Performance metrics in dashboard are critical tools for guiding, monitoring or implementing. Most of the firms fail in measuring because they use wrong metrics or broad metrics. Most of the successful firms align their metrics with their strategies.
Budget is another important tool that has to be considered. Based on that the goals are set, resources are allocated and performance is measured too. For correct measurement, budget should reflect the strategy that is it should provide enough guidance as the firms grow more complex and sophisticated. Strategic measures are taken by many companies which are linked to the strategies the firm articulates and measure performance both outside and inside the firm, relative to competitors and customers.
Different performance measures for different times have to be used by the firms considering where they stand and what their position is. For successful implementation of the strategies in the dynamic environment, combinations of metrics are to be used.
SEVEN GUIDELINES FOR PERFORMANCE MEASURE METRICS:
Measure what is important –the main focus should be on key strategies like focus, satisfaction, etc. it is also important that the metrics do reflect what competitors are doing, customer satisfaction. There should be a regular check to know whether any actions are being taken based on the metrics or not. Most importantly metrics should be clear and simple. Transparency of metrics is very important so that they are easily understandable and communicated to others.
Align your metrics with your key stakeholders’ metrics –it is necessary that the metrics should align with the stakeholders’ metrics to have a healthy relation with them. Every firm needs to understand what the stakeholders expect from them and based on that metrics are to be created. In this way both the firm and stakeholders can achieve their broader strategic goals.
Translate qualitative targets to quantitative metrics –it will help for the managers to set quantifiable targets and based on that track the performance. It will be easier to set and measure when they are quantifiable.
Deploy early warning systems –as the environment changes it is necessary to respond to it as quickly as possible. A firm should not always focus on long term goals but also on short term and immediate goals for better development and progress.
Establish a common language –even though metrics are simple and clear yet same words are interpreted differently. The words exact meanings had to be clearly defined for better understanding and transparency. As these metrics are communicated to the employees too they should be in simple language and also the link between the metrics and organization’s goals and strategies are also to be defined properly.
Deploy a balanced portfolio of metrics –there should be a balance between different combinations of metrics. Healthy performance metrics include both short-term and long term metrics. Focus should not focus only on short or long, both should be considered. The lifespan of the strategy should be seen and based on that metrics are to be created for the life time of the strategy.
Align metrics with strategy –good metrics facilitate implementation of strategy. Once strategy has been developed, firms calibrate their performance management systems to track and reward strategic behavior. Rewarded employees will be more encouraged on meeting their strategic targets.
For organizations to tune their performance measurement systems they need to encourage strategic focus and behavior, simplify the challenges and communicate both positive and negative results and energize the teams.
Budget is another important tool that has to be considered. Based on that the goals are set, resources are allocated and performance is measured too. For correct measurement, budget should reflect the strategy that is it should provide enough guidance as the firms grow more complex and sophisticated. Strategic measures are taken by many companies which are linked to the strategies the firm articulates and measure performance both outside and inside the firm, relative to competitors and customers.
Different performance measures for different times have to be used by the firms considering where they stand and what their position is. For successful implementation of the strategies in the dynamic environment, combinations of metrics are to be used.
SEVEN GUIDELINES FOR PERFORMANCE MEASURE METRICS:
Measure what is important –the main focus should be on key strategies like focus, satisfaction, etc. it is also important that the metrics do reflect what competitors are doing, customer satisfaction. There should be a regular check to know whether any actions are being taken based on the metrics or not. Most importantly metrics should be clear and simple. Transparency of metrics is very important so that they are easily understandable and communicated to others.
Align your metrics with your key stakeholders’ metrics –it is necessary that the metrics should align with the stakeholders’ metrics to have a healthy relation with them. Every firm needs to understand what the stakeholders expect from them and based on that metrics are to be created. In this way both the firm and stakeholders can achieve their broader strategic goals.
Translate qualitative targets to quantitative metrics –it will help for the managers to set quantifiable targets and based on that track the performance. It will be easier to set and measure when they are quantifiable.
Deploy early warning systems –as the environment changes it is necessary to respond to it as quickly as possible. A firm should not always focus on long term goals but also on short term and immediate goals for better development and progress.
Establish a common language –even though metrics are simple and clear yet same words are interpreted differently. The words exact meanings had to be clearly defined for better understanding and transparency. As these metrics are communicated to the employees too they should be in simple language and also the link between the metrics and organization’s goals and strategies are also to be defined properly.
Deploy a balanced portfolio of metrics –there should be a balance between different combinations of metrics. Healthy performance metrics include both short-term and long term metrics. Focus should not focus only on short or long, both should be considered. The lifespan of the strategy should be seen and based on that metrics are to be created for the life time of the strategy.
Align metrics with strategy –good metrics facilitate implementation of strategy. Once strategy has been developed, firms calibrate their performance management systems to track and reward strategic behavior. Rewarded employees will be more encouraged on meeting their strategic targets.
For organizations to tune their performance measurement systems they need to encourage strategic focus and behavior, simplify the challenges and communicate both positive and negative results and energize the teams.
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