metrics and measures
TRANSCRIPT
4imprint.com
Metr ics and Measures
© 2013 4imprint, Inc. All rights reserved
Hungry for change? Learn about metr ics and measures, the M&Ms of business. (Or, the f i rst course of change?)
“ When dealing with numerical data, approximately right is better
than precisely wrong.”
- Carl G. Thor
Picture this, you’re a CEO of a major corporation, and the board of
directors wants a presentation on business trends and the impact to
corporate performance. Here’s the catch: You can’t use numbers or
financial data.
Unless you have a crystal ball, this task would be impossible without
using metrics. You need data and financial descriptors that highlight
how the company is actually doing, and you need a process to analyze
the data. And that’s why you need measures, metrics and outcomes.
A measure is defined as an agreed upon concept of quantification.1 You might,
for example, evaluate the weather outside using a Fahrenheit scale (versus
Celsius). Some experts say there isn’t much difference between a measure and a
metric, but a metric is subtly different in the sense it adds a goal or performance
nuance to it. So you might say the freezing temperature is 32 degrees Fahrenheit,
and that would be a metric. The difference is minor, and for that reason, the two
terms are often used interchangeably. An outcome, on the other hand, refers
to a conclusion reached through a process of logical thinking. Or, simply put, an
outcome refers to how you use the data. In the case of 32 degrees Fahrenheit,
you will know to wear a down jacket!
If you’re one of those people that glaze over when someone starts talking about
metrics, measurements and outcomes, you’re not alone. At the mention of
measures and metrics, many minds fill with pages of numbers that may or may
not hold the secret to financial stability, future profits, or market potential.
It’s hard to know even where to start!
Let’s break it down and begin with a basic definition of what we mean by
metrics. Business metrics leverage numbers and facts that give insights to business
performance, finance and sales. Metrics help influence strategic planning because
1 “ What Is a KPI, Metric or Measure?” Klipfolio. N.p., n.d. Web. 29 May 2013. <http://www.klipfolio.com/blog/entry/305>.
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they give leaders quantifiable indicators, rather than relying on a hunch or
gut feeling. Metrics also help decision makers and business leaders plan (and
achieve) long term goals and objectives, by providing a corporate road map of
performance and sales. Simply put, metrics help monitor progress toward goals
and expose inefficiencies across business functions. When implemented properly,
they provide valuable insight for change and improvement.
What do metr ics and measures capture?
The short answer is a lot. Metrics and measures can be applied to almost any
facet of your organization. For example, you can track how much time an
employee spends on a project for budgeting and resource management. Or
you can measure the costs associated with marketing a product. Maybe you
want to use data to uncover customer buying habits, satisfaction and loyalty.
Metrics can apply to stakeholders, customers, shareholders or employees.
They can focus inwardly on the performance of the company, or outwardly on
customer satisfaction and retention.
There’s no limit to what can be measured and tracked over time. However, to
be valuable, you need to make sense of the numbers and statistics and use them
to apply business value. They should link to the strategic objectives of the business
and tell you how the organization is really doing. When used effectively, metrics
can help improve productivity and enhance strategic planning. The key is to
identify measurements that are meaningful and apply them appropriately. Many
companies launch measurement initiatives without a defined strategy and that
can lead to confusion. Knowing what you want to measure and why is a critical,
yet difficult task.
Types of metr ics : funct ional versus bus iness specif ic
Before you get overwhelmed, you should gain a basic understanding of
the different types of metrics. Metrics can be categorized into the
following categories:
•Financial metrics
•Strategic metrics
•Operational metrics
•Performance metrics
•Project management metrics
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Financial metrics are the most common types of measures and focus on overall
corporate performance. Two common financial measures are profits and loss.
Organizations track these numbers over time to assess the overall health of a
company. Decreases in corporate profits can indicate signs of trouble, while
increases may be an indicator of longer-term success.
Strategic metrics are similar to financial metrics, but link directly to the strategy
and goals of an organization. These metrics are often high-level and easy to
understand. Senior leaders and shareholders use these types of metrics to
evaluate customer retention, market share, and time to market.
Operational metrics measure the efficiency and effectiveness of an operation
or process. Think of operational metrics as those that measure the day-to-day
tactical operations of the business. These types of metrics provide insight on
how the business is actually running and provide a snapshot to monitor activity.
Manufacturing companies use operational metrics to determine inefficiencies
in the supply chain and to identify processes that can be improved. Call centers
might use operational metrics to track average calls per hour or the percentage
of successful customer interactions. The idea is to develop metrics that show how
your business is operating on a daily basis.
Performance metrics measure business contributions and performance across
customers, shareholders and employees. They can focus inwardly or outwardly, or
can evaluate performance against customer requirements and value. Examples of
performance metrics include customer satisfaction, productivity and quality.
Metrics are also used for project management to check time, cost, resources and
actions across a project plan and budget. These types of metrics help identify
areas for opportunity and improvement in project. They help determine where
employees spend the bulk of their time and can assist with resource allocation
and planning.
Not only are different metrics used for different business units, but you can
also categorize metrics by business functions or process improvements.2
Efficiency measures refer to how quickly things get done. In other words,
how many hours does it take to produce a product? What is the lead time
between order and delivery? Similarly, quality metrics measure tangible
data related to the quality of your product. For example, what is the rate
of returned merchandise? Or, on average, how many defects are produced
during manufacturing?
2 “ Small Business Systems.” Numbers Are the Language of Business Improvement! N.p., n.d. Web. 21 May 2013. <http://www.boxtheorygold.com/blog/bid/28325/Numbers-are-the-Language-of-Business-Improvement>
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Customer satisfaction measures apply to the customer experience. These
measures focus on new customers, retention rates or customer complaints.
Anything that impacts customer satisfaction could be included in this category.
Employee measures track employee progress and professional development. For
example, what is your employee turnover rate? Or maybe you want to track the
number of hours spent on professional development and training each month?
These would fall under employee measures.
Finally, innovation and improvement measures track new products and
improvements across the corporation. For instance, what is the percent of the
corporate budget is spent on research and development (R&D)? What percentage
of sales is associated with new products? What improvements were implemented
that led to cost or time savings? Innovation metrics help analyze this type of data
and can be useful when implementing new processes and approaches.
Know what you’re captur ing and why
“You can’t manage what you don’t measure.”
-Peter Drucker
When it comes to metrics, you should know what you’re capturing, why, and
what you want to do with the data. True, you can’t manage what you don’t
measure, but you also can’t measure what you don’t define. The biggest
mistake organizations make is that they don’t have a defined measurement
strategy. They start collecting metrics that don’t mean anything, and waste
time trying to make sense of data they never needed in the first place. Data
overload is a common pitfall that can be avoided with planning.
Avoid the measurement abyss by developing a solid plan for collecting,
analyzing and reporting measures—we’ve outlined steps below to help. But,
there are a lot of other resources available:
• The Society for Human Resource Management (SHRM), for example,
has spreadsheets and calculators that will help you make sense of some
of your HR data.
http://www.shrm.org/templatestools/samples/metrics/Pages/default.aspx
• If you need basic training, the Association of Research Libraries provides
online training on basic measurement tools and methods.
http://www.arl.org/focus-areas/statistics-assessment
• In terms of literature, there’s a ton of research and studies that can
help you get started. A quick search on Amazon® directs you to a
number of resources, including a well-known book by David Parmenter,
“Key Performance Indicators (KPI): Developing, Implementing and
Using Winning KPIs.”
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• Another one to consider is “Performance Dashboards: Measuring,
Monitoring and Managing your Business” by Wayne W. Eckerson.
• Of course, if you’re looking for an authority on metrics, Peter Drucker is
considered an expert in metric management and has published many books
over the years.
Measurement strategy best pract ices
In an article for Forbes, Justin Moore, CEO of Axient, provides sound advice for
those starting a new measurement strategy:
It’s critical to choose the right parameters. Measuring the wrong metrics
can do more damage than good. Getting too obsessed about the numbers
can lead to bad decisions and make you forget about the human element,
that you’re managing people, not robots. And not measuring on at least a
weekly basis can leave problems undiscovered until it’s too late to course-
correct. But, when you leverage metrics properly, they can be one of the
most powerful ways to propel your business to success.3
Measurement strategies are often directed by top leaders in the organization
and filtered down to business units. The top down approach is effective in
driving home the importance of a business strategy and helps engrain it into
the corporate culture. Sometimes, the CFO of an organization is in charge of
measurement strategies, while other companies place this task under human
resources or strategic planning committees. Who will drive your measurement
strategy largely depends on what you want to measure. Here’s a step-by-
step list of things to think about when developing and implementing a
measurement strategy.
Step 1. Define what you want to measure
• First, define metrics based on business goals and objectives that relate to
organizational strategy.4 In other words, what do you want to measure? To
define what you need to measure, ask key questions. Look for metrics that
have a business impact or will influence future performance. Here are some
questions you should ask to clarify your measurement strategy:
3 Network, CIO. “7 Tips On Building Your Business With Better Metrics.” Forbes. Forbes Magazine, 09 July 2012. Web. 17 May 2013. <http://www.forbes.com/sites/ciocentral/2012/07/09/7-tips-on-building-your-business-with-better-metrics/2/>.
4 “Making the Most of Metrics.” Information Management RSS. Nap., nod Web. 17 May 2013. <http://www.information-management.com/newsletters/metrics_strategic_operational_performance-10017214-1.html>.
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•What top factors will impact the business in the next year?
•What are the revenue objectives, quarterly and annually?
• What aspects of the business (e.g. new customers, increased sales, reduced
time to market) will demonstrate success?
It’s also important to clearly define your metrics. Simply saying the goal will
be to measure customer satisfaction is too vague. You need to outline how you
will measure customer satisfaction. Is it the number of repeat customers? Or do
you measure customer satisfaction by the number of first resolution calls in the
call center? In short, metrics should be clearly defined so that almost anyone
in the organization can assess progress and engage in the right behaviors to
promote success.
Step 2: Choose metrics wisely
Second, it’s critical to implement and select metrics that promote desired
behaviors to achieve strategic results. As renowned metric expert, John H. Lingle,
once said: “You get what you measure. Measure the wrong thing and you get the
wrong behaviors.”5 Choose metrics wisely and measure outcomes that promote
the right behavior.
Using the call center example, say you want to measure customer satisfaction
by the number of customer first resolution calls. But you need to make sure
employees focus on quantity rather than quality. If the number of calls handled
is an indicator of success, customer service representatives may rush calls in
order to meet the goal. That could lower customer satisfaction in the long term.
Therefore, it’s imperative that you aren’t measuring something that will produce
undesirable behaviors that have far reaching consequences.
Step 3: Monitor, monitor and monitor
An effective measurement strategy reviews metrics at regular intervals.
You can’t assess progress without regular tracking. It is also critical to
create accountability and demonstrate a commitment to what you say
you are going to do.
Effective measuring strategies provide real-time feedback and are
easily captured and monitored. There are a number of measurement
tools and software applications that can help an organization extract
and analyze data. You can even use office applications like QuickBooks
5 “The Alternative Board Oshawa Blog.” : The Great Management by Numbers Debate. N.p., n.d. Web. 20 May 2013. <http://thealternativeboardoshawa.blogspot.com/2011/04/great-management-by-numbers-debate_3075.html>.
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and Excel. It doesn’t have to be fancy, but it has to be consistent and real-time to
be effective. Successful organizations use dashboards or monthly business reviews
(MBRs) to track progress.
Step 4: Evaluate and adjust
Fourth, evaluate and adjust metrics as needed to address any changes to the
business or objectives. Any measurement strategy must be fluid. In other words,
a measurement strategy has to be able to adapt to changes in the business and
market. As priorities change, metrics change, too. Refining metrics every week,
month or quarter helps you stay on track and ensure measurement of the
right priorities. As noted by Axient’s CEO Justin Moore:
When you invest time and thought into setting, monitoring, sharing
and refining your metrics, you’ll be amazed at how much more in tune
you are to the state of your business, and how much more easily you
can make the critical decisions that can catapult your business’ success.6
Step 5: Communicate
Finally, continuously communicate and involve all levels of the business in the
measurement strategy. Capturing metrics is a fruitless effort if no one in your
company knows how they are doing on a regular basis. Metrics should be shared
across the organization, to promote transparency and accountability. Dashboards
are a good way to show weekly, monthly or quarterly progress, and should be
displayed in a place that employees reference frequently. Whether it’s a website
or a weekly meeting, progress against goals should be displayed regularly.
Business leaders in particular need to make sure they are promoting measurement
strategies. The ability to “walk the talk” and share results goes a long way in
showing employees that every level of the organization is committed to metrics
and achieving the outlined goals. Successful companies share results from the
top-down, even if they fall short of desired goals. This shows commitment and
transparency and ultimately creates a cultural buy-in for measurement strategies.
Measurement tools and approaches
Once you defined your measurement strategy (i.e. the nuts and bolts of the plan)
it’s time to consider what tools and methods might be helpful. You’ve probably
heard of KPIs, balanced scorecards and dashboards. But do you know what they
are and how to use them?
6 Network, CIO. “7 Tips On Building Your Business With Better Metrics.” Forbes. Forbes Magazine, 09 July 2012. Web. 17 May 2013. <http://www.forbes.com/sites/ciocentral/2012/07/09/7-tips-on-building-your-business-with-better-metrics/2/>.
© 2013 4imprint, Inc. All rights reserved
A key performance indicator (KPI) is a performance-based metric that evaluates
the success of a defined activity. KPIs are applied to strategic or operational goals
and are defined in a way that is understandable, meaningful and measurable.
KPIs should clearly link to the strategic objectives of the organization in order to
help monitor business strategy.
For example, let’s say your company is focused on customer satisfaction, and
noticed a lot of complaints because of late deliveries. You might identify
deliveries made on time as a potential KPI to improve customer satisfaction.
The KPI would track the number of on-time deliveries and report these on a
regular basis.
A KPI differs depending on the business area of focus. Below is a sample list of
some the more common KPIs by business function:
Finance KPIs
•Percentage of payments that are late
•Percentage of invoices overdue when paid
•Average monetary value of overdue invoices
Purchasing KPIs
•Percentage of on-time deliveries
•Percentage of deliveries received on time
•Number of correct deliveries
Human Resources KPIs
•Employee retention rates
•Number of applications to job postings
• Average number of hours of training and development
provided to employees
•Percent of days lost to illness
Customer Service KPIs
•Number of customer satisfaction surveys completed
•Number of complaints received
•First call resolution rates
•New customer retention rates
To choose the right KPIs, you need a good understanding of what is important
to the organization. Many organizations use a balanced scorecard framework to
help identify valuable KPIs.
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The Balanced Scorecard
A balanced scorecard is a strategic planning and management system that is
known for the ability to measure and manage corporate goals and outcomes.
It was introduced in the 1990s, and in 2013, it was listed as one of the top 10
management tools by Bain & Company®.7
As defined by the Balance Scorecard Institute, a balanced scorecard is used to
align business activities to the vision and strategy of the organization, improve
internal and external communications, and monitor organization performance
against strategic goals.8
The balanced scorecard was introduced by Drs. Kaplan and Norton
in response to some of the limitations of previous measurement
approaches. It provides a roadmap as to what companies
should measure in order to obtain a more “balanced” view
of the organization. It’s more than a measurement tool, it’s a
management tool that enables organization to translate vision
and strategy into action.
As Kaplan and Norton describe in their book, “The Balanced
Scorecard:”
The balanced scorecard retains traditional financial measures. But
financial measures tell the story of past events, an adequate story for
industrial age companies for which investments in long-term capabilities
and customer relationships were not critical for success. These financial
measures are inadequate, however, for guiding and evaluating the
journey that information age companies must make to create future
value through investment in customers, suppliers, employees, processes,
technology, and innovation.9
7 “Management Tools & Trends 2013 - Bain & Company - Publications.” Management Tools & Trends 2013 - Bain & Company - Publications. N.p., n.d. Web. 17 May 2013. <http://www.bain.com/publications/business-insights/management-tools-and-trends.aspx>.
8 “Balanced Scorecard Basics.” The Balanced Scorecard Institute. N.p., n.d. Web. <https://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx>
9 Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996): 76.
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The following (Figure 1.) shows an example of a balanced scorecard. In the center
of a typical scorecard is the vision and strategy for the organization. The four
boxes represent the critical focus areas: financial, customer, learning and growth
and internal processes.
Figure 1. Balanced Scorecard Sample
As shown, balanced scorecard collects and analyzes metrics from four distinct
areas: learning and growth, business process, customer, and financial. The
corporate vision and strategy is the center of the scorecard, since everything that
happens should link back to and support the corporate mission. The idea is to
obtain a balance of metrics in these four categories to develop a more coherent
picture of the organization. Financial metrics, while important, are only one of
the pillars that can impact performance.
Since the introduction of the balanced scorecard in the 1990s, it has evolved to
include different variations. Most of the key elements remain intact, but recent
versions include strategic mapping and/or strategic linkage models. The principles
of the balanced scorecard and the four key areas, however, remain the same.
A number of technologies have also emerged that claim to help organizations
implement a balanced scorecard. However, it is debatable as to whether or not
software can uncover the basic principles required for the balanced scorecard.
According to the Balanced Scorecard Institute: “The balanced scorecard is not a
piece of software … [and] unfortunately, many people believe that implementing
software amounts to implementing a balanced scorecard.10 “ This is not to say
that technology isn’t helpful; once a scorecard is developed and implemented,
software solutions can be valuable ways to manage the approach.
10 ”Balanced Scorecard Basics.” The Balanced Scorecard Institute. N.p., n.d. Web. <https://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx>.
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Overall, the balanced scorecard is the most popular measurement tool. According
to research conducted by the Gartner Group®, over 50 percent of large U.S. firms
adopted a balanced scorecard approach since 2002.11 However, this number might
be slightly misleading, since the term balanced scorecard is often linked to a
variety of measurement tools and methods. Other research indicates that about
a third of companies use a traditional balanced scorecard method, but only
about a fifth of all companies use the most up-to-date versions that include
strategy mapping.12
Dashboards and monthly business rev iews
Picture the dashboard in your car. Maybe you reference it to check your speed or
see if you’re almost out of gas. At the very least, you notice warning lights that
start blinking so you can avert a disaster.
Performance dashboards provide a similar service, only on a much larger scale for
corporations. A dashboard provides summarized data to show managers how fast
they are working towards their goals or provide alerts if the company is falling
short of targets. Dashboards are usually customized to report what needs
to be tracked most frequently.
Generally, corporate dashboards are easy to read and provide a real-time
user interface. They also provide a graphical presentation of the current
status and historical trends of organizational KPIs. It’s common to see
dashboards mirror traffic lights, and note whether something is red,
yellow, or green. A red light might indicate things are not going as they
should, while a green light indicates a company is hitting targets.
A manufacturing dashboard, for example, may show data related number of parts
manufactured or the number of failed quality inspections per hour. Similarly, a
dashboard in human resources might track KPIs related to employee recruitment
or retention.13
The dashboard isn’t about what you report as much as how you report it. In
other words, it should communicate progress at a glance, and be actionable and
immediate. It should summarize metrics quickly in a way that makes sense to
anyone that is reading it. It should be clear and concise, and serve as a report card
for your strategic plan and progress.
11 “Balanced Scorecard: How Many Companies Use This Tool?” Balanced Scorecard: How Many Companies Use This Tool? N.p., n.d. Web. 20 May 2013. <http://www.ap-institute.com/Balanced Scorecard How many companies use this tool.html>.
12 “Balanced Scorecard: How Many Companies Use This Tool?” Balanced Scorecard: How Many Companies Use This Tool? N.p., n.d. Web. 20 May 2013. <http://www.ap-institute.com/Balanced Scorecard How many companies use this tool.html>.
13 “Dashboard (business).” Wikipedia. Wikimedia Foundation, 05 Sept. 2013. Web. 20 May 2013. <http://en.wikipedia.org/wiki/Dashboard_(business)>.
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Dashboards are often integrated into executive reporting methods. For example, you may have heard of the Monthly Business Review (MBR), which is a process that tracks progress against the strategic and operating plan. It is also an opportunity to make sure the organization stays on track and implements adjustments to the plan when needed. MBRs are a good way to communicate corporate performance and provide clarity and commitment when used effectively.
Generally, MBR reporting falls under the responsibility of the team in charge of a measurement or improvement process. However, a CEO often receives MBR data, so the report should be high level and concise. An MBR is reported during a standing meeting and follows a structured agenda to review performance, assess issues and opportunities and make adjustments to the plan. Typically, MBRs are conducted on a monthly basis, after the close of a prior month. A disciplined approach is critical to successful deployment of an MBR. It needs to be engrained into the culture of an organization as a standard method to monitor performance and to constructively address issues and opportunities.14
Whether you use a dashboard, MBR, or both, the objective is to report progress on a regular basis to key stakeholders. Tracking and reporting measures is not just a best practice, it’s a critical piece of your metric strategy. Simply put, if you don’t regularly evaluate progress, you’ll have no idea where you’re going. The metrics you collect are valuable only if you use tracking methods to monitor outcomes and results. Think of reporting as the follow through to your strategy, and stick with it over time.
Other metr ics def ined
The list of terms to define popular metrics and methods is long. Figure 2 offers
some of the more common measurement terms and their definitions.15
Figure 2. Measurement Terms and Definitions
14 “How to Conduct High-Value Monthly Business Reviews.” Aligned Action. N.p., n.d. Web. 30 May 2013. <http://www.alignedaction.com/2010/02/how-to-conduct-a-highvalue-monthly-business-review/>.
15
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Metr ics examples
Examples of effect ive measurement strategies
If you’re looking for a company that excels in performance metrics, Lockheed
Martin Missiles and Fire Control is a good place to start. Winner of the 2012
Malcolm Baldrige National Quality Award, the company is known for excelling in
performance and operational measures to improve processes and productivity.
Lockheed Martin Missiles and Fire Control (MFC) use a nine-step Strategic
Planning and Execution System (SPES) to develop strategic and tactical
action plans using market and customer data. SPES integrates metrics, work
processes, and modeling to provide feedback for continuous learning.
Overall, the process promotes long-term sustainability and accountability data
for process improvement.
What, specifically, does SPES help the organization achieve? First, the company
realizes process efficiency as a result of a defined and consistent approach.
Supplier on-time delivery has been 100 percent since 2006, and overall supplier
Financial Measures
Sales or Revenue
Sales growth
Gross Margin or Profit
Profit or revenue per employee
Return on Investment (ROI)
Dividends
Cash flow
Inventory Turnover Ratio
Current Ratio
Customer Measures
Customer satisfaction
Customer retention
Customer referrals
Customer complaints
Response time per customer
Customer lifetime value
Customer acquisition rate
Number of customers
Customer service expense per customer
Process Measures
Average cost per transaction
On-time delivery
Average lead-time
Inventory turnover
Cycle time
Warranty claims
Frequency of returned purchases
Employee Learning and Growth Measures
Participation in professional or trade associations
Training investment per employee
Average years of service
Number of cross-trained employees
Absenteeism
Turnover rate
Employee satisfaction
Employee productivity
Training hours/certifications
Personal goal achievement
Timely completion of performance appraisals
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quality has been nearly 100 percent since 2007.16 Cost savings is another
benefit of its strategy. Time reductions as a result of process and performance
improvement across business units led to an estimate savings of $225 million
annually. Combined with a 99.4 percent on time delivery rate, you’d call the
approach a success.
Other companies use measurement strategies to jump start savings or promote
revenue growth. Shat-R-Shield®, a 40-year old company that manufactures
packaging materials, first introduced a measurement strategy about 10 years ago.
The CEO at the time, Karen Ponce, felt strongly that the organization needed to
adopt a formalized measurement strategy to assist with strategic planning. As
CEO, Ponce believed it was her job to work on the business, not in the business.”17
In 2005, the CEO and senior management team attended a training
workshop where they learned about the balanced scorecard and
KPIs. The company began developing KPIs and a balanced scorecard
approach, and over the next three years, as Ponce described, “started
measuring things that were really important across the entire company.”
The organization continued to refine and expand KPIs and balanced
scorecard to include eight strategic objectives.
In a short time, the organization realized benefits from becoming a measurement
management business. For the first time in history, the organization tracked
how many dollars they earned for every dollar spent in sales and marketing on a
monthly basis. They also monitored cost per unit and identified opportunity for
improvements. By 2010, the company netted more income than in the history of
the company.
Karen regularly shares her lessons learned regarding using KPIs and a balanced
scorecard for success. As she notes:
Executives get so caught up in the day-to-day running of the business that
they don’t work on the business. As President of the company, I should
spend 80-90 percent of time working on the business. And implementing
a cascaded and aligned balanced scorecard strategic planning and
management system is time well spent working on the business because it
gives clear direction and guidance to those I entrust and empower to work
in the business.18
16 “Lockheed Martin Missiles and Fire Control.” Lockheed Martin Missiles and Fire Control. N.p., n.d. Web. 21 May 2013. <http://www.nist.gov/baldrige/award_recipients/lockheed-martin.cfm>.
17 Perry, Gail S. “A Balanced Scorecard Journey.” The Balanced Scorecard Institute. N.p., June-July 2011. Web. <http://www.balancedscorecard.org/LinkClick.aspx?fileticket=Qd7wk08IcWE%3D&tabid=57>.
18 Perry, Gail S. “A Balanced Scorecard Journey.” The Balanced Scorecard Institute. N.p., June-July 2011. Web. <http://www.balancedscorecard.org/LinkClick.aspx?fileticket=Qd7wk08IcWE%3D&tabid=57>.
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There are an abundance of success stories among organizations that use (and
implement) effective measurement strategies. Most companies agree the recipe
for success includes planning, refinement, and ultimately, patience. Measurement
strategies aren’t implemented overnight. Collecting, planning and analyzing data
over time is critical to success.
Conclus ion
“ Without a standard there is no logical basis for making a decision or
taking action.”
-Joseph M. Juran
There’s a reason why organizations implement measurement strategies, it’s
because they work. They provide business and operational value, and can improve
your bottom line. When done correctly, a measurement strategy can yield
significant payoff and translate into serious cost savings. Whether your goal is to
attract new customers, grow sales, or increase your ROI, metrics can be the vehicle
to get you there.
Now think about what you would do if your CEO asked you to prepare a
presentation on business trends and corporate performance. Using a basic
understanding of metrics and measurement strategies, you could develop a
plan to track and implement critical KPIs across your business. You could even
explore balanced scorecard strategies and see if they can be applied to your
company. You’d probably develop a dashboard or an MBR to help report ongoing
results. Most importantly, you’re armed with the knowledge that metrics and
measurements can be the key to process improvement and corporate efficiency,
with a little effort and planning. So, what are you waiting for? If you’re hungry
for change, metrics and measures should be your first course.