In a previous article: “What is a Metric (KPI)? It's probably not what you think”, I looked at Metrics (also known as KPIs or Key Performance Indicators) - what they are, and where to look for them. Now that we have a notion of what Metrics are, let’s look at some of the key benefits of identifying and measuring the right Metrics for your organization.
(Note: I use the terms Metrics and KPIs interchangeably - but prefer to use Metrics these days in an effort to reduce the use of 3 letter acronyms).
Metrics drive your operating model (“Business as Usual”).
In every functional area of your business, you should be able to identify a small handful of Metrics that drive the outcomes you seek on a day to day, and week to week basis. By functional area, I am referring to departments like marketing, sales, product development, operations, customer service, finance etc.
Once you get clear on the outcomes (results) you want in each area, you can drill down to determine the “Activity” and “Effectiveness” measures that drive these outcomes. Results are important but you can’t “manage” results. However, you can manage the activity and effectiveness of your people in order to achieve those results.
Metrics clarify performance expectations.
According to research from the Gallup organization, employee engagement begins with each employee being able to strongly agree with the statement, “I know what is expected of me at work”.
Metrics help to clarify performance expectations for your functional teams and for every role in your company.
When you involve your people in selecting the right measures, and agreeing realistic “red” (bad), “yellow” (watch closely), and “green” (good) performance thresholds (see here for the right way to use the traffic light concept to set performance thresholds) - you are communicating your expectations in a clear and unambiguous manner. Involving your people in the process assists with getting alignment and buy-in from your people at the same time. Everyone knows and agrees what a good level of performance looks like, and what a poor level of performance looks like.
Here's a link to an article that explains what to do when you have roles that are harder to quantify. In those cases, if you are struggling to come up with something worth counting, then I recommend you focus on closely managing that person’s Projects and Tasks instead.
Metrics help you to manage more objectively.
Metrics provide objective measures of performance, and this data enables you to “manage by fact”. Evaluating employee performance is not about whether your people are working long hours or being busy. What did they actually achieve? It’s about the results they are achieving.
Being an effective manager requires having good Metrics data in front of you (or other data that objectively grades each person's results) so you know what sort of conversations you need to be having with each team member in order to manage and coach them effectively.
When you have current, up to date Metrics displayed on a live dashboard, the manager can quickly see which people need your praise and acknowledgment, and which people need your coaching and support.
Metrics drive business execution.
When you keep your Metrics scores up to date and visible on your dashboard and discuss these scores at your weekly team meetings and 1-on-1 meetings, this helps ensure consistency of performance and consistency of outcomes.
Larry Bossidy, former CEO of AlliedSignal, and co-author of the book "Execution - The Discipline of Getting Things Done" remarked, “When I see companies that don’t execute, the chances are that they don’t measure.” To Larry’s quote, I would add the additional 3 words, “... chances are that they don’t measure the right things”.
Metrics focus people’s attention on what is important.
What gets measured gets done. Employees are faced with many competing demands on their time. When they know the small handful of Metrics that grade their performance, it keeps them focused on doing the right things – particularly when the scores are made visible to their peers on a software dashboard and discussed at weekly meetings with their manager.
Metrics help you run more effective meetings.
You can't run a good meeting without good data. You are wasting your time, as well as wasting the time of those attending. This is an area where I see many companies struggle. They try to run meetings, yet much of their data is either out of date, missing, or inaccurate.
I strongly urge clients that your dashboard must always “tell the truth” as you go into your weekly team and 1-on-1 meetings. Unfortunately, if you don’t have the latest Metrics scores the manager:
- can’t see which areas are performing well, and which areas require your attention
- can’t see which people are performing well, and who needs your help and support
- can’t have meaningful discussions about performance
- can’t make well-informed decisions
Also, if your dashboard software is not kept up to date it greatly loses its power to motivate your people. Keeping the Metric data current, making performance visible, and discussing the scores every week is a proven factor for management success.
Metrics help you to hold people accountable.
Here’s another area where I see many managers come unstuck. They invest in software dashboards to make performance visible, but then they fail to close the loop.
I have a saying: “Successful Business Execution is 20% giving people clarity about what needs to be done, and 80% following up to make sure it actually gets done”
Whether you use management dashboards or excel spreadsheets, you must run effective meetings every week to discuss the Metrics scores and coach your people accordingly.
Here is my recommended approach.
If someone is struggling, talk to the non-performer in a non-threatening and supportive way by stating the observable facts that are visible on your dashboard or spreadsheet, and then ask the following 3 questions, e.g.
“I see the number of sales appointments you booked last week is ‘in the red’ again...
1. What’s happening here?
Allow the employee to respond. There may be a valid reason for something not getting done.
2. What 1 thing can we do this week to improve this?
Let them come up with solutions first. Then suggest others. Capture the agreed action(s) asTasks in your software dashboard.
3. What support do you need?
Make it clear that you are on their side and that your role is to support your team members to be successful.
Follow up next week to make sure these Tasks got done, and assess their impact on Metric performance. It is important for both parties to know that this same 3 question sequence needs to occur each and every week whenever any performance issues are identified.
Holding people accountable for achieving the target level of Metric performance every week is vital to ensure the company (and individual) is on the right track.
But making progress is not just about demanding accountability. Your job as a manager is to coach support your team to achieve their goals. Remember, you only succeed as a manager when your team succeeds.
Author "Business Execution For RESULTS", Winner 2014 Small Business Book Awards - Management Category
Need help? Contact me to discuss your strategic planning or management training needs.
