Performance measurement made simple: Three keys to success

Where performance measurement goes wrong

The challenge isn’t that organizations don’t have performance measurement systems and strategies. Most do. The real issue is that their approach to performance measurement lacks focus and flexibility.

There are so many metrics available to measure performance that it’s difficult to select the most relevant ones. Leaders get stuck in a maze of metrics, benchmarks, and dashboards—tracking everything and measuring nothing. The fact that different parts of the business care about different metrics makes an already complex situation even more complex.

Organizations often track the same metrics year after year without adapting them to changing business and market realities. The consequences are profound. Performance measurement becomes disconnected from the most influential trends and important organizational goals, which can jeopardize growth, business optimization, innovation, and competitiveness. For organizations looking to streamline processes and operational efficiency, exploring business process improvement is a helpful next step.

How to get performance measurement right

While performance measurement isn’t a one-size-fits-all exercise, there are success factors that apply no matter an organization’s unique situation. By prioritizing these factors, leaders can start to cut through the complexity and make decisions confidently based on a true picture of organizational performance.

1

Data: Ensure your data is right, reliable, and repeatable

Data is the foundation for an effective performance measurement system. It reveals where organizations stand, the desired destination, and best path to reach it. Without data, measuring performance is all guesswork and intuition, which don’t go far enough. But not all data is good data. Organizations need the right data to measure performance. They need reliable data to ensure that performance measurement is accurate. And they need repeatable data analyses to build trust in the results. It’s a powerful trio.

Getting right, reliable, and repeatable data takes strong data management practices guided by data-savvy leaders. Data management provides a structured and well-governed system to identify data, free it from silos, clean, and secure it. Data management also codifies and standardizes how data is stored, accessed, shared, and analyzed.

Getting right, reliable, and repeatable data takes strong data management practices guided by data-savvy leaders.

2

Metrics: Identify your organization’s power metrics

There’s no good way for leaders to know if their organization has achieved results without metrics. As part of doing business, organizations track a collection of financial, operational, customer, employee, and quality metrics. That’s why performance measurement is so complex. By identifying power metrics, leaders can zero in on what matters the most, measuring the right thing, instead of everything.

Power metrics rise above other metrics and are specific to every organization. They are an organization’s most important leading indicators to course correct to avoid performance problems. For example, a power metric could be a measure of customer satisfaction, pipeline health, or employee engagement. Remember that blue line? It’s a refreshingly simple power metric—a leading indicator of inventory management and production bottlenecks.

Power metrics are the most important leading indicators for leaders to course correct to avoid performance problems.

3

People and culture: Rally your people behind power metrics

While leaders are naturally inclined to pay attention to metrics, it’s critical that everyone in an organization rallies behind power metrics. They are merely numbers unless people internalize them. Leaders need to create an environment where employees at every level of the organization clearly understand and support the “what,” “why,” and “how” of power metrics. People need to know their part in achieving the metric and feel accountable and empowered to make it happen.

Organizations that are successful with performance measurement cultivate a metrics-focused culture. Their power metrics are visible, simple, and actionable. These metrics are visible because they are a natural part of employees’ daily routines, and leaders communicate about them clearly and consistently. The power metrics are simple and easy to understand. Think the blue line, Net Promoter Score, or conversion rate. Power metrics also have to be actionable by employees. That’s where the critical engagement starts, and sticks.

Organizations that are successful with performance measurement cultivate a metrics-focused culture.