Metrics_ How to Improve Key Business Results - Martin Klubeck [127]
Conclusion
Standards and benchmarks are inextricably joined at the hip. Benchmarks are meaningless if there are no standards to ensure that definitions and measurements are consistent across organizations. This is particularly an issue with external benchmarks, where you are attempting to rank yourself against your peers and competitors.
Standards are unnecessary if you are only using internal benchmarks.
Benchmarks are better used for demonstrating progress against a baseline than they are for comparisons against outside organizations.
When are standards and benchmarks required?
When you are comparing your performance against competitors or peers. External benchmarks are required to determine the average performance of your comparison group
the range of performance of your comparison group
the top performers in your comparison group
Standards are required to ensure you are comparing apples to apples with brand, type, color, and size. In other words, standards are required to ensure that you are comparing specifics.
When you are determining a realistic goal, tracking progress to a goal, or deciding if you have achieved a goal. Internal benchmarks are required to determine a norm to help set realistic goals for improvement
a baseline or starting point to track progress from your current state
a means for determining the achievement of a goal (when that goal was defined as achieving a specific level of improvement)
Benchmarks are also useful in determining if your efforts in organizational development or process improvement are having a positive effect on your environment, services, or products. If you anticipate your efforts (especially changes to processes) are going to have an effect on performance, you'll want baselines for any possible areas concerned. If you can also get historical data, it will help to determine if changes are due to your efforts or if they are normal fluctuations.
Respecting the Power of Metrics
The short length of this chapter is intentional in order to help you focus on the power of metrics. You must respect the power of metrics and be careful of the damage they can do to your organization if wielded improperly.
When I was a young Airman in the United States Air Force, I had the privilege to work with a civilian electrician, Tom Lunnen. Tom was a no-nonsense guy and a good friend. He was older than me (still is) and helped me with good advice on more than one occasion. Perhaps the best advice he gave me was to respect the power of electricity because even trained electricians have been badly hurt—or worse—performing electrical work. Electrical injury is the second leading cause of fatalities in the construction industry.
I bring this up because metrics are like electricity. Metrics can be used to do a lot of good. As a tool, they can help us understand our environment. They can help us evaluate how well our efforts are going. They can make communication easier and clearer. But like electricity, metrics must be respected. If you follow the rules, you can use electricity—and metrics—to make life better. But, even if you follow the rules, there remains the potential to cause damage. The risks are high enough that you have to decide in each case whether the benefits make it worth it.
Most of this book discusses how to develop, analyze, report, and most importantly, use metrics for improvement. But unlike most organizational improvement tools, like training plans, strategic plans, and employee recognition programs, metrics can do as much harm as good if used improperly. And in most cases, it's because the wielder of the data isn't well-trained or wary enough to understand the powerful but risky nature of metrics.
Metrics have the potential