A great system of metrics without support from top to bottom can result in poor results.
- You have goals and metrics. You have a team of individuals, departments, and even companies working together to meet a common set of goals, but in many organizations, you find that people are not working together. People are trying to move in opposite directions. Why does this happen? Well as you guessed, very often, I think numbers drive people to work against each other, not in cooperation with each other.
Let's take a look at a simple example. At the very end of a retail consumer supply chain, we have a retail store and a distribution center. Together, they work to make customers happy, but often, these two groups are moving in opposite directions, and they often grow to dislike each other. Once you look at the key metrics that guide them, it's not too hard to tell why this happens. What is one of the primary metrics for a retail store? Sales.
They went to sell stuff, lots of it. How about a distribution center, a DC? Since carrying inventory comes with lots of risk and costs, DC managers are often asked to keep inventory levels low. Do you see the problem? The retail store manager works so hard every day to sell product. They sell and sell, and sell, and if they do a good job, they run low on inventory. That shouldn't be a problem because the distribution center is supposed to provide support.
The problem is that the DC manager is doing everything they can to keep DC inventory levels low. This is when the problems become personal. The retail manager wants their bonus or promotion. High sales require having inventory in stock. The DC manager also wants their bonus and promotion, but maintaining very low inventory levels hurts the retailer. In both of these cases, we have good managers.
Managers working hard to meet their goals. The problem is that the managers are working against each other. Do you have issues like this in your organization? Probably. How do you find them? Well, I want you to draw a list of all the stakeholders in your process or supply chain. Departments, companies, customers, employees. Then, provide the KPIs for each stakeholder. Using your managerial savvy, look for places where people seem to be working in opposite directions.
Once you find these points of conflict, consider utilizing target windows versus target directions. In other words, instead of telling the DC that inventory levels need to be low, create a goal that says inventory levels need to be between 250 and 500 units. This is both reasonable from a risk and cost perspective, but it also provides an adequate support system for the retailer. Also, consider that this may be happening with your individual employees.
If you have 50 employees, and you tell your employees that using certain metrics, they will be ranked from number one to number 50, what might that do to the culture of the workplace? Would you want to work on team projects? Probably not. If you're an excellent performer, and others are not, their rating could be improved because of you. On the other hand, if you are a young, new employee, does anybody want to help you? Probably not.
The better you are at your job, the more of a threat you are to their ranking. Look throughout your organization. Are your metrics and goals creating an environment where employees are working against each other, or are your metrics creating a culture of cooperation?
- 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