Using Appropriate Performance Measurements to Drive Behavior
In today’s world, most businesses have access to a plethora of data. The biggest hurdle is understanding how to use the data to develop insightful metrics that lead to improved decision making and enhanced performance.
Many organizations tend to focus on industry benchmarks or generalized operational metrics; however, these metrics are often not specific enough to drive the right behavior within the organization. The first step in developing useful performance indicators is to have a thorough understanding of the desired result. Be specific – what behavior are you looking to drive?
From there, you can analyze how to best leverage the data to compile relevant metrics that are useful to your organization. With respect to the data, it is imperative to clearly understand how the data is compiled and what it means. Data integrity and accuracy is critical to developing useful performance metrics. Once compiled, the list of indicators should be distilled down to the most important measures. It is better to effectively measure a few items rather than drowning in data with limited insights.
Developing suitable metrics is only the first step. In order to improve long-term organizational performance, metrics must be used appropriately to drive behavioral changes.
Firstly, accountability must be established. There should be an owner that is responsible for the results of each indicator. After reviewing the results, these individuals must be able to easily identify what conclusions to draw. Simply knowing whether or not you beat last year’s numbers is not good enough. Appropriate and challenging, yet realistic targets must be set to ensure that you are working towards optimal performance.
When reviewing current performance against the target, it is important to highlight both the positive and negative results. If useful metrics were selected, then positive performance results will indicate that the team has adopted the behavior changes that you were trying to drive towards from the start. Moreover, if there are negative results, it will be easy to determine what actions and behavioral changes are needed to improve performance.
To facilitate visibility and use of the metrics, a simple, easy to interpret dashboard can be developed. Metrics and associated dashboards should be updated frequently and results should be relayed to the entire team.
Lastly, it is important to continuously reflect and ensure that metrics are still appropriate in changing business environments. Make sure to always check whether the organization’s metrics are specific enough to drive the desired behavior? Moreover, are the results being used effectively to improve performance in the long term?
By: Alexandra Palmer