The Story of Metrics to Drive Improvement

DPA Insights

By Nancy Kay, senior consultant, Daniel Penn Associates

Do you every wonder why your company or organization generates stacks of monthly reports with all the numbers you can dream of — and yet, nothing seems to change?

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The reason is that without an agreed-upon context for how the numbers are generated and analyzed, we cannot possibly categorize and use them to make meaningful decisions. Many companies’ metrics are not in alignment with its goals, objectives and initiatives. A lack of visual display keeps measurement ‘out of sight, out of mind.’ Organizations don’t always have the right people driving results.

Many organizations simply go through all the numbers and report them any way they can. Companies often figure that more data is better. Managers spend hours and hours piling over numbers…or putting those numbers in the trash.

True story:  A company experienced a significant ($ millions) downturn in sales from its forecast. However, inventory to meet that forecast had already been built. They had a 300 page monthly document to report numbers to many managers. They hired consultants to investigate the issue.

The consultants discovered that the company’s monthly numbers — a key indicator of business — had never been plotted on a trend graph. Once the consultants plotted monthly data on the graph, it clearly showed a downturn in a key performance indicator (KPI) six months prior to the actual downturn in sales. As well as not trending their data, the planning and forecasting department did not even realize the correct metrics they needed to measure against.

Quality and relevancy are more important than reams of data that no one understands and no one acts upon. The moral of the story for metrics is:

  1. Select the key metrics that will drive the business.
  2. Make sure they are measurable objectives.
  3. Report on these metrics with a frequency that you can do something about.
  4. All initiatives should support the improvement of these metrics.
  5. The improvements should be trended in the form of a graph.
  6. Make the metrics as visual as possible, post them for display.
  7. Ensure that the right people are looking at the right metrics.

As they say, a picture tells a thousand words. Focusing on the right data, using visual management with graphs, trends, displays, and clarifying who will meet the objectives attached to each metric: these are the keys to making positive changes in your business.

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