What do you measure in your organization? Sales results? Operating costs? Profit? Employee or customer satisfaction? Perhaps you measure the number of programs that your department delivers or the number of attendees to those programs. You probably have a pretty good understanding of what gets measured in your organization. So, here’s a harder question, why do you measure it?
I often ask this question in my talks and workshops. The most common answers are that we measure to track progress or to determine bonuses and performance ratings. Both are true, although I’d argue that those are side effects of the real purpose.
The real purpose of measuring something is to drive action. Why do you check the temperature in the morning? It’s not because you are just interested in knowing about the weather. It’s because you have to make a decision: should put on a coat, wear short or long sleeves, or bring your gloves?
Measurement should drive action.
I recently facilitated a goal setting session to create a robust set of measures for the organization. (Prior to the meeting they only had two, high level measures related to revenue).
We developed a series of measures around acquiring new customers. One person nervously raised her hand and said, “But that seems unrealistic because we don’t get that many new customers.”
That’s the difference in thinking about measures as a way to capture the state of your business versus as a mechanism to drive action.
She was using measures as a historical tool to describe what happened in the past. Aside from providing some interesting information for an annual report, this way of using measures drives little value. Not surprisingly, those numbers changed very little over the course of several years.
Instead, I challenged her and the board to use their measures more actively. They needed to determine a plan for how they were going to increase the number of customers. Each month they would review the metrics and change actions if they weren’t making progress.
I’m often surprised by the number of people who spend considerable time thinking through metrics but then put them away until the end of the year.
If you aren’t going to use metrics to influence or change your actions, don’t waste the effort capturing it in the first place.
Metrics should drive the future. They should not simply be a reflection of the past.
Tips for driving action through measures
- Build your measures around the key drivers and decisions for which you have control.
- Don’t use the same measure as your boss. Determine the specific and unique contribution that you will make to his or her measures.
- Ask yourself, “Does this measure provide enough guidance for me to take action?”
- Align the level of precision of your measures with your decision making. For example, don’t measure customer satisfaction to the 1/100th of a point if changes at that level aren’t going to impact your actions.
