Measurement-Managed Organizations™ are more likely to be leaders in their industry, with higher returns on investment and more success in major changes. But how are they created?
(Click here to learn more about the benefits of Measurement Management)
Three premises guide Measurement-Managed Organizations:
- A philosophy of fact-based decision making
- A central strategic measurement system that provides high-level focus
- An aligned infrastructure -- systems, structures, capabilities and a culture that are in sync with business strategy
Measurement-Managed Organizations use information as the basis for problem solving and decision making, but they avoid data scatter and data-wars because managers and their employees use a common base of metrics, tightly linked to their business strategy, to work with a common focus.
A strategic measurement system connects the vision and strategy to unit and individual performance expectations and goals. Unit managers and individual employees in Measurement-Managed Organizations derive their accountabilities from goals and measures that cascade from top management's strategy. Communication is open and clear, and reward systems are aligned with the key requirements for business success.
If we look deeper into the truly successful companies, our research and experience has identified five factors that accelerate their ability to execute their business strategies:
FocusFocus implies having a clear vision and strategy and a sound roadmap for staying the course. Superior organizations focus on priorities and they have measures in place to ensure that everyone's sights are trained on the critical few results important to the strategic well being of an organization and its stakeholders.
Companies that are truly proficient at measurement aren"t necessarily those with the most measures in place. Knowing what not to measure was just as important as knowing what to measure.
The key to focus is to measure key results in six performance areas that lead to success. "Strategic measurement" is measurement focused on these six areas of performance, as they relate to the organizational strategy.
AlignmentAlignment implies clear, unobstructed, horizontal and vertical lines-of-sight between senior executives and employees, and with customers and the markets.
In a Measurement-Managed Organization, all units from the CEO to the individual employee or performance team have linked measures. Top level strategic measures lead to operational measures, and these in turn define the field for department, teams and individuals. Most employees should be able to see a line-of-sight from their measures to the business as a whole.
Internal measures should be in alignment with the marketplace. A clear line-of-sight should exist from measures of competencies and performance to customer drivers, such as cycle time, to customer outcomes, such as retention and loyalty.
AccountabilityAccountability means holding one's self and others to commitments for performance. In Measurement-Managed Organizations, everyone has performance metrics.
Accountabilities such as good customer service, high effort, strong performance, and continual human resource development mean little without an agreed-upon system of metrics that puts meaning and muscle into vague, pleasant sounding generalities about performance measurement. For example, if everyone agrees that "customer service" is defined as the ratings given by customers on, say, five dimensions of a transaction purchase survey, then accountability can be properly measured and managed. And, accountability in this context implies having clear rules of engagement built on a clear definition of customer service and an effective system for tracking performance.
LearningLearning is the ability to transfer knowledge at the decision-making moment. It is also the ability of decision makers to draw quickly and effectively from the collective memory bank of past experiences in order to apply the wisdom of past experience to a new situation.
Measurement is a major factor in just-in-time knowledge transfer and learning. The quicker individuals receive the right information, the more quickly they can see a discrepancy between a norm or target and the "as is," and then take corrective action. That is why clearly agreed-upon targets that are aligned vertically enable workers to quickly identify when their performance is out of sync with the commitments they have made, and enable them to challenge the system when the data suggest that the rules of the game may have changed. High-performing firms have created thinking workers who do not check their brains at the door. They work hard to achieve clear targets, reducing the frustration that occurs whenever employees feel they are always chasing a moving target.
Learning is enhanced when there are tracking systems in place to test the viability of performance standards and related measures. Such systems give employees a powerful tool to challenge the fundamental assumptions of their plans. Workers who constantly see tolerances out of range, forecasts that aren't within reason, or service skills that are continually falling short, can help their organization avert an impending disaster.
ForesightForesight refers to the ability of the organization to anticipate future situations, trends, and outcomes, and to act on that anticipation in a timely and creative fashion.
Smart organizations spend time improving their ability to anticipate the future and understanding the potential impact of future events on their business. They have a highly linked set of business drivers, results, and measures and can home in` on drivers that have future predictive value. Even if a business model buys a company a modest degree of predictability -- assume it provides three, six, or twelve months lead time -- such a company stands a good chance of outmaneuvering competitors.
Good strategic metrics can help in identifying new trends in the marketplace. For example, firms that have good strategic sensors such as drivers of customer satisfaction, often can "feel" the pulse changing, the market going soft, shifts in consumer preferences, or the existence of an unmet need, as they track the relative importance of these drivers in consumer decisions.
Metrus Group has developed a time-tested, proprietary implementation process to help companies become Measurement-Managed Organizations. Click here for more details.
To learn more...- What exactly is a Measurement-Managed Organization?
- What are the benefits of being a Measurement-Managed Organization?
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