December 10, 2019

by: Sheela Nimishakavi

If you’re like most nonprofit professionals, you probably did a double-take after reading the title for this episode. Now before I lose you, I’m not suggesting that you stop measuring progress. All nonprofits need strong metrics so that we can measure progress toward our strategic goals and make sure that our programs serve their intended purpose.   

But, in a recent Harvard Business Review magazine, there was an article titled “Don’t let metrics undermine your business: an obsession with the numbers can sink your strategy” in which the authors considered how metrics could take businesses further away from their strategic goals. And, they actually talk about how metrics were one of the driving forces behind the Wells Fargo scandal.

Naturally this article piqued my interest because as we all know measurement and program evaluation are hugely important for nonprofits. We need data for grants, donors want to know that they are supporting effective programs, and our boards and supervisors want progress they can measure.

So are metrics good or bad? The answer is, it depends.

What the heck are these Harvard Business Review guys talking about?

The authors of the Harvard Business Review article, Michael Harris and Bill Tayler, describe the relationship between strategy and metrics as: “Strategy is abstract by definition, but metrics give strategy form, allowing our minds to grasp it more readily.”

The authors of this article go on to say, “But there is a hidden trap in this organizational architecture: a company can easily lose sight of its strategy and instead focus strictly on the metrics that are meant to represent it.”

In the nonprofit world, this translates to implementation of our strategic plan. After drafting up strategic goals, staff are tasked with action plans for implementation and measurement. Metrics are used to gauge progress towards the organization’s strategic aims.

The problem with metrics occurs when, naturally, staff focus on the piece that they are responsible for implementing and measuring, instead of focusing on the strategic aim. This phenomenon is so common that it has a name: surrogation.

Defining the surrogation phenomenon

Surrogation is defined as “the behavioral tendency to replace strategy with metrics.” Strategic aims are what move your organization closer to the vision of your nonprofit. Objectives clarify how you will accomplish the strategic goal, and metrics are used to gauge progress on these objectives. As you can see, metrics are two steps removed from strategy and this is where the problem lies.

Surrogation occurs when an organization’s strategy and metrics are not aligned or are poorly aligned. Press play for an example of how this looks in real life.

Another reason organizations might fall vulnerable to this phenomenon of surrogation is if there are incentives or pressure to achieve the metric. In the nonprofit world, the bigger issue is probably the pressure staff feel to achieve their metrics, especially when funding is involved.

Under this kind of pressure, staff can put their blinders on and really focus on achieving those numbers, which can unintentionally hurt progress on the organization’s strategic goal. Press play for an example of how this plays out in real life.

Safeguarding against surrogation

The authors offer three solutions for safeguarding against surrogation. First, they say “get the people responsible for implementing strategy to help formulate it.” Based on their research, they found that simply talking about strategy within teams was not enough.

The best way to ensure strategy is a focus is by involving those who are responsible for implementing the action plans in the formulation of the strategy. Since they were involved in the process of creating this strategy, staff will remember it but also they will have some skin in the game in achieving this aim because they came up with it.

The authors also suggest loosening the link between metrics and incentives. In terms of relieving the pressure that staff feel to achieve these metrics, which I personally think is a bigger deal within nonprofits than many may realize, I think the best way to combat this is for leadership to put things into perspective so staff don’t distort their efforts due to this pressure.

Lastly, the authors suggest that organizations use multiple metrics for each strategy. Specifically, multiple metrics should be used in a coordinated fashion.

Press play to hear two additional strategies for safeguarding against surrogation.

In conclusion

The authors of “Don’t let metrics undermine your business” contend that if you’re using any kind of performance metrics, surrogation is happening at your organization.

It’s totally fine if your organization has any or all of these issues. With the emphasis on data that has taken over nonprofits in recent years, it’s expected that surrogation exists within your nonprofit. It’s not the end of the world! But by becoming aware of it, you can get to work on readjusting your organization’s focus.

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