Measuring Results – A New Guide For Managers

August 30, 2011 by  Filed under: Management 

A lot of the data we use in business is qualitative data – anecdotal information from your team and partners. Just as important is measurable, numerical data, and you must understand how it can serve you.

Results thinkers developed their results thinking capabilities by learning how to measure, manage and manipulate data. There are three critical types of measures that every future executive must know before you can ever be considered for a top job in your organization.

1. Productive Measures

2. Indicative Measures

3. Preventative Measures

Productive Measures

Productive measures demonstrate the value you and your team have added to the organization. These are your performance measures, stated in the affirmative. They are the measures you would place against each one of your accountabilities to show the extent to which you are achieving your role expectations.

Productive measures are the ones you will use to communicate how your team has delivered extraordinary performance. I call them “Productive” because they demonstrate what your team has “produced”. Examples of Productive Measures would be:

* Dollars in new sales generated

* Capacity created through automation (e.g. hours)

* Increase in throughput (e.g. speed)

* Improvement in quality, measured by improvement in defect rate

* Employee satisfaction, measured by employee survey scores

Indicative Measures

Indicative measures are sometimes also called “leading indicators”. Indicative measures provide information that underlies your Productive measures. When you monitor Indicative measures, you can often preemptively identify future performance issues that your Productive measures might miss because they are too high-level.

Indicative measures can be activity based, or they can be productivity based. Here are examples of each type:

Activity Based Indicative Measures

1. # of sales calls completed per week per employee

2. # of processes automated

3. % of product that has been checked for quality

4. Employee participation rate in employee satisfaction survey

5. # of training hours completed by employees

Productivity Based Indicative Measures

1. # of new contracts signed

2. Dollars in new sales generated per employee

3. Average size of contract

Activity based indicative measures give you a layer of information pertaining to your Productive measures that could signal flaws in how you are measuring performance. For example, if your team is surpassing expectations by earning $700,000 in new sales each week, but your 10 employees are only making 2 calls each, and between you and one team member you are earning $650K of the total, your indicative measures will serve to show you that there is a lot of opportunity being left on the table by 9 of your employees.

Similarly, if your performance measures indicate high employee morale, but only half your team filled out the survey, you might consider that the other half are so disenfranchised that your real performance is actually quite low.

Productivity based indicative measures are like Productive Measures in that they provide information about outputs, however they differ in the level of detail. Whereas productive measures should give you the highest level of aggregate performance information of your role, Productivity measures would typically give you the subcomponents of that detail. Often, if you have identified Productivity based indicative measures, you will be able to delegate these as Productive Measures to members of your team.

It is important to use Indicative measures to guide your decisions, but be careful not to confuse them with Productive measures. The biggest mistake managers make is to confuse Indicative measures with actual performance.

Preventative Measures

Preventative measures are used to constrain behaviour. Sometimes in business there are limiting factors in the environment that would constrain you from going full-throttle on achieving performance. These constraints often relate to regulatory or board imposed rules and policies. They are also sometimes introduced to control interdependencies between teams.

We often see preventative measures in balanced scorecard processes where they exist to ensure one objective does not take priority over and compromise other important objectives. For example, a manager in charge of elevator installation would be responsible for efficiency of the installation, but not at the expense of safety. A preventative measure in this example could look something like “% Adherence to installation procedures”. This inhibits (constrains) people from certain behaviours. Another example that we see often in financial institutions is limiting the number of allowable material weaknesses in audit results.

Productive measures are your most important measures for moving you ahead in your career. They describe the value you give to the organization. To move the needle on productive data, you must be outwardly focused on results, and inwardly focused on efficiency.

“The effective decision-maker assumes that the traditional measurement is not the right measurement. Otherwise there would be no need for a decision… The traditional measurement reflects yesterday’s decision. That there is need for a new one normally indicates that the measurement is no longer relevant.” Peter Drucker, Management Master

Mary Legakis is a global management expert based in Toronto, Canada. As The Management Coach, she helps ambitious managers and aspiring executives get personal, professional and organizational results – faster.

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