Where do metrics come from? A metrics sourcing strategy.(REQUIRED READING)

One of the popular topics in management is metrics and measurement. Forrester published a series of reports on the Balanced Scorecard and articulated key metrics for each of the four perspectives. However, these only represent a starting point; each organization will develop metrics that are more specific to their strategic objectives, culture, industry and other relevant criteria. But when all is said and done, which metrics should you choose? There are several factors to look at when selecting metrics, which can ensure that you select the most appropriate metrics for what you are trying to accomplish.

What Do You Pick To Measure?

Selecting the most appropriate metrics to measure is a major challenge in implementing a performance management program. There should be a balance between operational-level metrics and strategic metrics. More importantly, metrics must be complementary and not work at cross-purposes. For example, a strategic objective of increasing customer satisfaction may not be in sync with another strategic objective of measuring reduction in inventory.

Smart Metrics

When developing metrics, a sound approach is to use the SMART technique. SMART metrics have the following characteristics:

Specific: The metric is clear in what it is measuring. This also applies to ownership and accountability for the performance of the metric. A specific metric is, for example, help-desk calls by hour by technician, rather than help-desk volume.

Measurable: Some metrics are not easily measurable, which may be due to the lack of accurate or timely information, or can arise from disagreements about how to measure it. For example, customer satisfaction is a metric, but how do you measure it? A customer satisfaction score from a corporate customer satisfaction survey is dearly measurable.