DRIVEN by Metrics

Headnote

Using measures in the right way puts an organization on the path to success

In 50 Words or Less

* Performance metrics can have a serious impact on an organization.

* Selecting the most appropriate metrics and determining how they will be used can be the most challenging task for any organization.

* These measures must be modified over time to reflect changes in the marketplace and your organization's shift in strategy.

PERFORMANCE METRICS, also known as measures or indicators, are a necessary part of managing an organization.

They have good and bad impacts on individual behavior, however, so organizations need to find ways to maximize the good while minimizing the potential damage. Organizations must:

* Make sure they have the right metrics.

* Use them appropriately to get the desired results.

* Revise them over time to account for changes that impact their potential value.

How to select performance metrics

Getting the most from metrics requires having the right ones and deploying them well. Far too many organizations have a tendency to select metrics by copying what competitors, companies written up in the business press and benchmarked firms are using.

While knowing what others are doing can be useful, each organization-if it's going to be successful-must have its own strategic niche. Therefore, it needs metrics that keep it focused on its strategic direction, not, the direction in which others are going.

Organizations should:

* Define a competitive (versus arcane) vision and a strategy to achieve it.

* Set objectives aligned to the vision and strategy.

* Create processes to deliver on that vision and strategy.

* Set metrics that will monitor how well they are doing on the objectives. That will allow those managing the processes to keep them going in the right direction.

This isn't to say that you can't learn by studying others. But the purpose of looking at benchmark firms should be to interpret how their metrics support their strategy and their business model. Even if two companies target the same market niche, how they choose to succeed in it will likely differ based on their competencies, resources and cultures.

For example, one call center in a particular metropolitan area might focus on hiring older wage earners who want to...