Keeping Score: Using the Right Metrics to Drive World Class Performance
Book Preface
Every day, thousands of managers and professionals in all types of organizations spend thousands of hours collecting, reading. and sitting in meetings listening to others review perfonnance data. In fact, I would imagine that most managers and technical professionals spend at least 25 percent of their time reviewing data. This figure is probably even greater in large corporations. ls all of this time well spent? I doubt it. From my expe1ience consulting with many major corporations and government organizations. I sec a lot of time wasted looking at data that has questionable value to the running of the organization. Not only does this waste valuable management time, but looking at the \vrong metri scan confuse decision making and lead to the wrong business decisions.
ALL ORGANIZATIONS COLLECT DATA
All organizations collect some type of data right now. This book is about how to make sure that you are measuring the right variables that will ensure your success both now and in the future. Spending some time thinking about what you currently measure and adding new measures to your databasi.? that help you track progress toward your future vision are what this book :s all about. The basic premises of this book are that it is important to develop measures that focus on the past. present, and future; and that measures need to consider the needs of your customers, shareholders or owners. and your employees. The book is also based on the idea that it is worse to measure too many things than it is to not measure anything at all. Trying to track everything that may be of importance is a common problem in organizations. Convincing management to select the vital few key measures from the wide array of metrics that are currently tracked is a difficult task. Information is power, and many are reluctant to trust a few overall ratios or aggregate indices -they want the details.
Most forward-thinking business and government organizations have implemented a measurement structure that includes more than the traditional lagging measures of financial and operational performance. Yet, many scorecard projects fail because of either poor design or implementation. Successful projects are characterized by approaches that:
I: Kill Flawed Metrics
Organizations sometimes put old metrics on their new scorecards even though performance on the measures can be easily manipulated. l saw this happen in several different military organizations that wanted to have a measure of project schedule performance on their new balanced scorecard I was helping them design. The concept behind the metric was solid – it measured percent milestones completed on major projects. Past performance on this measure showed it to always be green throughout the course of the project, yet customers’ biggest complaint was that the organizations failed to meet major project deadlines. The problem with this measure is that the scheduled dates were always changed/adjusted when project managers saw that they were going to be missed. It was easy to justify the new deadlines because of changes to project scope or delays from suppliers/vendors. Throughout the course of a project, the schedule gauge looked green until the very end when it turned red because the end date was missed.
The problem with this measure is that the schedule data lacked integrity. It was too easy for project managers to adjust the milestone dates so that it always looked like they were on schedule. Another organization that builds and maintains Navy ships came up with a better approach. They measure the amount of “churn” or change there is to a project’s scope, schedule, and budget. Some amount of chum is expected and acceptable, but too much indicated either a poorly done project plan or managed project. Churn was easy to track because the data came right from the project management software that everyone used to monitor project progress.
Any time you measure an aspect or people’s performance there is a tendency for them to select measures on which they know they can achieve good performance. An objective outside facilitator can help minimize this self-serving approach, but often it’s easy to mislead the consul-rants or convince them that the proposed measures are valid. Internal facilitators often get ovenuled by senior managers who are in the meetings. The new scorecard is then no better than the old one. People go to meetings each month and look at the red, yellow, and green charts, but actual perfonnance is often much different than what is depicted in the reports.
A solution to this common mistake is to use a separate group of inside or outside experts to review the proposed metrics to look for data integrity problems. You might take your draft scorecard to several outside experts and ask them to spend a day or so reviewing the metrics and provide feedback. lt is also a good idea to have some of your own people do this. A navy client did this and got some excellent feedback from a group of managers and technical professionals who were not involved in the initial scorecard design.
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