Measure What Matters

It is said “What cannot be measured, cannot be improved.” This has often become the basis for management and leadership teams to develop Key Performance Indicators and set these up in the form of a dash board. Review of the KPIs then occurs on a regular basis to track performance.

While this is a good practice – one should not forget that just because something can be measured does not mean it is the best metric. Often times extreme lagging KPIs are on the dash board. One needs to measure what matters, and, preferably high impact leading metrics.

Take for example customer complaints. It is a valid and important metric, however, it is too late in the game since the damage is already done; the customer had a bad enough experience – to the point that they decided to complain.

What are examples of leading metrics that could have predicted a spate of customer complaints? Consider tracking these over time:

• Proficiency levels of staff in new business processes / SOPs
• Ratio of new hires to total staff
• Rate of new product introductions
• Internal defect / error rates
• …

Each of these can impact customer complaints (an extreme lagging KPI).

So the next time you see KPIs on dashboards – ask yourself:

• Are they extreme lagging indicators?
• Are they actionable?
• What might be leading indicators that would enable you take proactive steps?

Would you like to have your KPIs analyzed for usability and effectiveness? Let’s chat – you can reach me at rai@thekpisystem.com or feel free to call me at: 512-560-8326.