How to Properly Craft, Implement and Manage Effective Metrics
Metrics are one of the most dynamic tools for getting valuable insight and helping to make effective decisions at very level of an organization. If crafted and implemented in a wrong manner, however, they can do more harm than good. As such, in order to achieve desired results from metrics, they have to be well defined, precise, and conveyed in such a manner that all interested and impacted parties understand them. Moreover, they must stress the aspects critical for the success of an organization and, most importantly, provide actionable information.
How to Develop Metrics
There are no fixed or predefined set of rules for creating meaningful and effective metrics. In order to create an appropriate set of metrics that best suits your organization/process/project; take into consideration several factors, such as industry, technology, background, maturity and pragmatic quantitative methods for measuring the overall performance or progress. If you generate metrics too often or too quickly, you won’t be able to keep up with the information created. On the other hand, if you use too little or go too slowly, the metrics won’t be taken as a viable or valuable information source to help organizational goals. Before you adopt any metrics, you need to design a process that can help in defining, developing and educating the organization in an agreed-on time interval.
Choose Key Metrics that Best Define your Vision, Goals and Objectives
Since each organization is unique with different goals and objectives you cannot use pre-packaged metrics, as any attempt to do so would turn out futile. Metrics must focus on key indicators that will make it easier for other individuals in the organization to fully understand them and then work accordingly to get desired results.
Pre-packaged metrics rarely work because whoever prepared them might not have the true understanding of your organization, it’s unique requirements and its goals. As such, the meticulous process of re-defining, revising or refining is crucial. Once you will follow this approach, your metrics will become more effective and relevant and will ensure the involvement of more individuals from your organization all working together for a common goal. In other words, your team will have a clear understanding of the metrics and the necessary actions generated from them.
Understanding your Organization’s Capabilities in order to Record and Report Performance
While going through the metric development process you should make it a point to check the capabilities of your organization so that data can be recorded and calculations can be done and then reported against your metrics. It’s critical to understand that until you succeed in accurately recording the data, which is crucial for the validation of performance, your metrics will remain ineffective. This is where IT comes into scene. With the help of IT, you can identify and validate data elements, systems and functionality that can give you what you need. Additionally, they can let you know whether the data exists and where to get it. If you find that no data is available, then you’ll have to use another development process for redefining or replacing the metrics.
Bridging the Gap by Creating IT Development Plans
Since, a majority of IT firms have regularly scheduled system updates; they can play a big role in bridging the gap. Don’t discard your metrics in the absence of data, instead evaluate the importance of metrics and then work with your IT partners to create a way to define development plans which can be used in future. No matter how hard it may seem, adding certain elements of data, necessary for capturing crucial information about business processes can be very easy. In fact, most business applications come with reporting features, and it’s only a matter of turning on some of its feature or functionality.
Besides this, if you are in an immediate need of data, don’t simply ignore the idea of collecting data manually. Although manual methods aren’t usually preferred, they can still be quite helpful depending upon what you are trying to collect, the number of transactions you are expecting, and the time it would take to do the whole task. When it comes to documenting data, like process cycle times or occurrence of activities, it’s simple to do and the data derived is actionable. In other words, collecting data manually can be quite decisive in reprioritizing IT activities, and accelerating your already functioning automated method.
Ensuring Willingness and Participation of the Management
It really doesn’t matter how impressive or dynamic your metrics are if the management is not involved or interested. Without their buy-in, your metrics are of no value as management plays a crucial role in the overall metric development process. Since each manager may have a different interest in metrics it’s not that crucial for them to equally participate but they must be familiar with the overall idea of metrics and for the purpose of each.
You should first create a basic set of metrics to begin with so management can later fill in any gaps, redefine or make appropriate changes in order to align the metrics with the mission, objectives and goals of the organization. From there, the team can work with Subject Matter Experts to develop a detailed outline of each metric. Once sufficient details are available, they should then hand over the task to management for further reviews, changes, and validation.
Using Metrics in the Structure of Management
Once everyone is in agreement with the key purpose of chosen metrics, they must be added to the structure of management in such a manner that they become one of the chief elements of the decision making process. These are considered chief elements because qualitative insight and experience are crucial for managing the process, even more so than the quantitative metrics. Although metrics offer hard data, certain environmental factors could cause obstructions for process performance. Insight and experience can come in handy in understating these obstructions and will prevent the organization from overreacting to data or making decisions too hastily. Moreover, the review of performance must have a full explanation on the causes of inconsistencies (low/high) along with the necessary plan to action to make the situation better. For instance, if we talk about call centers, during summer they can potentially have longer than normal hold times as there is a stronger likelihood that more of the reps are out on a vacation. In other words, metrics can report about the sudden increase in hold times, whereas the insight and experience will give the explanation for such an occurrence.
Performance Association
When it comes to performance, one of the key factors is carefully associating the performance discussions with specific metrics. For instance, while addressing an issue or evaluating performance, make it a point to raise the topic of specific metrics which are accountable for monitoring them. If there aren’t any metrics related to the topic, then you need to figure out whether it’s worth scrutinizing. If yes, then you should check why there aren’t any metrics related to it, especially when there’s already a well-planned procedure for defining and developing indicators that help in measuring core performance areas. Since changes in business environment and strategy call for a new set of metrics, it becomes crucial to implement a new set of metrics at such a phase.
Implementing Ongoing Metric Management and Accountability
Since change is the only constant in the universe, you may have to modify your metrics and goals along the way of the development of the process. Prior to making any of the changes, first make sure that the existing metrics are being implemented properly. Moreover, you have to examine and rationalize the changes before implementing them, and make sure everyone involved agrees with them. Making changes without a valid reason can put your whole metrics program in jeopardy, so prior to making any changes, evaluate everything, discuss it with other team members and then find a good justification for the changes.
Adjusting Targets in Proper Manner
While crafting new sets of metrics, we can be prone to setting up unrealistic goals which run the risk of being too low or too high. In some instances, we simply make an educated guess regarding what a target must be. It’s not necessary that information from external sources, experience or simple estimates represent the culture or unique traits of your organization. As long as the decision makers agree with it and there’s a good theory to support that you must change the target, you should feel confident moving forward with the modification.
Discarding Obsolete Metrics
A metric can be considered obsolete when the main process for which it was originally built becomes consistent enough to be incorporated as part of the day to day process and integrated into another large-scale metric. There’s no harm in replacing an already existing metric with a new one that is consistent with meeting the expectations of the organization. Since, there’s always space for improvement you can define a new indicator, validate the data source and craft a new metric.
By measuring business performance, management gets all the necessary information to be used to monitor the health of an organization and use resources on those areas which have the greatest value or are at the greatest risk. It is critical upon the organization to craft the appropriate metrics for their business. Whether it’s organizationally, a project or a program; all of them can benefit greatly from well-crafted and properly implemented metrics.