Behavioral Metrics 101: Getting the People Side of Your Business Right

Behavioral metrics is just a fancy way to say, "Measuring the people side of business."

If the concept is unfamiliar, it's because behavioral metrics rarely make it to a P&L. Sure, in most well-run organizations we measure the costs of turnover, employee engagement, and leadership development, but let's take it a step further. For example, think about measuring the difference between the personality profiles of high-performing franchisees and those unable to make the grade. Why are some capable of meeting or exceeding expectations, but others aren't?

By knowing the financial and behavioral gaps that exist between best and worst performers, franchisors can improve their selection of the right franchisee--and influence the performance of existing franchisees. Whatever can be measured can be managed.

The 80/20 rule

Since entering the New Millennium, franchisors have become more interested in applying tools that measure personality and behaviors. This is especially true for franchisors that fall prey to Pareto's Principle, otherwise known as the 80/20 rule. Here, franchisors want to know why 80 percent of royalty income is often generated by the top 20 percent of franchisees. As frustrating as this is, it becomes even more so when the mechanics that cause or predict this elude our grasp. Franchisees make the same investment, receive virtually identical training, are given similar locations and build-outs, yet royalty revenue is all over the place. This gap can be summed up in one phrase: the power of personality.

Qualities of an ideal franchisee

Consider this simple exercise. First, list about 20 qualities that would make for an ideal franchisee, or work from this list if it fits:

Second, look at the list of qualities and determine which ones are skills and which are behaviors. The difference: skills are learned in school and behaviors come from our personalities. More than likely, the majority of the list will include behaviors. Going through these two simple steps makes it easier to see why behavioral metrics are helpful. Most of what franchisors seek in franchisees lies in the essence of their personality.

Mastering the gap

This five-tier performance pyramid represents a cognitive process for determining who you need to be to achieve results in a particular role or on a given project.

• Tier I represents the personality of the prospective applicant, existing franchisee, or corporate employee.
• Tier II represents the job behaviors, how a person needs to act at work. In short, Tier II is all about the job or the position. The list from Step 1 above shows behaviors of the Ideal Franchisee. When selecting a prospective franchisee, an applicant for a corporate position, or when dealing with an existing franchisee, it's critical to know how wide the gap is between the individual's personality and the behavioral requirements of the position. The wider the gap, the more difficult the job becomes, and the more energy required for completion.
• Tier III denotes the actions necessary to do the job. For example, these actions can include calling on prospective customers, distributing samples, doing X number of presentations, selling retail, or closing new business.
• Tier IV signifies the metrics we use to measure performance. How many presentations did they do? How much did they sell? How many samples did they distribute? When we drive results, we ultimately achieve our Tier V results.
• Tier V represents the results, or outcome. For many franchisors, the best Tier V results come in the form of the Ideal Franchisee. When a franchisee matches the behavioral requirements of the position, job performance is typically stellar and usually carried out flawlessly. It can really be a thing of beauty. However, it works both ways. The wider the gap is between a franchisee's personality and the behavioral requirements of the job, the more energy necessary to accomplish the job. Those with the wider gaps go home at the end of the day feeling emotionally drained because they've spent the day going against their natural grain.

By creating a cognitive approach to succeeding in the role of a franchisee, people both with and without the preferred personality for the position can accomplish similar results. Just remember : If you can't measure it, you can't manage it.

Bill Wagner is CEO and co-founder of Accord Management Systems in Westlake Village, Calif. The firm works with franchisors and other franchising professionals to get the people side of business right through behavioral assessments. Exceed your own expectations: send an email to info@accordmanagementsystems.com with the subject line containing the title of the position you want to measure. We will send you a link for an online assessment. Enjoy the ride--and Master the Gap!