Business Productivity: The Trouble with Metrics
The old adage, “You can’t manage what you don’t measure,” has been circulating in management circles for years, but what does it actually mean? Most organizations use metrics to monitor and improve their processes. From revenue per customer to average handling time, metrics provide bite-sized pieces of information that can be used to make decisions about everything from business process improvements to employee bonuses. Unfortunately, metrics can become institutional barriers to change when managers begin focusing on “making the numbers” rather than improving processes.
To be effective, managers must actively curate their metrics while avoiding the following 5 common mistakes:
1) Choosing the wrong metrics. Sometimes organizations choose metrics simply because they are easy to measure. Call centers commonly measure average handling time (AHT). If the goal of the call center is problem resolution, the best measure might not be how fast they get customers off the line. Before institutionalizing bad behavior, consider the impact of the best and worst measurable outcomes. If a metric is already part of the performance monitoring process, take a look at the outliers to gain a clear picture of what’s happening on the ground. Good “numbers” can actually reflect bad results.
2) Measuring too many things. Metrics can become addictive. Getting too much information is worse than not getting enough. Excess data can confuse both managers and staff by highlighting issues that do not impact overall performance. Faced with poor performance, some managers contribute to this problem by adding irrelevant metrics to hide failures. Stop the insanity. If there is no causal link, eliminate it.
3) Weighting metrics inappropriately. Not all metrics are created equal. While managers may take solace in meeting some of their performance goals, it’s important to realize which ones are tied to core processes. If bonuses are tied to achieving multiple metrics, make sure weighting of those numbers produces the intended results. An increase in sales calls does not necessarily translate into actual sales.
4) Time consuming reporting processes. Metrics that draw productive employees away from revenue producing activities often defeat the purpose of good metrics. When possible, metrics should be automated using existing technology. Forcing managers to compile more and more data will take the focus away from pleasing customer and place it on pleasing management.
5) Missing the obvious. While metrics can be good indicators of performance, they cannot be a substitute for going out on the production floor or talking to customers. Often things that get a business in trouble are not the things that are measured. Metrics focus on the world of the known. They are not very helpful in identifying new trends or threats in the marketplace. They also fail to measure intangibles like company culture or employee satisfaction.
While metrics can be invaluable in running a business, they are only one tool of many. Getting lost in a forest of numbers and forgetting about the trees who are your customers and employees is a recipe for disaster.
For every hour spent analyzing spreadsheets and numbers, a company should spend at least 10 hours talking to customers and employees.
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