Organizational Measurements

 

“How’s it going?”  Or more to the point, “how is your company doing?”  “Oh, we are doing okay.”  “We are keeping the doors open.”  “We made a profit last year.”  “Man things are really tough.”  “Competition is eating us alive.”

 

Have you ever participated in a conversation like this?  It is a bit awkward and fairly stilted.  Wouldn’t it be great if you could really answer the question with some confidence and authority?  “Our cycle time has been improving at the rate of two percent for the past five months.”  “Employee morale is up by five percent over this time last month.”  “Productivity in the CAD section is up 20 percent since we had everyone trained in the latest software.”  “Our customer satisfaction numbers have gone down every month for the last year.”

 

I once met a man who claimed he could manage a business as large as General Motors with a scorecard of just 14 measures.  We never got the point of him telling me what the 14 magic numbers were, but I think he was on to something.  If you are going to understand and manage a business, you need to have some key measures to go by.

 

So what measures are the right ones?  How many do you need?  Where do you start?  I like to begin by looking at the mission vision and values of the organization – the constancy of purpose.  Surely within those three areas are several items to measure, and they are vitally important.  Of course the most used measures are financial measures – profit, return on investment, debt to equity, etc.  Then there are always very important processes in the organization that are key to success.  They must be measured.  Every organization should have some indication of how well they are doing in the eyes of their customers.  So we need to measure customer satisfaction in some way.

 

Recently I have become aware of another area of measurement that is almost always overlooked.  That is the measure of employee growth.  I am not sure why this area is forgotten.  It could be because it is not easy to measure and could involve judgment.  But it is very important to the future of the organization. Are our people growing in their skills and education so we can advance as a company?

 

Perhaps you have run across the book, The Balanced Scorecard by Robert S. Kaplan, David P. Norton or the book, Bullseye! by William A. Schiemann and John H. Lingle.  They both advocate a scorecard approach to the key measurements needed to run an organization. 

 

Below is a template of a balanced scorecard for you to consider.  Begin by choosing from what general perspectives you will measure the organization.  My choice is to look at 1.Constancy of Purpose, 2. Financial, 3. Customer, 4. Processes, and 5. Employee Growth.  After careful consideration choose several measures in each perspective.  You may have more or fewer than three measures in each perspective.  I suggest you don’t have too many. 

 

You may want to try it for an entire organization, but it will work at the department level as well.  Take measurements monthly or more frequently to get the most benefit.  Put the measurements in run chart graphical form so progress over time can be seen.

 

Once measurements have been decided upon, share them with others in the organization.  Let everyone see how the organization is doing.  Expect employees to have questions and to provide suggestions about how to make the numbers get better.

 

Most folks think of measurement as a way to control behavior or to evaluate past performance, but a good measurement system will clarify and communicate the strategy, align individuals and the organization, be used to make on-the-fly adjustments, and be predictive of the future. – a communicating, informing, learning system not a controlling system.

 

Give a balanced scorecard measurement system a try.  Be able to communicate and take action based on the facts.

 

 

 

The Organization Scorecard

 

 

Perspective: Constancy of Purpose

 

Measure Name	Type of Measurement (Input, Output, Outcome)	Measurement (What and how)	Frequency Measured	Person(s) Responsible
1
2
3

 

 

 

Perspective: Financial

 

Measure Name	Type of Measurement (Input,  Output, Outcome)	Measurement (What and how)	Frequency Measured	Person(s) Responsible
1
2
3

 

Perspective: Customer

 

Measure Name	Type of Measurement (Input, Output, Outcome)	Measurement (What and how)	Frequency Measured	Person(s) Responsible
1
2
3

 

Perspective: Processes

 

Measure Name	Type of Measurement (Input, Output, Outcome)	Measurement (What and how)	Frequency Measured	Person(s) Responsible
1
2
3

 

 

 

 

 

Perspective: Employee Growth

 

Measure Name	Type of Measurement (Input, Output, Outcome)	Measurement (What and how)	Frequency Measured	Person(s) Responsible
1
2
3