By Tim McMahon

It is not enough to simply create a numeric measure. The measure should accurately reflect the process. We use metrics to base decisions on and to focus our actions. It is not only important to measure the right indicators; it is important to measure them well. 

To be effective and reliable, the metrics we choose to use need to have ten key characteristics. The table shown right was adapted from Keebler (1999), and suggests the qualities to look for in indicators. 

A good measure:	Description:
Is easy to understand	The measure conveys at a glance what it is measuring, and how it is derived
Encourages appropriate behavior	The measure is balanced to reward productive  behavior and discourage “game playing”
Is visible	The effects of the measure are readily apparent to all involved in the process being measured
Is defined and mutually understood	The measure has been  defined by and/or agreed to by all key process  participants (internally and externally)
Encompasses both  outputs and inputs	The measure integrates  factors from all aspects of the process measured
Measures only what is important	The measure focuses on a key performance indicator that is of real value to  managing the process
Is multidimensional	The measure is properly balanced between  utilization, productivity, and performance, and shows the trade-offs
Uses economies of effort	The benefits of the measure outweigh the costs of  collection and analysis
Facilitates trust	The measure validates the participation among the various parties

Choosing the right metrics is critical to success, but the road to good metrics is fraught with pitfalls. As you endeavor to become more metrics-driven, beware of errors in the design and use of metrics.

Common mistakes include:

• Metrics for the sake of metrics (not aligned)
• Too many metrics (no action)
• Metrics not driving the intended action
• Lack of follow up
• No record of methodology
• No benchmark
• Underestimation of the data extraction

Although there may never be a single perfect measure, it is certainly possible to create a measure or even multiple measures that reflect the performance of your system. If the metrics are chosen carefully, then, in the process of achieving their metrics, managers and employees will make the right decisions and take the right actions that enable the organization to maximize its performance. These guidelines will make sure you pick the right indicators and measure them well. ■

Republished with permission from Tim McMahon. Tim McMahon is a Lean implementation leader, author, and blogger. He is the founder and contributor of A Lean Journey blog. This site is dedicated to sharing lessons and experiences along the Lean Journey in the Quest for True North. As a Lean practitioner, Tim brings nearly 20 years of leadership experience implementing Lean manufacturing. Read more of Tim’s work at aleanjourney.com.