If You Can't Measure It, You Can't Manage It
 |
Discuss this Article No responses yet, be the first... |
The same concept should be applied in businesses - "if you can't measure it, you can't manage it."
Research has revealed that the biggest obstacles to successful execution of performance management are "lack of accountability" and "a culture that does not support measurement." But most organizations don't do a good job tracking measures.
When it comes to executing your business strategy, it's critical to translate goals into measurable objectives or metrics. Progress on achieving these goals must be continually monitored. Without measuring progress, it's difficult to manage the activities that lead to achieving the goals you've set. Perhaps more importantly, without continual measurement, we can find ourselves off track and not even know it until it is too late. Without measurement, the unfortunate outcome is the failure to meet strategic objectives.
An outstanding mission, vision and strategic plan with the most committed people in the world, won't automatically turn an organization's vision into a reality. It takes well-defined metrics that are linked to an annual strategic plan and use of these metrics to measure progress towards goals. Both quantitative and qualitative measures should be used to determine performance versus metrics. This allows for revisions to be made based on information gleaned during review of performance versus metrics.
To achieve strategic objectives, be sure that your organization's short-term measurable objectives logically relate to your company's strategy. Also, be sure to include a plan for how your organization plans to compete: how it will be different from your competition.
A simple, yet effective way of measuring progress is the consistent use of the following acronym during goal setting. Each goal must be S.M.A.R.T:
S= Specific (what are you going to do, why is it important, how will it be accomplished)
M=Measureable (must include a way to measure attainment, achievement)
A=Attainable (reasonable, yet with some stretch)
R=Realistic (not so outrageous that it can't be achieved)
T=Time-Based (clear deadline for accomplishment)
Once you have goals established in this manner, translate the organization's strategy into actionable plans and initiatives. Establish a detailed action plan, or individual plan, for every person in the organization. This individual plan should be reviewed between employee and team leaders weekly, providing status updates and enough time for corrective action in the case that goals are at risk. Included in these individual plans are measures for monitoring progress.
Perhaps most importantly, you'll want to translate your organizational goals and individual plans using measurable gradecards or scorecards. Your use of gradecards needs to be continuous, readily available, and internally accessible.
The Usefulness of Gradecards and Scorecards
Gradecards or scorecards can be used to measure progress toward goal achievement. The "balanced scorecard," used extensively in business and industry, government, and nonprofit organizations worldwide, was created by Harvard professors Dr. Robert Kaplan and Dr. David Norton. This scorecard is a performance measurement framework that added non-financial performance measures to traditional financial metrics, giving executives a more ‘balanced' view of organizational performance.
Do balanced scorecards work? Consider the following research:
- 80 percent of the organizations that regularly use the balanced scorecard reported improvements in operating performance.
- 66 percent of organizations using scorecards also reported an increase in profits.
- 61 percent, a significant majority, reported improvements in bottom-line financial results.
Using the balanced scorecard leads to new business processes that can be used to link long-term strategies to short-term decisions. In order to implement the scorecard successfully, you must first effectively communicate the organization's strategies to all employees. This helps to get everyone behind the overall strategy, and helps tie each person's daily activities to the goals of the organization. In fact, most organizations that use scorecards consider them to be graphical "dashboards" that help them to continually align their organization's resources.
The continual monitoring of progress toward organizational goals will certainly tell you how well you and your players are performing against the most important aspects of your business. But don't forget, it still takes leadership; the scorecard is only a part of building a successful team.
Eric Kurjan is the President of Six Disciplines Ohio Group. Six Disciplines brings "big company" process improvement to a select group of smaller organizations. For more information visit www.SixDisciplines.com/Cleveland, or call 419-581-2823.
