Dr. Kathy Allen

August 13, 2025

Letting Go of Proxy Metrics

I’ve been thinking about the way we measure progress on the things that matter, both in our organizations and our personal lives. These assessments are often difficult to achieve. What we need to measure is too complicated, intangible, or can’t be quantified (or qualified) accurately. When this happens, we find approximations for these tricky measurements. We call these proxy metrics.

We use things like profits and losses, revenues and expenses, for example, to assess the state of our organizations. When we do this, we’re using money as a proxy metric for measuring the health, well-being, and resilience—the true success—of the organization and its people. At this point, we can only approximate organizational health and value. That’s only one reason we have to realize the significant drawbacks of using proxy metrics.

Cascading Effects of Using Proxy Metrics

Relying on proxy metrics leads to an assortment of problematic, if not dangerous, cascading effects. Over time, they can dramatically change an organization’s culture and reward system. This happens in part because a gap is created between the proxy metric and the meaningful metric that the organization originally wanted to evaluate.

Here are some ways this dynamic plays out in an organization:

Leaders lose sight of the complex integrated variables that indicate a resilient, healthy organization. Earnings become the main concern, and the culture is reshaped to reward and recognize divisions and people who contribute to quarterly profits. Pretty soon, the underlying variables get ignored, and the more superficial proxy metric becomes the primary measure of what matters most.
Healthy organizations are measured over time, not on a quarterly or annual basis. Short-term results get inflated when profit is used as a proxy metric. Organizational health is achieved over time because sustained health and resilience require extended focus. Profit as a proxy metric alters the connection between the employees and the organization. The connection moves from a mutually beneficial relationship to one in which employees are seen as an expense that erodes profits. At that point, these critical contributors are measured by their cost instead of their contributions.
Organizations mistake busy-ness for impact. I have worked with and served on non-profit boards. Instead of profits, these boards use operating “in the black” as an indicator that the non-profit has good leadership. This proxy metric can obscure several deeper issues. A toxic leader, for example, can deliver a positive balance while still being abusive to their employees. Using activity as a proxy metric is another common practice. This could (and does) easily mask failures to help the people whom the organization is supposed to serve. This could also reshape employee behavior from serving people to keeping busy, another dangerous cascading effect.

Other societal sectors use proxy metrics widely, and profits aren’t the only ones in use. In education, a common proxy metric is “seat time,” which is the amount of time students spend sitting in a classroom. Obviously, students may just be looking at their phones while in their seats, yet we use this to gauge learning, contribution, creativity, and other hoped-for outcomes.

Proxy metrics pose problems for individuals as well. For example, some people use the concept of an “ideal” body image as a proxy measure for health. Yet we know health is measured by more complex variables such as spiritual, physical, emotional, mental, social, and nutritional wellness.