If data told you where to improve and whether you’re successful or off-course, would you want it? Would you use it? When talk turns to metrics –people often shut down. Mostly, it’s because relevance and utility are absent. Sometimes it’s because people prefer to avoid accountability.
The sticky and too-common problem: people collect and report a vast range of items that are easy to measure instead of deeply understanding and choosing a vital few metrics.
Key performance indicators (KPIs) should be vital navigation gauges to understand where your work stands compared to planned results. The right data is used to improve both processes and impact. In your selection, make sure data is both relevant and actionable.
One way to organize indicators is to see your organization in several big parts. A simple four-piece dashboard common to the private sector includes: customers (or participants), financial performance (outcomes), internal processes, and talent. Those noted in parentheses are a social sector comparable.
What do you need to know about each to make decisions?
1.Customers or Participants It makes sense to have information about your customers or participants…without them, the enterprise quickly fails. For both exempt and for-profit organizations, you might want to know what is your participant retention rate? You also might want to know about “reach,” which is closely associated with the effectiveness of your marketing strategy. How well do you translate inquiries, invitations, presentations, web views into new participants? This is a “conversion rate.” To determine growth, the size of your slice of the pie, compared to others in the same market is important to know, too. This is relative market share.
2.Financial Performance or Outcomes The private sector identifies a revenue growth rate or net profit margin. In this context, it’s also relatively simple to calculate return on investment. Although more complex, the social sector can describe outcomes, too. Results often come in the form of reductions or gains, e.g., fewer teens in the criminal justice system or better science scores by 9th grade. It’s important to be able to describe short-, intermediate and long-term outcomes. Specifying those outcome chains in a time sequence informs smart plans, adaptation and progress. It’s essential to know where you are …to get where you’re going. A social service agency or foundation cites the aggregate of their effort across multiple programs or grantees. For example, Pew Trusts delivers public value from environmental partnerships in several selected priorities.
3.Internal Processes The cost and quality of internal processes are ripe areas for review because these can be directly influenced by capable managers. We know the overall enterprise performance is deeply connected with routine functions. The maturation or relative sophistication in processes is an important measure. So, for example, in planning: Does rigor, discipline and evidence occur in a standard process and cycle? In addition, capacity as well as productivity are areas to assess against standards, as is the value on-going projects contribute to operations.
4.Talent High performing organizations rely on great talent. Organizational leadership as well as human resource practices vary in quality. Both significantly influence workforce and the workplace. “Best in class” human resource practices focus on talent identification, selection, development and retention. The talent domain raises these and many more questions: What competencies and attributes matter most in our staff? Do we have the right people? Will staff recommend their employer as a great place to work? Do staff attitudes and behaviors contribute to the enterprise goals? How do staff rate each other, themselves, their supervisors? What’s the depth of the management bench? Is the prevailing culture healthy or toxic?
Einstein said: “Not everything that counts can be counted, and not everything that can be counted counts.” Steering your ship requires the right information at the right time to inform choices. It is why skillful management measures carefully.
-Lisa Wyatt, Ed.D. is chief strategy officer and partner in Phillips Wyatt Knowlton, Inc. PWK is a performance management resource for systems and social change with clients worldwide. Lisa has cross-sector and international experience. She is an author and W.K. Kellogg Leadership Fellow. See: www.pwkinc.com