Do Your Metrics Drive Behavior?

We’ve all heard the phrase “tell me how you will measure me and I will tell you how I will behave.”

That’s partially true, but inherent in the statement are several important assumptions. For your key metrics, ask these questions:

1)        Does the employee being measured believe he can in fact directly impact the metric as much or more than can others who are measured by something else?

  • The example of insisting Distribution minimize shipping costs while Supply Chain minimizes inventory costs is but one that can create conflict among departmental leaders

2)        Is the metric defined sufficiently well to consistently respond to the behaviors you want?

  • If product mix, or seasonality, or other similar factors are acceptable explanations for the metric going in the wrong direction, then it’s not a good metric. You’re saying it’s okay to behave in a way that makes the metric deteriorate, which means it is not driving behavior and you don’t want it to!

3)        And perhaps most importantly, does top management focus constantly on understanding the values and movement of key metrics?

  • No matter what leaders say, it’s what leaders do that actually drives behaviors of others in the organization.
  • If “key metrics” are mentioned at the beginning of the year and then again at performance review time and not in the interim, the metrics are useless in running the business.

Metrics come in two kinds.

1) Those that drive the behaviors you believe are critical to your organizations success, and

2) Those that are perhaps interesting, but irrelevant.

Eliminate all of those in category 2 and focus on a mere handful of those in category 1. Your business will benefit.

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