BACK TO BASICS
Measures That Matter
Use measures that drive action and get results
by Bradley Kolar
What do you measure in your organization? Sales results? Operating costs? Profit? Employee or customer satisfaction? Perhaps you measure the number of programs your department delivers or the number of attendees at 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?
The most common answers are that you measure to track progress or to determine bonuses and performance ratings. Both may be the case, although I’d argue those are side effects of the real intent.
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 need to decide whether to put on a coat, wear short or long sleeves, or bring your gloves.
Driving the future
I once facilitated a goal-setting session to create measures for an organization. We developed a series of measures related to 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 instead of as a mechanism to drive action. She was using measures as historical tools 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 little during the course of several years.
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.
The point is that if you use measures simply to record the past, then not much is going to change. Measures should be proactive tools to help you change the future.
Here are some tips for driving action through measures:
- Build your measures around the key drivers and decisions over which you have control.
- Don’t use the same measure as your boss does. Determine the specific and unique contribution 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.
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 them in the first place.
Metrics should drive the future—they should not simply be a reflection of the past.
Bradley Kolar is the president of Kolar Associates in Naperville, IL. He earned a master’s degree in computer science from Northwestern University in Evanston, IL.