The last blog posting on” The Characteristics of Metrics that Matter” discussed two key characteristics of an effective metric that determine its trustworthiness: accuracy and reliability. You wouldn’t want to make decisions based on a metric unless its calculation is accurate and you are reliably interpreting it. But what good is a clearly defined metric if you don’t know what decision to make or action to take?
I can see something’s wrong (or right) but what should I do? – That’s the key question: is the metric actionable? Can someone actually do something to 1) determine what happened that caused a metric to break a threshold or miss a goal and 2) correct or otherwise address the situation? First, the metric must clearly indicate the problem or achievement down to a low enough level to assess root cause. For instance, showing that overall costs are decreasing is not nearly as actionable as when the decrease is sliced by product segment. We could then learn the cost reduction lessons from those responsible and initiate the right response. Breaking metric thresholds can be cause for celebration!
Calculate, act, repeat – Actions to find out why a metric says what it says and act accordingly must be repeatable and economical. Why measure what you cannot validate consistently time after time? Likewise, the value of the action taken is the improvement you can make minus the cost of collecting data, calculating the metric, reporting it, and taking the action. This cost can be impacted by things such as the frequency of data collection and reporting, the work to ensure clean data and an accurate calculation (sampling can help minimize cost), etc.
A clear plan of action for the right people – With a clear indication of what happened, how do the right individuals take meaningful action? First, the right metric owner (or owners) must be informed of the metric change. The owner should be determined when getting broader buy-in within the organization on the ability to drive outcomes. The owner must be able to a) do root cause analysis and b) take action to celebrate a “win” or correct a problem. Regarding one or more owners, I suggest one person be the accountable owner with optional “assistants” that can take action. The key to success is to carefully define the ownership roles so that ultimate accountability is clear yet responsibility can be disbursed.
A simple Responsibility/Accountability/Consult/Inform (RACI) chart can help establish accountability and responsibility. It lays out these roles for those completing tasks or deliverables, or needing to stay informed about them:
- Responsible – Actor to take action
- Accountable – Buck stops here, owner of quality and outcome, held accountable
- Consulted – Involved for input
- Informed – Receiving info about execution
Having this worked out ahead of time adds confidence in the overall performance management process – the right person(s) can determine the root cause and take the right action(s).
Can the right person(s) take the necessary actions related to metrics in your organization? Share your comments and let’s discuss.