This video briefly describes the system of metrics, KPIs, and scorecards.
- Whether you're making a business decision, or if you're just looking to win a silly argument, we often look to numbers for assistance. Who's the greatest basketball player of all time? You might cite individual statistics, team achievements, or championships. Who's the best student in our school? You'd probably use grades or standardized test scores. Which of our employees deserves the biggest bonus? Perhaps sales numbers or department profitability might help you decide.
While we often refer to these numbers as statistics, when we're playing in the world of performance measurement, we refer to these measurements as performance metrics, or just as metrics. These metrics often track outcomes and resources, or some ratio of the two. And while they generally measure things that are important to managers, some metrics don't provide much value, at all. And even when you come upon an interesting metric, in most cases, no single metric can provide a clear or complete picture.
Why? A metric typically just measures one dimension. So, when we measure humans, what types of things might be important? Intelligence, communication skills, technical skills, their ability to motivate others. No one metric could likely capture all of those attributes. Let's suppose we had one single magic metric. A single number that could tell the complete story.
Let's say we had the total human metric. If the person getting measured got a low score on their total human metric, we wouldn't really know why the score was low. Do they need to improve their technical skills, or their communication skills? This is why, while having one single magic metric sounds so enticing, you'd probably be much better off with a system of metrics. A system of metrics is a collection of metrics.
Each metric in the system measures one important facet of performance. For example, suppose a school wants their students to excel in math, reading and science. They'd also like the student to be creative. And, they want the students to have excellent communication skills. This school would need five metrics. That would be the school's system of metrics. The school now knows each student's particular strengths and weaknesses, and it can use school resources more efficiently and effectively, to help each individual student in the ways they need.
That's the power of a good system of metrics. Most organizations now understand that having more than one metric is typically the best way to go. Unfortunately, most companies then go metric crazy. They measure anything and everything. This just makes life confusing for managers. With so many metrics, managers get confused, and sometimes, they get intimidated by the hundreds of metrics available to them. Most companies hoard their metrics.
They hate to get rid of any metric at all. But, in an effort to help their employees, many companies will create a list of what they call, Key Performance Indicators, KPIs. These are a special set of metrics the company values above all others. So while the hundreds of other metrics might still be available to managers, the company's KPIs can provide the managers a starting point. If the KPIs look good, things are probably okay.
If they KPIs do not look good, there might be a problem. So, now you're probably wondering, what is a good metric? What makes a good system of metrics? How can my company use KPIs? And those are all very important issues we'll explore, throughout this course.
- 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