During a recent meeting with a Hong Kong restauranteur whom I’ve known for many years, the question of business metrics came up. Actually, he brought it up and it really showed what different approaches to business we have. As we sat on the terrace of his popular cafe sharing ideas about a potential joint project, he began peppering me with questions. “So Chris, what’s your estimated return on investment timeline for your new hotel?” “I don’t know,” I admitted. “Well,” he continued, “How about your restaurant revenue per square meter?” “No idea,” I answered honestly. He became more insistent, “What about hourly turnover? Wine sales as a percentage of revenue? Gross margins on food items?” “Dunno,” I shrugged. I wasn’t being evasive, and it’s not as if I have no idea how my business runs, I just look at it more as a labor of love, rather than a game of numbers.
Peter Drucker said, what gets measured gets achieved. So what we want to achieve in our work will determine what we choose to measure. If all we focus on is financial, I believe our business is reduced to a series of transactions. The company rents our behavior at an hourly or monthly wage and we perform certain tasks. The closer our performance matches the company’s expectations, the more we are rewarded.
In companies where people are treated as transactions, they are more likely to treat customers and co-workers in the same way. You see it all the time in high-volume businesses; fast-food, airlines, financial services. We feel we are being “dealt with” versus being treated as human beings. If we measure customer service in terms of does it solve the customer’s problem, then we create a culture of problem solvers who deal with customers.
I realize that this is the most practical and prevalent corporate formula for success. But the standard greetings, robotic attempts at communicating empathy and hollow thank you’s do little toward helping people feel happy. Most customer complaints are because some emotional need hasn’t been met. We didn’t feel appreciated, remembered, cared for or listened to. Most performance-related problems also result from this same lack of relatedness, because we’re too focused on the numbers.
What most people measure are results, because they are tangible. Businesses are about profit and shareholders and growth. Our obsession with quantitative data, creates a transactional culture that trickles down to communities, institutions and families. Students are judged on their performance in terms of test scores & attendance, but no one tests kids for happiness.
We don’t test college students on it, we don’t reward it at work. In terms of nations, only the King of Bhutan has the inspired practice of measuring his country’s GNH (Gross National Happiness) as a leading indicator of the country’s success. I think this is a revolutionary concept. Our measures of success are so narrowly defined, and so dominated by financial results, it leaves little room for qualitative things like feelings.
Scientists don’t like studying feelings because they are so hard to reliably isolate and objectively measure. But it’s the feelings that matter most. People work hard when they’re passionate. Kids thrive when they’re loved. Corporations win when they care.
In talking to my Hong Kong friend, I was more interested in his staff turnover (incredibly high), online customer feedback (uninspired) and most importantly, was he enjoying himself? As I failed to answer his financial questions, he failed to appreciate the relevance of my questions. High turnover is part of the restaurant business, so you live with it. TripAdvisor isn’t valid because anybody can write anything in a review. And was he happy? He took this question as if I were asking his sexual orientation. What does it matter? I’m running a business.
I think too many people take this approach to work in general. They ask, “Am I earning at my potential?” instead of, “Is this the kind of work that inspires me?” By focusing on work that inspires me, I feel more engaged and happy, which I share with the people I work with who (hopefully) are likewise engaged and share their happiness with customers. For most, happiness at work is a luxury; something that happens to us rather than something we purposefully create and share.
Can you run a business on happiness? I believe so. As I said, people work better when they’re happy and this creates a better customer experience, which translates into profits. So instead of focusing on results, we should be focusing on enjoying the experience. If we focus on results, we neglect the critical human interactions that get us there. “Are we having fun yet?” should be our mantra, to replace “The beatings will continue until morale improves.”
I do set challenging financial and other qualitative goals for my business, then I don’t look at them for the rest of the year. We have our marketing & sales plan, product improvement plans and I conduct staff 360 feedback twice a year, which is a better indicator for me as to the company’s health. Emotional satisfaction – happiness, drives business results.
From a great article in Boston.com on the science of measuring happiness:
The patron saint of the happiness maximizers is Jeremy Bentham, the English philosopher who two centuries ago gave the world the ethical theory known as utilitarianism. The theory itself is simple: in any situation, the best thing to do is that which brings the greatest aggregate pleasure or happiness. Bentham imagined a “hedonic calculus”: a systematic reckoning that weighed factors like intensity of feeling, duration, purity and the number of people affected. One of his disciples, Francis Edgeworth, wrote hopefully of a future when utilitarians could use a device he called a “hedonimeter” to simply read out a person’s happiness level.
We do have such a device: it’s called a smile. It’s really easy to walk around and see how many people in your company are smiling at any given time. In meetings, on the phone with customers, by the water cooler. When I failed to see people smiling at work in the past, I realized it was related to the fact that I wasn’t smiling myself. Daniel Goleman’s EQ work shows how emotional satisfaction leads to better productivity through employee & client relationships. These are quantifiable results being driven by happy people.
I’m getting ready to take all 40 of my staff to Beijing as an end-of-year bonus. Every gardener, housekeeper and dishwasher, because they have all done so well this year. I know that because their happiness at work has resulted in great guest experiences that I personally hear about and has contributed to successful financial results as well. But that’s the icing on the cake. Though I’ve lived in Beijing and traveled there a hundred times, none of my staff have ever been. I think I’m as excited as they are to go stand in the cold in Tiananmen sqaure, and relive what it felt like my first time there. Money may not buy happiness, but happiness enriches everyone and in the process makes us rich.