A good metric must be attainable, easy to understand, and cheater-proof.
- [Instructor] A good metric provides feedback, but it also helps drive people to make good decisions. It can guide employees toward expected behaviors. The good metric might even be able to predict what will happen next. But it can only do good things if the metric is tied to a desired strategy. Consider this generic strategy for an online retailer. They want to provide customers convenience, security, reliability, and value.
If customers, managers or investors demand proof, do you have metrics to demonstrate your competence in each area? Metrics that are tied to your strategy are often easier to manage. They provide quick and useful answers, and for your employees and managers, they point directly to the desired behaviors. Consider online security. If you have metrics that measure incidents of fraud with a product, incidents of fraud in payment, incidents of customer information breaches, you've now directed the security team to focus on preventing these types of incidents.
Low incidence numbers signal favorable outcomes. Managers can point to specific actions that might have resulted in those low numbers. High incidence numbers signal poor outcomes. This allows managers to have important discussions about needed changes. If incidents are up in only one category, it may signal how employees should use their time, or how much the company should invest in an improvement program.
This sounds so simple and obvious but often companies build up metrics without tying them to desired outcomes. Take a moment, consider your organization's top three to five goals. Then, think about the three to five most important metrics you worry about everyday. Are those metrics driving you toward meeting all of your goals, some of your goals? And how many of the key metrics are not at all tied to the organization's stated goals? Before you develop the best metrics for your company, stop and consider the organization's goals and strategy.
- 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