Beware the Metrics System – Part 1
Every business uses metrics to assess various aspects of its performance. Some – usually the smallest and least diversified – may focus exclusively on the most basic financial measures. Others may be found at the opposite end of the spectrum, tracking a multitude of metrics across the entire organization – finance, operations, sales & marketing, human resources, research & development, and so on. The more extensively metricated organization is not necessarily more efficiently operated or more effectively managed, however. The administration of a metrics system incurs costs that must be balanced with its utility for it to be valuable to an organization.
An efficacious metrics system can greatly facilitate an organization’s management and improvement; a misguided one can be detrimental, in numerous ways, to individuals, teams, and the entire organization. The structure of a well-designed metrics system is influenced by the nature of the organization to be monitored – product vs. service, for-profit vs. nonprofit, public vs. private, large vs. small, start-up vs. mature, etc. Organizations often choose to present their metrics systems according to popular templates – Management by Objectives (MBO), Key Performance Indicators (KPI), Objectives and Key Results (OKR), or Balanced Scorecard – but may choose to create a unique system or a hybrid. No matter what form it takes, or what name it is given, the purpose of a metrics system remains constant: to monitor and control – that is, to manage – the organization’s performance according to criteria its leaders deem relevant.
Always on the lookout for useful or clever analogies that facilitate understanding of complex systems or ideas, some discoveries are made with great pleasure and some disappoint. The law of averages demands it.
The jigsaw puzzle is no stranger to analogy-building. One example appeared earlier this year in Plant Services’ “Human Capital” column (“The Jigsaw Puzzle of Reliability,” March 2019). Unfortunately, this is one that left me underwhelmed. Perhaps space limitations precluded full development of the analogy; the author’s forthcoming book may correct this. In any case, this installment of “The Third Degree” is my attempt to redeem the venerable jigsaw puzzle analogy.
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