Business Metrics that Work

by Tom McBride

Partners for Creative Solutions, Inc.  

There is an old saying that if you want to improve something you should measure it.  The basic premise is that improvement will come just because those who can influence the result know you are watching.  While this approach to applying metrics can work in some situations, in most cases a lot more thought is required. A poorly designed metric may result in improvement in one area while producing a negative effect in another. The wrong metrics, or too many, may do little more than disrupt and are unlikely to produce the desired results.  On the other hand, well-designed metrics are powerful tools that can help achieve dramatic improvements in your business performance.  The key is to choose the best ones for your organization.

Most reasons for measuring relate to either monitoring progress or to attaining an improvement.  However, a word of caution is warranted regarding the use of metrics to achieve improvements.  Used alone, without the help of an effective improvement initiative, metrics will produce little in the way of sustainable results.

In designing your metrics, begin by considering what you wish to achieve.  As a minimum this should include a review of the strategic goals of your business.  What results in your company, department or work area would have the highest benefit to your organization’s strategic goals?  The answer to this question will create the foundation for designing metrics for your organization.  You will also need to understand the characteristics of good performance measurements listed below.

Support the achievement of the organization’s strategic goals.
Few in number – Too many metrics dilute the impact of the more important ones.
Easy to use – Good metrics are simple to produce and provide clear and convenient information to the user.  Visual feedback, such as a chart or graph, displayed near the worker is more effective than a report lying on a manager’s desk.
Provides quick feedback – Delayed feedback often loses meaning, because it severs the connection between cause and effect.
Designed to boost improvement efforts – Good metrics are applied to outputs that need improvement, and feedback should be directed to those who have control over the result.

It is helpful to think of business metrics as being like the dashboard of an automobile. Instruments in a typical car dashboard provide a few critical pieces of information to the driver in an instantaneous, easy to use fashion.  Metrics that are easy to use and provide meaningful feedback are very likely to boost the performance of your business.