Measure Everything That Matters

Quick Summary: Many individuals resist being measured, but it is essential to improving performance.

Abstract:

Instilling the importance and establishing metrics in all elements of the company can be challenging and, in fact, met with resistance.  The key to acceptance is to measure things that matter to individuals as well as the entire organization.  Relating individual metrics to overall company performance allows each individual to understand how their actions impact the company.  It helps instill the feeling that their part does indeed matter.

When implementing a company-wide metrics system, quite often there is reluctance from most of the departments and individuals to participate.  Commonly, individuals think of the company’s performance as the responsibility of someone else.  When asked, CEOs typically reply that they are running the company by the numbers which really means by the financial results of the last reporting period.  Those financial results are only the outcomes of activities performed by all of the individuals within the organization.  Most individuals do not want to be measured and have those measurements visible to others.

An effective way to start the metrics process is to ask each individual to simply write down every task that they do that requires four or more hours per week.  Next, ask them to write down numeric measures associated with the task.  The measurement ability or technique does not have to even exist.  Instead, the list should include what could be measured.   The only overall requirement is that the task should be able to be measured by some objective, repeatable criteria.  One method to help jump start the process is to ask individuals to think of all of their tasks falling into one of two categories:  increasing revenue or reducing costs.  Simply ask the question, “How does the ‘Himulator’ activity that you are involved in help the company increase revenue?” Or, alternatively, “How does it help to reduce costs?”  For many individuals, this exercise will be the first time that they thought through how their individual performance impacts the company.  For most, this exercise will heighten their feeling of responsibility.  This phase of the process is the “measure everything” portion of the activity.  It is remarkable after individuals have listed the first few items, some times with great pain and anxiety, many other potential metrics quickly follow.  Individuals are likely to buy in to the concept as they realize they are partially responsible for the company’s wellbeing.

Albert Einstein is attributed with the saying, “Not everything that counts can be counted, and not everything that can be counted counts.”  Certainly, the latter part of that statement is true.  It is easy to measure items that do not count toward helping improve quality, increase revenue, or reduce costs.  It is very easy to fall into the trap of measuring busyness instead of effectiveness.  The table below shows some examples.

Busyness

Effectiveness

The number of proposals generated

The number of proposals accepted

The number of customer service calls answered

The number of customer service issues resolved

The number of magazine articles written

The number of magazine articles published

The number of tests run

The number of tests run and passed

The number of email campaign recipients

The percentage of email campaign respondents

The number of prospects in the sales funnel

The number of prospects that became customers

 

Think of busyness activities as being activities that are necessary to perform to achieve larger goals.  They are required but should not be the focus of the metrics. 

Measuring is not enough.  The measurement must be relative to some standard or predicted level of performance.  For example, simply reporting that four proposals were accepted is meaningless.  Other factors that need to make the number meaningful might include:

  • The dollar amount of each
  • Their profitability
  • The length of time from opportunity awareness to acceptance
  • The resources required
  • The number of proposals accepted over the last similar time period
  • The expected number of accepted proposals necessary to meet the business’ objectives

Clearly defining the factors associated with a metric are important.  Just as important is the rate of change of the metric relative to past performance, future forecasts, or some other benchmark.  Although management or others within the organization may be responsible for establishing the goals for a metric, the metric itself should be measured by the individuals directly associated with the task being measured and be able to be verified by someone else.  By establishing ownership of the metric at the lowest level within the organization, on-going or real-time improvements may be made even before comparisons to the goals occur or others become involved.  The closer to real-time feedback that can be given, the faster improvements, or at least awareness, can be made.

Although the emphasis in this article has been establishing metrics for individuals, keeping all individuals in every capacity informed about the company’s overall performance is vitally important.  Ensuring that individuals understand their role helps them establish ownership and responsibility.

As one example, every night dating back to the mid-1980s, as the thousands of part time workers at Federal Express package sorting hub in Memphis showed up for work, they could see on large screen computer monitors the number of packages delivered and the number of missed commitments that occurred earlier that day.  These workers may have been responsible for only a small fraction of the missed deliveries, but the almost real-time metrics provided an excellent snapshot of how the entire company was doing that day.  It gave the employees a sense of ownership and commitment that few companies have ever achieved.  To them, the measurements mattered.

 

Article Number : 2.060201   

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