Many approaches such as the Balanced Scorecard or Objectives Matrix tries to balance the need for hard and soft measures. Management assumes that metrics will spur greater performance, bring focus to priorities and foster collaboration to achieve results.
In our experience, they rarely do. Most metrics are primarily focused on measuring functional performance based on organizational design. The metrics of the vice-president cascades down to the metrics of his or her subordinates along reporting lines. In reality, organizations succeed when their overall processes are efficient which spans across functions. This generates multiple conflicts between functional priorities and process or customer priorities. The organization oscillate between the two requirements while organizational performance suffers.
In the new world of demand for rapid response, high reliability and satisfying unpredictable customer behavior, key performance metrics based on functional or process attributes no longer work. Our research proved that the very basis for performance measurement must change.
Efficiency metrics are replaced by effectiveness metrics as the prime measure of success. Agile and responsive systems provide more value to customers and markets than efficiency and cost reduction. Therefore, key metrics should be formulated around business systems and their synchronization.
Metrics such as:
Throughput dollar days
Inventory dollar days
Velocity through key resource capacity
should be the prime measures of performance.
If you find yourself frustrated by poor performance outcomes despite measures showing all is "green," then it is time for you to rethink your assumptions about key metrics.
We have seen significant increases in performance merely by reformulating the basis for performance measurement.
What You Will Gain
What Your Company Will Gain
New understanding and competence to structure your organization's performance management.
Significant gain in overall company performance by re-configuring the performance metrics and measurement.
Increased respect and support for your managerial capabilities to structure effective performance measurement.
Increased motivation throughout the organization to deliver on success metrics matched to the new market requirements.
If you want to reframe your thinking about performance metrics then you should...