This video explores common themes in the types of measurement errors made by companies.
- How do your organizational leaders feel about metrics? Do they hate metrics? Do they love them too much? Do they not really understand how to measure? Let's take a look at some of the bad performance measurement attitudes we tend to see in organizations. So companies just aren't serious about measuring. I don't need numbers to tell me what's wrong. I know when things are going wrong. The company has a bunch of metrics, but I never look at them.
I don't need numbers to make decisions, my gut tells me what to do. Unfortunately, we hear things like this all the time in organizations. Sometimes from the top leaders. And you know what? Sometimes you can get away with it. Sometimes leaders can make great decisions without metrics, but as markets evolve having metrics can signal that change is needed. When investors ask that you provide proof they often want solid metrics.
And when mistakes are made metrics can provide clues about what went wrong. Plus, when companies spend a ton of time and money collecting data not using that data may be an enormous wasted opportunity. Some companies put too much emphasis on metrics. On a five point scale one employee scores a 3.85, another employee scores a 3.91. Is the employee with a 3.91 definitively better than the employee with a 3.85? In most cases metrics are not 100% exact.
They aren't foolproof. You need to understand the limitations of your metrics. As a result often we should use them as guides, but when we use them as the primary source of decision making they can be misleading. Remember, the metric is only a number. It doesn't understand real life. It measured what happened in the past. It can't see how the world is evolving. Metrics should help start a discussion, they should help guide managers, they should not be used a substitutes for managers.
Some companies just measure those things that make them look good. Perhaps a company tells you that 99.5% of their orders arrive within their stated 5 day delivery guarantee. That sounds good, but is it really? Instead why don't they ask customers when they want the item delivered, and try and meet those customer expectations. A manager would probably say, well, they'll ask us to deliver it in one or two days and we really can't do that.
So this company is choosing to measure based on their own very simple goals rather than shooting to provide complete delivery satisfaction to their customers. What's more important to your company? Hitting your numbers or making the customer happy. Are there numbers in your organization or industry that are now and have always been important? I work in education, we have grade point average. It motivates bad student behavior, it changes the way instructors measure performance and provide feedback, it guides employers to interview some very poor candidates, bad use of time and poor learning outcomes, yet we continue to use grade point average as our key student metric.
Why? Because this is the number we've always used. I'm guessing in your organization you have bad metrics too, and you continue to use them even though everyone knows they're bad. Why? Because these are the same dumb numbers we've always used. Maybe your leaders love metrics, they measure everything, all the time. There's a metric for everything and everyone.
The problem is that there are so many metrics that managers get managerial paralysis, they freeze up. The mountain of numbers is scary. The answers are hidden in there somewhere, but where? Numbers are supposed to help us make quick decisions, but when the numbers are overwhelming they slow down decision making. What you need to remember is that your company can have great metrics, but the corporate culture can ignore or misuse that valuable data.
On the other hand many companies have awoken to the value of data analytics, but if you're measuring the wrong thing you're probably making misinformed decisions.
- Metrics and human behavior
- Common corporate errors in measuring
- Developing a good metric
- Using the performance measurement tune-up
- Avoiding redundancy
- Using dashboards, infographics, and other data visualization tools