Why leaders should be data-informed, not data-driven

Over the last decade, there has been a sharp increase in the expectation for leaders to use data to guide their decision making. Data is a useful resource in our organisations because it helps us understand how we are performing, where things are going well, and where we should focus our attention. The data that we rely on is usually quantitative, which is numerical, tangible, measurable information that we can track as single metrics or over time.

We also have access to a lot of qualitative data, which provides the context or explanation for the quantitative data that is available. Regardless of the type of data you have, value and use, some organisations pride themselves on being driven by this data. However, I would argue that this not helpful for our employees, company culture or bottom line, and rather, we should, instead, be informed by the data.

The distinction between being data-informed versus data-driven is a clear one. When we use the numbers in conjunction with our understanding of the context, the team, the economy (the list goes on and is totally dependent on your organisational context), and we make decisions bearing all of this in mind, then we are data-informed.

When we set goals with specific consequences, make decisions using numbers alone, or focus on singular and targeted metrics, we are data-driven. Data-driven decisions are not necessarily devoid of logic – in fact the decision makers may have thought long and hard about what to do next – but they do prioritise and value metrics over people. 

I would like to think that you’re reading this, thinking ‘I am/ we are absolutely informed by data not driven by it’; and that may be true. But if you were to do a quick Google of data articles or look at Google Trends, ‘data-driven’ terminology is used far more extensively. In reality too, I see the impact of leaders and organisations who (perhaps with the best intentions) subscribe to the data-driven paradigm (perhaps uncomfortably), and may not know that there is an alternate approach.

I have worked with organisations who performance manage employees based on a single target or metric, or promote staff based on a limited range of results. One company changed their marketing strategy based on a single campaign, and another cleaned out the executive because of employee satisfaction results alone. 

Data can incredibly useful; however, when we use it in a way that is data-driven, it impacts our employees and organisational culture. Some of our best and most capable people fear the use of data, and this often stems from lack of confidence in using numbers, general maths anxiety, perceptions of themselves as ‘not numbers people’, or fear about how the data will be used.

Therefore, when we talk about, or behave in a way that indicates we are driven by the data, we (either implicitly or explicitly) send a message to our employees that we value targets over them and their efforts. With this messaging, employees fear what will happen if they do not get the results that are expected of them, their trust in leaders can start to diminish, and they begin to feel replaceable. The longer-term impact is that employees start to be motivated by external compliance, rather than an intrinsic desire to do good work, which we know, does not work long-term, motivate employees, or inspire people to stay (see Drive, by Dan Pink).

I worked in an organisation like this in the UK, and as a middle manager, it was an incredibly toxic workplace. Our performance was measured against one or two single annual metrics, we had weekly meetings where we had to justify the modifications and changes we were making to hit the targets, and there were annual (and public!) rank orders of employee performance.

We were held (almost) personally responsible for the results of our team and we were in a perpetual cycle of not knowing whether we were doing enough, and ultimately waiting on our fate to be decided by the annual result. When senior leaders (among others) were performance managed for a 12-month period because they didn’t hit their previous annual goal, it sent a clear message to the rest of us that none of us were safe, and it could very easily happen to us too. It was not good for us as individuals, or the organisational culture more broadly. 

The pressure and stress that individuals feel in a data-driven organisation, collectively impacts more broadly on staff culture. It becomes survival of the fittest, there is collective unease with the way the organisation is led, and there is loss of trust in the way the leaders are leading.

Frances Frei, in her TED talk, talks about the importance of demonstrating ‘rigour in our logic’ to build trust with employees. When we are driven by numbers, many employees struggle to see the logic in our decisions because they believe the leader does not understand the complexity of the organisation or what they are asking of their employees. This directly impacts employee perceptions of how trustworthy we are. 

On the other hand, we can all lead and promote organisational and team cultures that are informed by the data and not driven by it. Leaders who do this recognise that they don’t have all the answers, that a data set or data point alone does not convey why something might have occurred, and that very rarely is a metric reflective of a simple cause and effect relationship. 

Some of the things that effective data-informed leaders and organisations do are: 

• Leaders make the distinction between being data-driven and data-informed explicit for their staff, and articulate to employees that they seek to use the data to inform what they do, not to drive their decision making.
• Leaders demonstrate and model that they are data informed by consistently explaining their decision making, and showing the rigour in their logic, and proving that they are using the numbers to inform their decisions.
• Data communications from leaders are not always one-way or transactional; they do not talk data at employees who listen and receive, they have an open dialogue about performance and seek to understand, rather than dictate actions. 
• Organisational structures promote data discussions and exploration of data in teams to establish insights and actions, it is not all top-down decision making.
• Leaders and organisations are deliberate in their use of data to recognise and celebrate achievements of their teams – they do not only use data to identify deficits.  

As leaders, the way that you perceive, talk about, and model your use of data in your workplace, sets a clear precedent for your organisation and your employees. When we prioritise people, use metrics to support our work, seek to understand the complexity rather than prescribe solutions, and open conversations about what next, we give permission for our employees to value and use data in the same way.

It is far healthier, realistic, and sustainable, because we cannot and should not, make all our decisions driven by data. As Rishad Tobaccowala said, if we only ever used data to make decisions “none of us would be born. The ROI on having children sucks”.

Note:
Frei, F. (2018). How to build (and rebuild) trust. TED. https://www.ted.com/talks/frances_frei_how_to_build_and_rebuild_trust?language=en
Pink, D. H. (2011). Drive: The surprising truth about what motivates us. Penguin.
Tobaccowala, R. (n.d.) Restoring the soul of business. Growth Faculty.

Written by Dr. Selena Fisk.
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