The Power of Outcome-Based Management

Help your team work smarter, not harder

Which of these two salespeople would you rather hire?

• Salesperson A, who works 60 hours a week and closes $2 million in business per year.

• Salesperson B, who works 30 hours a week and closes $3 million in business per year.

It’s not a trick question. Anyone should prefer the salesperson who closes 50 percent more business per year, regardless of how many hours they work. While Salesperson A is clearly willing to make a lot of calls, Salesperson B gets better results.

Of course, outside of sales, most leaders don’t evaluate their people based on the outcomes they deliver. Instead, they focus on their inputs—hours worked, marketing campaigns sent, recruiting calls made, or other activities that demonstrate effort but don’t guarantee success.

In fact, relying on inputs to measure performance can be counterproductive. Sometimes employees use facetime to cover for a lack of actual results—and leaders can overlook an underperformer who is always working, because they are mistaking busyness for productivity.   

The best thing leaders can do for their employees and their organizations is set clear professional outcomes for their teams, help them dedicate their time toward hitting those outcomes, and measure their people against those outcomes. This is what I like to call outcome-based management.

How Outcome-Based Management Works

In outcome-based management, managers determine upfront the key metrics that employees need to deliver in order to advance the organization toward its short- and long-term goals. Then, they create a scorecard that clearly lays out those outcomes and tracks each employee’s progress toward them. This is a simple way to evaluate whether your people, regardless of what they are doing, are delivering what the company needs to be successful.

As mentioned above, very few departments outside sales leverage outcome-based management. Part of the reason is that sales teams have very objective metrics, and other departments don’t. The solution is to identify similarly objective metrics across other teams.