balanced metrics 2021-02-17 Jeff Bondy

The economic recovery in 2021 will put a premium on execution. Why? Because the operating environment will be more stable and predictable. 2020 was the year of big strategic changes; in 2021, you just need to execute well.

However, how do we even know how well our organizations are currently executing? Financials cannot give the full picture since they don’t tell us how much better we could perform.

Many of our Line-of-SightSM Certified Partners are also talent optimization consultants because they have a passion for execution - after all, you can only execute through your people. But there is more to execution than human capital.

Line-of-SightSM helps mid-market companies to large enterprises execute better. It looks beyond talent to help you assess the 5 Key Success factors for Execution (let’s call them KSEs): Strategic Understanding, Leadership, Balanced Metrics, Activities & Structure, and yes, Human Capital.

This week represents our third in a series of short tips on execution, Every week we will discuss how you can improve each of these five KSE’s.


How Relevant Are Your Metrics? 

The Importance of Balanced Metrics

A set of well-chosen metrics allows employees to understand exactly how their activities are going to be tracked and how their output will be aggregated into successful execution. In other words, good metrics will foster the right behaviors to execute. Depending on your strategic intent, these behaviors may lead your organization to innovate (by fostering collaboration), to reduce costs (by systematically rooting out inefficient processes), or to deliver outstanding service (by measuring client satisfaction for example).

Regardless of your strategy, you control what you measure. And if employees know what you control, they will adapt their behavior accordingly.

The reality is different. In our work helping clients to improve their execution capabilities, we often see inefficient metrics such as:

● A dashboard that includes useless metrics added over time, but no longer relevant
● Some measurements may be “vanity metrics” which are designed to always deliver positive values and cast their owners in a positive light
● Dashboard are shared only with executives and managers
● Budgets may progressively drift away from alignment with the strategy, especially if you do not use Zero-Based-Budgeting and budgets are carried over year after year without substantial, critical review

Answer the questions below. If you answer “No” at least once, you may need to review your current metrics to make sure they support your strategy execution.

● Do you systematically consider and act on every metric you track?

● Do your employees have full access to the metrics that track their activities?

● Are your metrics out of date when it comes to guiding today’s work?

● Is your budget fully aligned with your strategic priorities?

When we help clients achieve execution excellence, we focus on metrics early - as soon as the strategic intent has been clarified. We promote good metrics hygiene based on simple guidelines:

First, metrics have to track all the key drivers for execution. There is a massive body of research on balanced scorecards and we encourage clients to consider all of the elements of their strategy while focusing in on their key drivers for execution.

Most of our interventions include the removal of irrelevant or outdated metrics that no one dared to remove until now.

Second, the leaders’ role is to communicate their strategic intent broadly; it is also to make the underlying metrics equally visible and accessible to all. At a minimum, they should report on company-wide metrics once a month.

Let’s use a bowling alley analogy: what if the pins were hidden behind a curtain? How would you adjust your aim and technique? Employees need to keep a score of how well they are performing. In other words, remove the curtain and let them adjust their aim accordingly.

Third, employees should be empowered to act on the metrics that track their activity. People fundamentally want to perform well; this requires the ability to assess their own impact and the opportunity to improve and develop.

Finally, budgets should be just as consistent with the strategic intent as operational metrics. Just like metrics, budgets tend to inflate over time or become disconnected from business goals if they are not regularly re-assessed against the strategy. No manager likes to see their budget cut, but that discipline is essential to remain focused on the essential strategic intent.

In our next blog, we will consider the impact of a well-designed organizational structure and focused activities on your ability to execute well. How well is your business executing? To find out, please reach out to a Line-of-Sight Certified Partner to initiate an assessment of your execution capabilities.

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