Jeffrey Saltzman's Blog

Enhancing Organizational Performance

Performance Metrics

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[tweetmeme source=”jeffreysaltzman”]”Which is more important, the sun or the moon?” A citizen of a small town not noted for its intellectual prowess asked. “Why the moon of course,” was the reply. “It shines at night when it is needed. The sun shines only during the day, when there is no need of it at all!” (Ausbel,  N., A Treasury of Jewish Folklore, 1948)

“What to measure, what to measure…..” the executive muttered to himself as he walked down the hallway. Do you simply measure the obvious things, or are there less obvious metrics that need to be measured that can help the organization’s performance? And how many ways should you measure similar outcomes in an effort to triangulate and instill confidence in the measure? If you don’t understand what is really going on as the quote above implies, your measures may be entirely off-base. They could be based upon superstition-like folk wisdom or they may overlook critical, but subtle aspects of performance. Metrics can be hard measures, such as sales volume, widgets produced, defects per million etc. They can be soft measures such as customer satisfaction and repurchase intentions or employee confidence in the future of the organization or their own personal future in the organization. Metrics can be at the individual level, department level, organizational level etc. When you think of all the possibilities of organizational performance that you can measure, it is no wonder that some organizations seem to spend an awful lot of effort and time measuring, eating up significant resources.  Occasionally they must ask themselves, “can we get by with fewer and simpler measures?”

Think for a moment of a car. Say you just filled the car’s tank with gas prior to heading out on an extensive road trip. You are interested in knowing when you should stop and refill the tank so that you will not become stranded by the side of the road without fuel. On your dash you have 3 gages, a fuel gage, an odometer and a clock. If you were to drive your car at a fixed speed, on a never changing road, achieving a consistent miles per gallon you could determine when to put gas in the car using any one of those 3 gages, they would be redundant. You could look at the fuel gage and see when the needle was inching toward zero. You could look at how many miles you had driven on the odometer, knowing that when you hit a certain number of miles it was time to stop for gas. Or you could look at the clock, knowing that with a steady consumption of fuel per minute, after a certain period of time gas was needed. That situation though rarely describes how a car is driven. You may be going up and down hills, starting and stopping at traffic lights, or driving at inconsistent speeds resulting in changing miles per gallon performance. Therefore each of those gages on your dashboard, while potentially highly correlated with each other in their predictions of when to stop for gas, will not be perfectly related. And with their uniqueness they will provide additional insight into maintaining the car’s or the driver’s performance. For instance the odometer can tell you that it might be time to replace the tires or change the oil and the clock can tell you how much more time you have to drive in the daylight or if rush hour awaits you in the city ahead that you will be driving through. Each measure of performance if chosen carefully should not only help triangulate on an outcome (the car needs gas) but should also provide additional insight into performance.

Those of us at OrgVitality have determined that if an organization were to focus on 6 aspects of their performance that they would have a pretty good dashboard of how the organization was functioning in the areas of softer and the often harder to measure metrics. Those aspects of performance include:

  1. Leadership
  2. Employees
  3. Work Processes
  4. Product Offerings
  5. Service Orientation
  6. Customer Loyalty.

Further, we believe that each of these metrics should have a current performance measure and a future performance measure. For instance, leadership from a current performance orientation is about execution and leadership from a future orientation is about the vision of where the organization is heading, the ability to communicate and bring that vision to life, it is about the succession planning pipeline and the development of leadership talent.

If you would like to learn more about these metrics, we have set up an OrgVitality Self-Assessment that you can sample at http://demo.orgvitality.com/vsa.  If you complete the survey you can compare the performance of your own organization against the norms from other organizations. Enjoy.

© 2011 by Jeffrey M. Saltzman. All rights reserved.

Visit www.orgvitality.com

Written by Jeffrey M. Saltzman

July 8, 2011 at 3:43 pm

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