by Lisa Kinsey
Chief Strategist, Kinsey Management
The Importance of Balanced Metrics
A set of well-chosen metrics allows employees to understand exactly how their activities are going to be tracked and how their output will be aggregated into successful execution. In other words, good metrics will foster the right behaviors to execute. Depending on your strategic intent, these behaviors may lead your organization to innovate (by fostering collaboration), to reduce costs (by systematically rooting out inefficient processes) or to deliver outstanding service (by measuring client satisfaction for example).
Regardless of your strategy, you control what you measure. And if employees know what you control, they will adapt their behavior accordingly.
The reality is different. In our work helping clients to improve their execution capabilities, we often see inefficient metrics such as:
- A dashboard which includes useless metrics added over time, but no longer relevant
- Some measurements may be “vanity metrics” which are designed to always deliver positive values and cast their owners in a positive light
- Dashboard are shared only with executives and managers
- Budgets may progressively drift away from alignment with the strategy, especially if you do not use Zero-Based-Budgeting and budgets are carried over year after year without substantial, critical review
| Answer the questions below. If you answer “No” at least once, you may need to review your current metrics to make sure they support your strategy execution.|
Do you systematically consider and act on every metric you track?Do your employees have full access to the metrics that track their activities?Are your metrics out of date when it comes to guiding today’s work?Is your budget fully aligned with your strategic priorities?
When we help clients achieve execution excellence, we focus on metrics early – as soon as the strategic intent has been clarified. We promote a good metrics hygiene based on simple guidelines:
First, metrics have to track all the key drivers for execution. There is a massive body of research on balanced scorecards and we encourage clients to consider all of the elements of their strategy while focusing in on their key drivers for execution.
Most of our interventions include the removal of irrelevant or outdated metrics that no one dared to remove until now.
Second, the leaders’ role is to communicate their strategic intent broadly; it is also to make the underlying metrics equally visible and accessible to all. At a minimum, they should report on company-wide metrics once a month.
Let’s use a bowling alley analogy: what if the pins were hidden behind a curtain? How would you adjust your aim and technique? Employees need to keep score of how well they are performing. In other words, remove the curtain and let them adjust their aim accordingly.
Third, employees should be empowered to act on the metrics that track their activity. People fundamentally want to perform well; this requires the ability to assess their own impact and the opportunity to improve and develop.
Finally, budgets should be just as consistent with the strategic intent as operational metrics. Just like metrics, budgets tend to inflate over time or become disconnected from business goals if they are not regularly re-assessed against the strategy. No manager like to see their budget cut, but that discipline is essential to remain focused on the essential strategic intent.
In our next blog, we will consider the impact of a well-designed organizational structure and focused activities on your ability to execute well.
How well is your business executing? To find out, please reach out and we will initiate an assessment of your execution capabilities. Contact us at email@example.com