control over product price. If you just give this team a revenue goal for their business unit, it won’t focus their efforts appropriately. It could lead them to argue or complain about pricing policy. That’s just not productive. The business unit also doesn’t control customer service. Using total revenue for this team’s goal isn’t fair because they don’t control all of it.

When you set the sales team’s goal, focus their goals on what they can control. In this case, it’s new sales volume. Think about that sales team going out and trying to get more customers. The driver metrics, for their ability to acquire customers, are things like the number of prospects they talk to, the number of sales calls they conduct, and the conversion rate from a prospect to a paying customer. By focusing on these driver metrics for this sales team and focusing it on what they can control, you’re going to get better results.

When you think through your metrics for your business unit, think through the drivers. Consider the team’s ability to control those drivers. And make sure the goals you allocate to them are focused only on that which they can control. If you build your goals this way, you’re going to get a more concrete set of goals that your team feels empowered to actually drive.

Qualitative goals

In addition to setting quantitative goals, which are pretty easy to set, a lot of times you’ll have to set qualitative goals. You can look at things like major project completion or milestones in completing that project. Milestone goals are relatively easy to measure and focus your team on driving a specific outcome. Just be sure you have counterbalancing goals like quality to prevent the team from cutting corners to hit a time-based milestone goal.

Sometimes, you want to measure things that are difficult to measure. You’ll have to infer from indirect quantitative metrics whether you’re making progress on that desired outcome. Things like culture are hard to measure, but that doesn’t mean you don’t have to measure it. You can construct a set of indicators that let you know if you’re moving culture in the right direction. You can look at things that’ll tell you if you’re succeeding in reaching that higher-level end goal.

Let me offer a couple of examples.

The culture conundrum

If we’re looking at culture, maybe we create a balanced scorecard to measure our performance on cultural improvement. We want to be a top place to work. We want engaged associates. Those outcomes are hard to measure. But, we can look at quantitative metrics to tell us how we’re doing. Here are a few metrics we can use to assess how well we’re building a great culture:
• We can look at associate retention to see how many people stay in the organization.
• There are measures out there like a Gallup Q12 poll that can tell you in which direction your culture is moving.
• You can look at things like absenteeism. You can measure if somebody’s not at work, and that can serve as an indicator of whether or not you have a good culture. If absenteeism is running high, there’s clearly a problem at the office.
• You can look at referral hires. Are people telling their friends, “Hey, you should come work here; it’s a great place to work”?
• Some organizations have kudos programs where associates reward one another for doing something great. How many people are using that program?

When I look at all of these quantitative metrics together, it gives me an indicator of whether my culture is strong or weak, and if it’s going in the right direction.

Assessing the big project

You may have situations where you’re doing a big project. Qualitative goals can help you assess performance here. Setting qualitative metrics is the same as setting quantitative ones. Understand the desired high-level outcome you’re trying to achieve. Think of drivers that point toward that outcome and measure them.

Let’s look at implementing a large technology system. We may take an approach where we set goals based on milestones. We may set goals around use-case completion, user acceptance testing, and training completion. When you have these goals in place, you can assess whether you’re hitting your milestones to get the project done.

Tying quantitative and qualitative measures together

Qualitative goals can really help you understand how your organization is doing. Pay as much attention to them as you do to your quantitative goals. Integrating quantitative and qualitative goals can provide a complete picture of your organization’s overall performance.

First published on the thoughtLEADERS blog.

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About The Author

Mike Figliuolo’s picture

Mike Figliuolo

Mike Figliuolo is the author of The Elegant Pitch and One Piece of Paper. He's the co-author of Lead Inside the Box. He's also the managing director of thoughtLEADERS, LLC—a leadership development training firm. He regularly writes about leadership on the thoughtLEADERS Blog.