The best management advice you have ever heard should be, “what gets measured gets done.” The underlying idea is that an organization’s performance can often be interrelated to successes of the systemic process that employees operate. Therefore, managers must establish an objective set of metrics for organizational, team, individual performance, and track and evaluate performance and then reward their employees based on the outcomes, as measured by predetermined metrics.
The simple act of establishing a metric for performance and tracking it is enough to make employees want to keep exhibiting and improving on the effective behaviors. Therefore, incorrect measures will get the wrong things done.
Activity measures are not necessarily outcome measures. It is a myth that measurement alone will make a difference. The “manage by metrics” strategy just does not involve setting up the right metrics. If an organization is effective at measuring something, it simply has established a means of measuring progress towards a goal. It does not mean that the organization does not necessarily get anything significant done. Managers tend to gauge all sorts of parameters and establish metrics that do not necessarily have significance. Habitually they do not know how to use the data meaningfully to improve organizational performance.
Recurring, quantitative measurement of customer satisfaction is an effective indicator of the health of the organization. Many corporate have determined that this is metric is more significant than business profitability or market share. To implement this strategy, define key measures that affect the output of the organization from the lens of the customer. Measure everything that is directly or indirectly significant to what needs be done to create business value.
One effective strategy to manage by metrics is to make customer satisfaction and key quality measures to be the primary basis for annual performance evaluation and compensation raises for the entire organization.