A successful Key Metrics program can materially improve the bottom line as well as client satisfaction, while a failed program can result in wasted time and effort, distraction, and hard dollar costs. A streamlined approach to tracking and reporting Key Metrics improves the overall impact by generating consensus among the team, maximizing efficiency and creating a clear linkage between performance and results.
At the heart of a successful Key Metrics program is one overarching goal: The goal of an Effective Metrics program is to spend time working to improve results, NOT reporting Metrics.
Having worked in a number of roles where I've worked on Key Metrics initiatives, I developed these Guiding Principles. We use them in our practice at Empower Business Optimization Consulting, to design and deploy effective Metrics programs that are tailored to our clients’ unique circumstances.
1. Metrics must be quantifiable and undeniable
You must be able to specifically measure a Metric in order to report it, and subjective Metrics can be debated. Performance discussion can get buried in debate over the Metric itself, thus detracting from the value of the effort. A thoughtful approach that seeks out quantifiable, indisputable Metrics is more likely to deliver impact.
2. So what? Each Metric must link back to greater organizational goal
To be relevant, Key Metrics must tie back to company targets. If the number of hours spent in meetings doesn't specifically link back to organizational goals, then don’t create a Metric for it. One of the easiest ways to kill a Metrics program is to create “noise” that results in wasted effort and reduced impact.
3. Keep it simple. Short list with straightforward Metrics
A Key Metrics program generally includes more than one functional team, and it often includes many. The broader the scope, the more Metrics get put on the table, and the more noise that can potentially be created. Be selective. Stick to only the Metrics that exhibit each team’s success or failure to achieve critical targets.
4. Don’t attempt the impossible. Data must be readily available, accessible
At the least, data must be possible to create and access. This is an area we work with clients to achieve, by aligning upstream processes to generate downstream information. When implementing a new Key Metrics program, go for the early wins and create Metrics using data that you can access today, while simultaneous creating a plan to add Metrics as the program, and availability of data, evolves.
5. We’re in this together. Foster a productive spirit of teamwork, camaraderie
I cannot stress the importance of this principle enough. Implementing a culture of accountability can initially be painful, and finger-pointing among teams is something you want to avoid. When implemented effectively, a Key Metrics program can open the lines of communication among silo-ed teams, highlight areas of interdependence and improve collective success rates.
6. Keep everyone in the loop. Results widely available, delivered timely
Whether results are delivered through an emailed file or through a dashboard tool (my preference), Metrics must be accessible to those who are being measured. The greatest unlock here comes when everyone in the value chain has regular visibility to the Metric and feels connected to it. Stale Metric results are distracting, and can detract from the credibility of the program, so timely updates to Metrics reporting is vital.
7. Be deliberate. Create Metrics that will drive the behavior you want
Back to our overarching goal, the purpose of a Metrics program is to drive results. Creating Metrics that focus on a specific area of the business will draw more attention to that area. For this reason, you might create Metrics for an area of the business that you want to invest in, or is a critical piece of the value chain, or is under-performing. Setting a target Metric sends a clear message which activities are valued and prioritized.
8. Select Drivers. Metrics should include 80/20 Leading indicators to End Results
Financial statements communicate the end result whereas Metrics should focus in leading indicators. An Effective Metrics program should devote at least 80% of its Metrics to those upstream activities that staff can immediately control, and eventually impact the financial statements.
9. Be Impartial. Self-reported is okay but not as great as independent data collection
There are two problems with self-reported Metrics: (1) they can be improperly skewed when times get tough; and (2) it wastes the time of the self-reporter to track and enter them. The program should strive to collect data from independent, unalterable sources as part of the natural business process.
10. Be efficient. Manual tracking is okay but not as great as automation
Again we refer back to our overarching goal where we set the focus on business outcomes as opposed to manual tracking effort. A successful Metrics program should strive to create useful data through aligned processes as opposed to labor-intensive manual entry.
All businesses want to know how well they’re performing, but only some go so far as to implement a Key Metrics program. An Effective Key metrics program can propel an organization to the next level of their evolution, while a failed program wastes time and diverts focus. To find out more about designing and implementing an Effective Key Metrics program, contact us.
Melanie Manning is the founder and Managing Director of Empower Business Optimization Consulting in Atlanta, Georgia. After a 20-year career in corporate finance and operations, Melanie recognized the value of business resources who could see the big picture and were also capable of implementing solutions. To address this need, she founded Empower with the mission of supporting growth through analytics. Melanie earned a degree in Finance, with a focus in Mathematics, from the University of Florida and an MBA, with concentrations in Finance and Management, from Emory University. After Emory, she went on to achieve the Chartered Financial Analyst (CFA) designation.