all kpis are derivatives of revenue or cost

Every metric, objective or goal should be driving revenue or reducing cost. If it isn’t, it’s not something a business, product or team should be pursuing.

I often see this concept interpreted incorrectly. Especially when it comes to areas like employee happiness, satisfaction and wellness - metrics like net promoter score (NPS), employee satisfaction, feedback frequency, etc. I’ll call these “culture metrics”.

There’s two ways that people often miss the mark here.

The obvious one is the leader that doesn’t value their employees. “Employee wellbeing is not important - only the bottom line.” This is the stereotypical bad boss we’ve all seen on TV and maybe even in our own workplace. Their belief that company performance is more important than the people that make up the company has a negative impact on both revenue and cost.

The math here is simple: it costs money to hire someone and losing an employee is really expensive. There’s a hard cost of a recruiter fee or having an internal recruiting team. There’s the opportunity cost that your existing staff is spending on interviewing candidates. There’s the onboarding cost that can take weeks of low or no productivity. Culture metrics may seem woo-woo, but they are leading indicators to real, financially impactful metrics like turnover and retention. Not to mention, a high NPS leads to employee referrals that substantially reduce the cost of hiring - aka growth.

The less obvious one is the leader that finds it morally distasteful to roll up culture metrics into financial metrics. They might look at the headline of this essay and say “profits aren’t the only thing that matter, people matter too!” But that perspective is equally as toxic as dismissing culture metrics altogether. Investment in a person’s wellbeing isn’t devalued because it aligns with a company’s mission. In fact, that alignment is necessary for the wellbeing of the employee: you can’t pay salaries or health insurance premiums without it.

An amazing company culture can only exist if the company exists, and that requires making more money than you spend. And in order to bring that culture to more people, the delta between revenue and expenses (aka profit) has to afford it. It’s critically important that every measurement rolls up into revenue or cost, but it’s also critically important that revenue and cost aren’t the only measurements.