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Metrics – Friend or Foe?


Budgets and metrics are two tools that can either be your friends or foes.  As the executive leader of your organization, you determine in which category they fall for  you and your company.  I’ll leave the budget discussion to the finance guys; here I want to talk about metrics.  Simply put, metrics are  measures of how well your business (or you personally) is progressing toward meeting your goals.  Although I am a business strategy consultant, I am not truly a numbers person–I don’t even pretend to be one–I learned early as a leader that using data and measurements could make my life easier in so many ways.

A metric is just a numerical interpretation of the condition of some aspect of your organization.  There is not a company in existence that is either too big or too small to benefit from having metrics in your toolbox.  Money is a good thing to track with metrics, such as what is your revenue, how many collections have you made, and so on.  But it isn’t necessary that all of your metrics be money-driven.  You might want to know how many written complaints you received, how many written kudos you gave out, on how many days you exercised, etc.  When you establish goals (you do have written goals, right???), it is very important to monitor them.  Nothing is more negative to an organization than identifying goals and then forgetting to acknowledge the good work that your staff did to reach them.

You can be creative in how you display the metrics–don’t just rely on spreadsheets!  One of my clients, a CPA firm, made a race track on the office wall.  Each team in the firm had a race car that would move along the track as progress was made.  Along the map, they put mileposts up with gift cards attached.  As the milestones were reached, the employees would race to move their car up the track and claim their gift card.  They  never knew until they opened the card whether it was a Starbucks gift card or a VISA card loaded with cash.  Another client, a collections agency, would enter drawing tickets for each employee as they reached their goals. At reporting time, they got that many chances to draw for some incredibly expensive gifts.  I know a ‘solopreneur’ who used metrics for his business to incentivize himself—achieving his goals determined whether he and his wife were going on a trip to Greece.

Metrics can be as fun or as dull as you allow them to be.  If you are in an industry that has a professional organization, then you probably have access to many benchmarks used for best practices.  These allow you to start with a minimum standard or expectation while you determine what works best for your company and culture.  Sometimes those numbers will be adjusted lower until you can get some processes in place.  Sometimes those industry numbers will be too low for your standards, and you’ll knock them out of the park.  Contrary to popular belief, metrics don’t have to be a drudgery carried over from your corporate days.  Metrics are a reporting tool just like an operations assessment.  How you choose to monitor, report, and reward are totally up to you and only limited by your imagination.  If you have a boring system….. change it. You are the executive leader.

Most importantly, don’t forget that the numbers represent people’s hard work.  If you are a one-person shop, recognize and celebrate your own efforts.  Take your significant other out on a date.  Take a trip!  Buy your special drink.  If you have staff and employees, recognize their efforts in improving your business.  Have fun!

Don’t forget that metrics are just a numerical interpretation of how well you’re doing—don’t avoid or fear using them.


3 Comments

  • Brad Closson January 3, 2011 at 5:32 pm

    Good post Penny. Very important part of business that is overlooked most of the time. Thanks for sharing.

    Brad Closson
    Connective Management

  • Brian Mueller January 13, 2011 at 2:11 pm

    You make numerous excellent points. I particularly like that metrics are a tools, they don’t have to include a $ sign and they can be displayed in creative formats.
    Based on my experience, you can add “less is better.” Whether you are defining entity-wide metrics or focusing on components of the entity, challenge yourself to strip the business down to the 1 or 2 “drivers” of the outcome you are seeking. Author Jim Collins says in “Good to Great” that every entity should have a “hedgehog principle”, or solitary metric, that reflects the essence of the business. The best I’ve done is gain acceptance for 2 metrics, which I thought was a huge victory! In that case I compromised with a 2nd metric that had a “$”. In general, I think business leaders will find that pertinent non-financial metrics will appeal to diverse stakeholders, are better suited for leading indicators of the business, can be easier to quantify and can be measured more frequently than accounting cycles typically permit.

  • Nancy Simpson February 4, 2011 at 1:03 pm

    Written goals? Oh, yes, I do have them somewhere. I agree that rewarding yourself and/or your team regularly for achieving certain benchmarks is a great plan. And, being certain that everyone knows what the benchmarks are–communicating with your team what the goals/benchmarks are is crucial to success. Even if that team is the business owner and spouse/significant other or an accountably partner.
    Good information in your post,as well as on your site.

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