Before I get all numeric on you, I wanted to state for the record that I am not now, nor do I aspire to be, a vampire. As such, this particular article is intended for non-vampire supervisors—those who eschew the blood-sucking managerial stylings of their peers.
If, by chance, you happen to be that type of manager—or one of hundreds of thousands obsessed with the current pop culture obsession with the undead—read no further because nothing here will be of interest to you. That said, I am told werewolves will find it of value.
While the dollars and cents are important, dare I say critical measures of success, they are far from comprehensive. To paraphrase what has been written in many a business article, book, blog, and, reportedly, Van Helsing’s diary: What gets measured gets done. And conversely, I believe: What is not measured gets very little or no attention whatsoever.
As a non-vampire manager, why should you measure various business outcomes? In order to focus your organization’s behaviors and efforts, that’s why! Even a zombie knows a good performance measurement system will help your organization achieve success by illuminating opportunities while guiding actions and behaviors that actually “make the needles move.” Doing so will help you in five ways, according to Mike Bourne and Pippa Bourne’s “Balanced Scorecard In a Week”:
1. Establish your current position
2. Communicate direction
3. Stimulate action in the most important areas for your business
4. Facilitate learning
5. Influence behavior
So there you have it—not one, but five compelling arguments as to why it’s important to carefully (and frequently) measure performance within your organization. By digging beneath the surface and exploring more than your profit and loss statement, you have the ability to discover the source of your organization’s successes and, if you’re lucky, opportunities for improvement. If you know the sources (levers) of your success, you have a clearer recipe for future success.
This may seem obvious, but I can’t tell you the number of times I have worked with a group and thought, “They really have very attractive veins in their necks, but as managers they don’t know why they are performing so well—which means when things go south, they really won’t know why that’s happening, either.” Scary and not anything like the recent spate of vampire movies, I know. When you measure the right things, you’ll be able to celebrate successes today and navigate a clear course for your future success tomorrow. Presumably, vampires have a lot of tomorrows, so it’s a pity they aren’t able to benefit from this article.
If you are still reading, then you clearly buy into the “why” behind performance measurement. Good for you and thanks for joining the movement (and not being a vampire). Now you might be wondering: OK, smart guy, but what do I measure? The answer and foundation of a good management measurement system is the key performance indicator (KPI). And what, exactly, is a KPI? As defined by author Kent Bauer (who is most assuredly not a vampire), “KPIs measure the business health of the enterprise and ensure that all individuals at all levels are ‘marching in step’ to the same goals and strategies.” But selecting the right KPIs to measure is where the magic lies. You must identify those measures that truly are critical to your business and are not just “noise” or merely activities and not outcomes. Selecting the wrong KPIs can do more harm than having none at all, for they can create bad behaviors that could destroy long-term value in your business! (Bleed it dry, so to speak.) To help answer the question at hand (what are you supposed to measure?), your KPIs can fall into two categories:
1. Strategic measures: Competitive strength, relative market share, organizational culture, training and development, etc.
2. Operational measures: Customer satisfaction, product or service excellence/quality, return on capital, team member productivity, etc.
Ideally, a balance should exist between your strategic and operational KPIs. Don’t get too focused on one aspect of your organization. Speaking of balance, your KPIs should also represent cross-organizational measures. To once again quote Kent Bauer, “Ensure that KPIs are not defined in functional or siloed terms.” Balance, folks—it’s the name of the game. Like a Type O donor, your KPIs should be universal, so-to-speak.
At the end of the night, successful management systems provide more than just numbers and graphs. Vadim Kotelnikov of Ten3 Business says they will help your organization improve the following:
1. Feedback that tells you whether you are—or aren't—doing the right things and doing them well. Tools, including team member surveys, are available to help in this department OR companies that specialize in team member surveys are available to help you.
2. Motivation that will spur you on to improve your performance.
3. Incentive for you and your team to do it better.
For all this to happen, you must make sure that you measure the right things at the right time and in the right place. If you can check “yes” next to each of those points, you’re still not a vampire but you will be well on your way to helping your organization achieve success now and in the future. Until next time, remember to take care of your customer, take care of each other, and take care of yourself!
Jim Hartigan, chief business development Officer and partner joined OrgWide Services, a learning, communications, surveys and consulting firm in April 2010 after nearly 30 years experience in the hospitality industry, including the last 18 as a senior executive with Hilton Worldwide. Jim brings to OrgWide a reputation for driving change through improved business processes and developing comprehensive strategies that streamline operations, drive brand awareness and preference, and increase customer satisfaction.
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