Performance metrics are a key building block of an organization’s analytics capabilities—with good reason. Everyone wants to understand how well their organization performs, and there’s often data around for easy picking.
But, beware. As you develop the discipline of organizational self-analysis, be mindful of the effects your analysis can have on employee behavior. In particular, you want to be sure that drawing attention to performance metrics doesn’t drive people to “game the system” by manipulating key metrics at the expense of others.
As such, keep the following in mind as you build your organization’s performance metrics skill set:
- Look beyond a single metric. Few if any people have a job that’s simple enough to rate based on a single statistic. That’s even less the case for departments and larger organizations. Choose a portfolio of metrics that gives you the big picture in at least part of its complexity. If you’re assessing a corps of drivers, don’t just look at miles driven. Factor in number of trips, tonnage hauled, tickets incurred, percentage of cargo damaged or lost—as comprehensive a view as you can. Not only will this give you a better understanding of your organization, but increasing the number of variables will make the system more difficult to game.
- Put the right value on what you measure. Don’t get giddy about the fact that you can get hard data on a given aspect of performance. Make sure to put it in context. For an example, consider the on-time delivery of projects. For internal project managers (PMs), that’s likely to be less important in and of itself than whether the project was able to deliver the needed value to the organization at the anticipated cost. On the other hand, if you’re a PM consulting organization that has timely delivery written into its contracts, then this metric turns into a key measure of the performance of your PMs.
- Tie metrics to compensation very carefully. We humans are tremendously complex beings with rich inner lives. But in a workplace setting, monetary compensation remains a go-to motivator and a great explainer of people’s behavior. In choosing your compensation metrics, do a risk assessment to investigate the relationship between your chosen goal and other aspects of the organization’s performance. If you’re rewarding first-call resolution in your call center, what’s going to happen to your average handle time? If you squeeze down on average handle time, are you going to cause your representatives to log “resolutions” that only superficially address the issue rather than getting at root causes?
- Be clear on what’s measured and what’s not. Make sure that everyone in your organization knows, at goal-setting time and reinforced consistently throughout the year, which parts of enterprise and personal performance are being assessed metrically and which are being evaluated through other means. Hold to it as best you can throughout the year, and provide updates when circumstances change. Also, make your measures transparent. Allow your people to access their latest metrics and question the numbers, calling out qualities that the metrics don’t measure.