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.