A good system of metrics must measure effectiveness, efficiency, and adaptability.
- Let's take a look at these three basketball players. Player A averages 18 points per game. Player B averages 30 points per game, and Player C averages 12 points per game. Which of these players is the best player in the bunch? I know, most of you probably chose Player B, but remember, a single metric can have flaws, and even if I provide you additional data, we still have a problem.
Some of you might've noticed that all of these metrics provide effectiveness data. How effective was this player at scoring, rebounding, and blocking shots? But, what else should you consider before making your decision? Perhaps, you're now thinking about resources. How many minutes did this player play? How many shots did they take? Let's add in just those few bits of data.
We now have shots attempted and the number of minutes a player averages per game. These new metrics help us track efficiency. In other words, they tell us how well this player used these limited resources, minutes, and shots. So now, who's the best player? Perhaps, now you only feel more positive that Player B is the best player of the bunch. How about if I told you that you're wrong? What could you be missing? Well, let's say you told a group of adults that they could get a big monetary bonus by accumulating excellent basketball statistics? What might they do to cheat the system? Player A played in only the final minutes of college basketball games, in which his team was losing by at least 20 points.
Player B was an 18 year-old boy that accumulated these statistics in games against nine year-old boys, and Player C, he's a starter for an NBA team. These are measures of adaptability. They help us understand the conditions under which the other numbers were observed. Does your company have a system of metrics that measures effectiveness, efficiency, and adaptability? If it doesn't, the organization is likely missing important information that could be guiding managers towards bad decisions.
Just like you chose the wrong person as the best player of our small group, your organization can be overlooking important data, and when certain employees discover the deficiency in your system of metrics, they will exploit it. This can lead to outcomes that only appear to be positive. It can lead to a poor use of time and materials, and perhaps, most damaging of all, it will create victims of your very best employees.
The ones that did not seek to take advantage of your incomplete system of metrics. So, as you look around your organization, make sure you're measuring in all three categories of measurement. Effectiveness. Which outcomes does your company desire? Efficiency. Which resources are used in creating those outcomes? Adaptability. What are the different types of situations under which those outcomes can occur? Only when all three categories are represented in your system of metrics, can you begin to feel comfortable with what the numbers are telling you.
- 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