What Gets Measured, Gets Done

I spent nine years running a US subsidiary of a Germany company. Their obsession (at least the group I worked for) with metrics gave me an appreciation for the power of metrics to elevate the performance of individuals and organizations.

The terms “metrics” and “performance indicators” are used synonymously. Most companies use some level of financial metrics for performance reporting to stakeholders. The focus of this article is on using metrics for performance improvement.

The value of written goals has been discussed in hundreds of business and self help books. What is often missing or understated is the critical process of quantitatively tracking the progress towards achievement of the stated goals. Without the appropriate metrics, there is no accountability and little chance of goal achievement.

Metrics create an environment of accountability throughout the organization. An organization that closely tracks performance indicators or metrics creates a culture where goal achievement is the norm and where there is no room for mediocrity.

These performance indicators also provide a way to convey corporate goals to the organization in a tangible form and get buy-in at all levels. It also sets an example that the company management is holding itself accountable for success.

How do you know what performance indicators you should be tracking in your business?

1) Start with your strategic plan and the goals you have set for the organization. List the general topics that relate to the goals i.e. customer service, asset utilization, financial performance, market share, employee retention, etc.

2) List critical success factors for each topic that if achieved, will directly contribute to attaining each goal.

3) Define a specific metric for each critical success factor that will track progress towards its achievement.

Just as the attainment of goals can be chunked down into components that can be delegated in the form of individual objectives, the associated metrics can likewise be used to create accountability for groups or individuals and thus align effort within the organization.

Metrics are important for reporting performance to stakeholders and for making fact-based decisions. The real power of metrics comes from creating the accountability that drives performance improvement. Consider adopting the “metrics obsession” like my friends in Germany. It will do wonders for your business.

“We promise according to our hopes, and perform according to our fears”
-- Abraham Lincoln