Using Metrics to Define SuccessDecember 2015

material minds

Evidence Based Management

Evidence Based Management is making its inroads into the world of business albeit a bit slowly. The logical ones among you might wonder, if managers don't use evidence to make decisions, then what would they use?

What they do is make decisions based primarily on gut feel, habit, ideology, or even better, wishful thinking. Evidence based management means getting the facts and then using those facts to make management decisions. Simple isn't it but few people do it.  

Evidence based management does not mean waiting to get all the facts, completely ignoring your gut, or ignoring ethics or values. It just means getting the best evidence you can in the time allowed and using that evidence as one factor in how you make your decisions.

Metrics, or what is often called Key Performance Indicators, are simply measurements about key business items such as results, customers, process and people.

Metrics are used to determine how a business has done, whether it is on track, and how it looks like it’s going to do in the future.

They are the evidence upon which to base a decision.

 

What are Metrics?

There are a number of key advantages for a business that uses a well-developed metrics program in managing what it does. 

The secret to implementing strategy successfully involves translation of that strategy into the daily action of all employees and providing a strong link between those daily actions and the strategy itself. That is the role of metrics.

Using metrics will enable you and your team to focus on things that really matter to the organization. This allows you to filter out extraneous matters that have no material affect on the business.

Using certain types of metrics, especially sales ones, allows you to accurately forecast results and thus have a much better chance of meeting your objectives.

Metrics enables employees to know what they are accountable for and enables their managers to hold them accountable in a way that is clear and unambiguous.

Why are they important?

Focus people on results 

Set expectations 

Refine a business model 

Drive activities 

Define jobs

Improve delegation

Manage performance

Motivate

Coach

Improve communication 

How you can use metrics

Metrics are a very powerful tool that you

can use to:

What is expected of them How they’re doing How they can improve

The following is a simple 12 step process to enable you to produce individual or team metrics for every employee in your organization

12 Steps to create powerful employee metrics

Figure out what you produce1

At a fundamental level, your job is to change something. You are taking a certain set of inputs and changing those inputs and then passing what you have done off to someone else.

The end result is what you produce. The things you produce could be:

Data stored in a computer database.

Communication in the form of a letter, report or proposal.Knowledge

A physical or digital object.

Put simply, your end user is the individual, team, or department for whom you are doing work. It is not necessarily your boss but it very well could be.

In determining who is your end user, you must figure out which of the following is the recipient of your output. • Another person or multiple people

in your team.• Your boss.• Someone or more than one person

in another team in your company.• Someone or more than one person

in another company.

The end user is important as it is this person who will be the judge of the quality of your work. Since all results must be externally verifiable, the end user is the person who will provide external validation.

 

Define who your end-user is2

Having defined what you produce or the outputs of your work, you need to determine the level priority for them.

The objective of this exercise is to determine which 3 to 5 things you produce you should develop metrics for.

Prioritize what you produce3

Step 2 - What does Success look Like?Define success4

For each of the four to five outputs you have prioritized, you will need to define what success looks like in order to be able to measure it.

Defining what success looks like is one of the most critical aspects of assigning a job to an employee. If you can’t define what success looks like then you’ll have trouble figuring out

how to get there and the employee will never know if they’ve gotten there.

Payment

At the highest level, an end user can pay you for what you produce.

Election

Sometimes there is no payment but someone elects to proceed to another step.

Approval

Some other activities result only in approval or disapproval of your output.

Satisfaction

When there is no payment, election or approval, the end result must default to satisfaction.

There are essentially only four results that arise from giving what you produce to your end user. These should be results over which

you have control and where control isn’t shared with someone else.

Define what types of results you produce5

Measure results6

Speed

Finally, you can measure cycle time or the time from the start to end of the process which concluded with the result you are measuring.

Cost

This cost measure only applies when you get payment and measures the cost of the item you provided in dollars or time in order to get payment.

Quality

Your result quality is measured by the $ received in payment or the # or percentage who elect to proceed or who approve of or are satisfied with what you’ve done.

For each of the four types of results we identified, there are three measurements that can apply to those results. Select one or more of these ways to measure results.

Define the activities for producing results7

Simply put, an activity is a series of actions or steps taken in order to drive the results that you defined in the last section. Having created some result metrics, it is important to turn to

look at creating some activity metrics. Activities can be broken down into four categories 

Creating

When you produce something new like an article you sell, a report, a program etc, you have created something new.

Reviewing Some employees are assigned the task of reviewing or approving work done by others.

Recording Accountants spend a lot of time recording transactions and other people in an organization spend time recording things in databases.

Communicating This activity encompasses any verbal, not written communication and would include telephone calls, meeting, speeches, etc.

Measure the activities8

Speed

Finally, you can measure cycle time or the time from the start to end of the activity.

Cost

Measure the cost of the activity in dollars or time to complete.

Quantity

Measure how many times do you have to undertake and activity to drive a result

For each of the four types of activities we identified, there are three measurements that can apply to them. Select one or more of these ways to measure activities.

Is it really a Metric? 9

Are results expressed as a number?

Is the result externally verifiable?

If not, express them as a number.

Change the result so that it is externally verifiable.

Are activities expressed as a number

If not, express them as a number.

Who owns the metric? 10

Multiple teams involved.

Multiple companies involved

Company metric

Government metric

Multiple people in a team involved in the activity. Team metric

One person involved in the activity. Personal metric

Does the activity drive results? 11

Does the metric owner have control over results?

Will doing more of the activity bring better results?

If not, change who owns the metric.

If not, revise the activity or result so that they are related.

Does the result form part of your boss’ results?

If not, eliminate result to improve alignment.

Tying it all together12

Buckminster Fuller said that ”If you want to teach people a new way of thinking, don’t bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking.”

Metrics are a tool to focus managers on results and improve their leadership capabilities

They connect company strategy to the daily action of all employees.

Metrics are a tool

Putting it All Together

material minds

Helping companies execute strategy better by connecting strategy with the daily action of all employees.

Charles Plant

416 458 4850cplant (at)materialminds.com@cplant

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This is a five part series on Strategy Execution and is comprised of:

1. Strategy Execution2. Using Metrics to Define Success3. Job Design and Delegation4. Performance Management and Communication5. Coaching and Motivation