For those of you who have been regularly reading my posts, you know I advocate the economic development profession shift focus from measuring performance as year-over-year job growth to better enabling their residents to achieve their American Dream. There are three core arguments for advocating the shift.
- Neither elected officials nor economic development professionals create jobs. Employers create jobs. Consequently, holding the economic development profession accountable for year-over-year job growth is not a reasonable approach.
- Elected officials and economic development professionals need to put residents (rather than companies) at the center of every decision they take. This will result in more balanced decision-making. Paradoxically, decisions that benefit residents enable companies doing business in your community to be more competitive. Employee satisfaction helps deliver bottom-line performance improvement.
- With the introduction of Xavier University’s American Dream Composite Index (ADCI™ powered by dunnhumby), a statistically validated metric is now available to hold elected officials and economic development professionals accountable to all residents for making it easier to achieve their American Dream. Not every resident in a community is interested in new jobs. In fact, if you consider the baby boomer retirement trend, increasingly fewer residents are interested.
So Why is Year-Over-Year Job Growth A Poor Measure Of Performance?
A recent cover story in the Cincinnati Enquirer (4 August 2013) entitled “Kasich, FitzGerald differ on state of Ohio economy”, provides a practical example of why annual job growth is a poor measure of economic performance. For background, the article compares how the incumbent Ohio Governor and the emerging opposition candidate characterize Ohio’s economy. One describes it as an “Ohio comeback”, the other as a “train wreck”. Both use job growth data to support their positions.
I will leave it up to you to determine which characterization is the most accurate. My purpose isn’t to critique either position, it is to use the debate as a real world example of why job growth is in fact a poor performance measure.
What I like about the article is that the reporter interviewed economists to get a balanced view of Ohio’s economy. Here are some excerpts from the article that I found interesting:
“On their faces, all of those figures are correct. But, they paint very different pictures of Ohio’s economy, and neither version is complete.”
“In judging the economy, long-term employment figures – simply put, the number of Ohioans with jobs of any kind – tell the most accurate story.”
“During the Great Recession, Ohioans lost more jobs more quickly than the rest of the country. But after the recession officially ended in June 2009, Ohioans went back to work more quickly than other Americans, especially in late 2011 and early 2012.”
“Are we concerned the glass is half-empty or are we grateful it is half-full? You always want to do better. But you don’t want to lose sight of the fact that, compared to other states, [Ohio’s] recovery came sooner. There aren’t a lot of places doing a whole lot better.”
“Ohio’s reliance on manufacturing means a slower growth rate is normal. Manufacturing jobs require factories, equipment and supply chains, so they can’t come online as quickly as office jobs, for instance. Manufacturing accounts for roughly 13 percent of jobs in Ohio, compared with about 9 percent nationally.”
“The truth is, the best evaluation of a governor’s four-year term comes at the end. By year four, businesses have had time to react and they’ve had time to implement your changes.”
Regarding evaluating the impact of a term on economic performance, one economist said “People will still be arguing. People will always have something to argue about.”
What Makes A Good Community Performance Measure?
A good Community performance measure allows for Leaders to make principle-based decisions.
- It reflects the true mission of the Community.
- It is relevant and inclusive.
- It can be benchmarked to evaluate a Community’s relative success.
- It can be improved by sustainable process changes.
- It is strategic in nature.
- It facilitates prioritization and choice taking.
- It can be tracked and monitored over time.
- It can be assigned to an accountable owner(s).
Based on the above criteria, job growth fails miserably as a good performance measure for Community leadership. The data can be positioned to tell whatever story is advantageous to the narrator. There are a number of important uncontrollable variables that can impact the outcome making it extremely challenging to assign accountability. When the trends are positive nobody believes them and everybody seeks to own them. On the flip side, when the trends are negative a million reasons are offered to explain why the results do not accurately reflect individual (or even collective) efforts.
Why Is The ADCI A Better Performance Measure?
Let’s try to answer the question by the numbers.
- The mission of a Community is to enable residents to better achieve their American Dream.
- While not every resident is looking for a job (e.g. retirees are typically not), all residents are interested in better achieving their American Dream.
- The ADCI scores can be compared at the state level and work is underway to make the data available at the MSA level.
- The five sub-indexes can each be impacted through decisions advocated for by economic development professionals and made by elected officials.
- Enabling residents to better achieve their American Dream can serve as the mission statement of every Community’s strategic plan.
- Analyzing strengths and opportunities by the 35 ADCI dimensions versus relevant competitive states (or soon MSAs) allows for better prioritization of Community resources.
- The ADCI data is available on an annual basis.
- Elected officials and economic development professionals can be held accountable to the people for the relative ADCI value and changes in performance annually.
I’d love to hear your thoughts on how focusing on enabling residents to better achieve their American Dream could lead to different strategic decisions.
Read About My Journey To Learn More About The American Dream
American Dream Case Study Series
How Easy Is It To Achieve The American Dream In Your State?
To view the complete set of State rankings based on the ADCI and five explanatory sub-indexes, simply click this button