9.17.2012

Righting the Wrongs of Organizational Measures

Mark Nash and Sheila Poling recently published a book titled The Right Measures: The Story of a Company’s Journey to Find the True Indicators of Its Success and Values. I spoke to Sheila on the phone and asked her: "What is the relationship between all the measures that an organization compiles?" Here is her response:

Organizations, regardless of type -- private sector, public sector, or non-profit -- should identify what they value as the overall goals of the organization.  The goals at the top (or strategic goals) are where most of the effort is focused.  Yet, to truly measure success, you must have Key Performance Indicators (KPIs).  KPIs are a type of performance measurement and are used by an organization to evaluate its accomplishments.  Typically KPIs are used to evaluate an organization’s success in terms of making progress toward, and ultimately achieving, its strategic goals.  KPIs should be the basis for all other measurements within the organization.  For long-term success, you need to have your key measurements linked, with direct relationship to the KPIs, from the bottom to the top of the organization.  
In the fictional story in our book, Max Housholder explains to the management team at M.E. Burdette Company how the measurements that are used to report success are related.  Relying on his life experiences, Max talks about how a construction crew and a homeowner each use the same tape measure to determine the individual success of their own goals in building a house and how in the end it is all related.  The differences in the measures lie in their detail.  All the measures are connected, linked or aligned to the ultimate goal of building the house. "Each of you in this room needs to find your tape measure. Find your sixteenth of an inch. Then connect the dots. You’ll see how it fits with the eighth of an inch, and then the quarter, half, and then the inch. As you move up your corporate structure, you’ll then start seeing how all the inches fit together to form a foot and more. If you don’t figure out how to tie the entire organization together through measurement, you will never be able to sustain success."
Her response lead me to the follow-up question: How do a company's measures affect its performance? Sheila summed up her response with:
One of the characters in our book says it best -- Chris Anselmo speaking to the management team says: "The things you measure are a reflection of your organizational values. And these values are the fundamental building blocks that shape your company’s vision and action. You measure what you value. Measures directly influence how people work. In turn, how people work affects organizational results.  This is a big interlinked circle of events wrapped around the culture of the organization.  When we talk about the culture of an organization, this is at the heart of that culture.  The organizational values drive what we do as an organization.  When we measure what we value, it affects our behavior...."
What do you think of Sheila's response? Does your company measure too much or too little? How do your measures affect your company culture?

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