The Only Good Metric Is a Stakeholder-Value Driven Metric

Building stakeholder-value driven metrics is not  rocket science.  However, building the right metrics does presuppose that you have a fundamental and definitive understanding of what value is being delivered to stakeholders and the gap between what is being delivered and what is expected and needed.  Without that information in hand, it is unlikely at best that quality metrics and supporting tracking and reporting systems will yield any returns.

Metrics can be a good thing or a bad thing depending how well they align with delivering value to stakeholders.  Let’s face it: building baselines, measuring results and continually raising the performance bar is not necessarily fun.  It is time-consuming and arduous.  The wrong metrics distract human capital from what is important.  Entire organizations can be misled and substantial damage to the financial well-being of the company can result.  

Let there be no doubt that what we measure is what we focus on.  That's why it is absolutely critical that organizations create the correct metrics and measurement systems.  I suggest that performance metrics be integrated into the company’s business plan in the form of its strategic objectives.  These metrics should be stated in operational terms so that it becomes easier to communicate them and drive them down throughout the organization.  Then, instead of developing divisional and departmental supporting metrics, the company should create cross-functional metrics based on its value delivery systems (end-to-end business processes).  Finally, these cross-functional metrics should be driven down to specific roles that employees play within each delivery system.