Metrics
are an important method of understanding what is happening in your business at
any particular time. It provides a feedback loop that helps executives make
decisions about business strategy. Even though metrics are important, it is
equally important to understand that metrics don’t tell the whole story as one
can become derailed by over-reliance on metrics.
You
need to know how many products are being made, rejection rate, overtime,
staffing numbers, sales volume, stock value, time spent on activities, and
customer perception. These metrics, in addition to the thousands of others,
help describe how a business is functioning. It is possible to run some metrics
by the day, month, quarter, year, or decade to get a better grasp of what is
going on.
Metrics
can also influence employee performance in positive ways by letting employees
know that their contributions count. It provides a level of feedback and
expectation building that is used for evaluating employee performance. The
numbers help motivate and define the nature of work.
The
downside is that numbers take on more importance than the actual work and
organizational output. This occurs when metrics take on a life of their own and
become the focus of employees who want to seek praise and rewards without
actually servicing the needs of the company. The focus switches from the
customer to the numbers.
The consequences
of switching from real life customers or outputs to numbers are that the
numbers become the main focus of operations. It is possible to meet all of the
numbers but still be turning away customers or turning out an inferior product.
If your business is not measuring
properly then the numbers become a type of smoke and mirrors to what is
actually happening.
Metrics
should be used to create a full picture but also should not supplant common
sense in managing entire process. If the numbers take on a life of their own
organizational targets may not be hit even though the metrics are giving
positive results. Adjusting and changing the metrics from time-to-time can
ensure people don’t only focus on the numbers.
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