Use of Metrics - GPA

by Don Harkey

People love to quantify things. Business is up 20%. Sales are down 8.3%. Spending is up 3.4% versus this time last year. Consumer confidence is down 1.5%. Sometimes this is taken to another level.

Allow me to share a real example. Schools frequently utilize a single metric to determine performance in school known as a Grade Point Average (GPA). The way a school calculates the GPA varies from school to school. The traditional way is to award 4 points for an A, 3 points for a B, 2 points for a C, 1 point for a D, and 0 points for an F. Each class is then weighted using “credits”. If a student earns an A in a class worth 4 credits, the student earns 20 grade points (4 x 5). The GPA is calculated by dividing the total number of grade points by the number of credits. Traditionally, a 4.0 GPA signifies that the student received all A’s.

The GPA of a student is a critical measurement. It often serves as a key metric for determining scholarships, awards, and admissions to advanced education opportunities. To complicate it further, the GPA is often used to determine the class ranking. The ranking itself is also frequently used for scholarships and admissions.

However, there are problems with using averages. Is it fair to compare Sally who takes Latin, Advanced Physics, and Calculus with John who takes Art, Basic Algebra and Study Hall? Some schools have decided to modify the GPA system in order to account for this by giving “bonus” points for certain classes. An honors class, for example, might be worth an extra point (ex: an A earns 5 points instead of 4). That seems fairer, right?

Imagine 2 students who can take 8 classes within a day. Both students enroll in 6 very challenging honors classes. The first student fills out their schedule with study hall (worth no grade points) while the second student decides to take Music and German because they have always been interested in those subjects. Both students get all A’s. Who deserves a higher GPA?

Both students did well in their honor’s classes, but the second student also took extra classes and still did very well. However, let’s calculate their GPA’s. The first student got all A’s in 6 honor classes and earned 30 grade points and got a 5.0 GPA. The second student got all A’s in 6 honor classes and 2 “regular” classes and earned 38 grade points (assuming 1 credit per class) and earned a 4.75 GPA. The second student was penalized for taking extra classes.

Is this really a big deal? Students who understand this quirk in the system and want to rank high in their class will often avoid non-honors classes or classes where they might risk getting a lower grade. They will avoid music, art, and any elective classes with instructors who are known to challenge the students. By the end of their high school career, these students will rank higher than the students who do take the non-honors classes in addition to their base honor class load. Class ranking is very frequently tied to scholarships. This approach can mean the difference between thousands of dollars in scholarships. The first student who took fewer classes might go to college all expenses paid. The second student may need to take out student loans and enter their career with a massive debt that will take many years to pay off. All of this is due to a fluke in a common metric.

Using metrics to measure performance is not just tricky. It is a bad idea. Numbers (data) are never always bad or always good. Numbers just give one picture of the way things are. Can you name a metric that is always good or always bad?

Sales are down 4% versus last year. That is bad, right? Not if the year is 2008 and you are selling cars like Toyota. The sales metric might suggest that performance has been poor while in reality Toyota outperformed most automakers.

Accounts receivable has increased 20%. That is bad, right? That depends on how you look at it. If there are customers aren’t paying bills as promptly as they used to, that is not good. What if the sales are up 100%? What if a big job was just billed out? Imagine if you are a manager of a division and this was a key metric on your scorecard. What decision might you make to control this metric? You might choose to hold back that big bill until next quarter.

What is the point of this discussion? Do not manage by metrics! Metrics (data) can be a powerful management tool that can lead to a better understanding of the organization. However, the context within which the metrics were collected is at least as important. Managers need to understand the processes they manage and they need to use data to deepen that understanding. Don’t drive by the numbers; drive the process that creates the numbers.