Measuring performance intelligently beats out measuring everything

For years, I have told my clients, “If you can’t measure it, you can’t manage it.”

Although some of them get this sage wisdom, many never do. However, measurement and transparency drive accountability within organizations. It is that simple.

When our employees can see what their actions are accounting for within an organization, they can adjust their performance to get even better results. This allows all levels of our organization to focus on the same goals. When we recognize our employees’ achievements, we encourage self-motivation. Excuses are removed.

However, any measurement must be objective measurement. The results of that measurement must be shared openly with everyone within your organization or, in the case of the chamber we mentioned a few columns ago, your membership and community. Objective measurement is not something we would like to have, it is a must-have because it is an essential part of achieving results that will last.

Measurement aligns results

Our goal within any organization is to achieve excellence in our results — results that will last. To accomplish this we must have objective ways to measure our work and progress. Outcomes-based measurements help our organizations define specific targets, measure progress toward those targets and align the resources (people and money) to achieve them.

Quint Studer in his book, “Results That Last,” uses the example of customer satisfaction to show how we can align goals and measure progress. This approach is used across all “Five Pillars of Excellence” (Service, Quality, People, Finance and Growth). Measurement allows us to align the desired behaviors we want from our employees.

When our metrics (that which we are measuring) are met, we excite the employees and drive the organization toward even greater excellence. This process holds individuals accountable to meet their and the organization’s metrics. It makes no difference if we are counting widgets, customers served, things made, sales accomplished or profits earned, we won’t know how successful we are if we don’t have measurements in place.

Not measuring to just measure

If we don’t measure, we will never know if we hit our targets. However, we are not measuring just for the sake of measuring. We will use this data to align our specific leadership and employees’ behaviors that we want to cascade through the organization to drive the results we want. The better we can align these behaviors and standardize them, the quicker we will achieve our desired results.

Our ability to measure our results is at the core of every organization’s success. But what should we measure?

Research has shown that finance workers within our companies can actually help us determine some of the metrics we should be following and achieving. Don’t panic. I am not suggesting that your organization should be driven by the bean counters, I am only suggesting that we use them as a resource.

Using diagnostics to improve

Chief financial officers, bookkeepers and financial managers can all get excited about seeing data. So can doctors when looking at their patients. By looking at data and adjusting what it is we are doing (our behavior, the medicines, etc.), we can improve and move closer to the results we wish to achieve.

Studer uses the example of a doctor reviewing a patient’s chart. The doctor...

n Evaluates the current results (condition) of the patient based on the data chart.

n Takes action based on that data to improve the results (the patient’s condition).

n Closely monitors that action to see if the desired improvements are being made.

n Reports on what works and what doesn’t work.

The doctor will then adjust her techniques or medications until she gets the results she wants for the patient. Measurements are therefore based on tracking and using indicators. This data leads us to process improvements.

The key question we must ask after we take a measurement is simply, “What actions can we now take to move us in the direction we want to move?”

Key points

n Measure to ensure improvement — Without objective measurements carefully thought out and incorporated under each of Studer’s “Five Pillars,” the evaluating of employee performance becomes fuzzy, mysterious and meaningless. Employees who want to improve their performance can easily become burnouts, and will probably leave an organization when realistic measurements are not in place. High and middle level performing employees want to do their best to help the company achieve its goals. What they can measure they can improve.

n Creating a great organization — When corporate goals are aligned with desired behaviors, and metrics are in place, great organizations can spring up that develop lasting results. Leaders, employees and customers get excited as measurements improve and are communicated. Measurements hold us accountable.

n Measure frequently — When we measure frequently and consistently, we can quickly determine progress, motivate the employees and reinforce positive behaviors.

n Focus on the achievable — When we are measuring and find that we have scores of say eight or nine on a scale of ten, as well as scores of four to five on the same scale, it is better for us to focus on moving the eight and nine rankings up than to spend time, money and energy on the lower scores.

n Sharing monthly financials — Several years ago, I worked with a client who was adamant that they would not tell their employees the company’s financial position. This is a mistake and one they have yet to correct.

Most leaders, managers and employees have no understanding of the financial condition of their company. They really don’t know how finances work in their industry, nor the pressure that the company faces from shareholders, their board and the public at large. Studer recommends, and I concur, that financial information should be shared with employees on a monthly basis.

Educational sessions should be conducted with employees and managers so they better understand the company and larger industry issues. Transparent financials create the ownership behavior in our companies that we seek from all our employees.

n Return on investment — No company can survive and prosper without having a sufficient return on their investment. We can and must use measurements to calculate the return on the investments we are making in our tactics and process improvements. Knowing the return on the investment helps us to achieve even greater buy-in from our board of directors, our senior leadership and our employees.

We can’t manage and improve any systems within our companies on our road to excellence unless we have specific and well-defined measurements in place. Taking the time to align what it is we are measuring with the desired employees’ behaviors will improve our processes, and create a culture of excellence in our organizations.

*Sources: “Results That Last,” by Quint Studer

 

Dr. L. Darryl Armstrong, Armstrong and Associates, is a consultant and counselor. He can be reached at drdarryl@aol.com or 1-888-340-2006 or www.armstrongassociates.org.