PGS is in the process of defining metrics for each division and hat in our organization. Why? We talked to Theo Hunt, a Lean Six Sigma Black Belt expert, to explain the process and benefit of spreading metrics throughout the organization instead of keeping them all at the top. Here is what she had to say:
First, why are we working through the process of defining metrics throughout? Two reasons: alignment and control. To get an organization in alignment, i.e., all moving in the same direction, the measures of success from the top of the organization down to each individual’s position should all be aligned. There should be a clear path that shows how the measures throughout the organization aggregate and move the organization in a unified path forward.
The second reason for creating metrics throughout the organization is control. Individuals are empowered by what they have control and influence over, so when you break down organizational measures of success into those pieces that a department or an individual can influence and control, then they are empowered to deliver the results you are looking for. The metrics are in their sphere of influence. Creating clear metrics that measure what a department or individual is delivering helps them to be motivated and focus on the right tasks and behaviors.
How are measures created that aggregate from top to bottom? At PGS, we started at the top. If “x” is our vision, what measures of success do we want to look at to make sure the organization can deliver that vision? We want to track that we can not only make it to vision, but that we have the systems in place to allow/make that happen (i.e., both lagging and leading indicators).
Once the top level measures are established, the next question is for division heads. We said “here is where we are headed as an organization and here are the metrics at the executive level that show how we are progressing. What aspect of that do you influence/control? Based on that answer, what are the measures your division is looking at to maintain alignment to the overall vision?” You ask the same questions on down the chain to the individual hats in order to create the system of aligned measures.
What makes a good metric for an individual hat or division? There are six criteria to consider:
- The measure must be within your circle of influence. It must be something within your hat as an individual or within your control at the division level.
- The measure must align with the organizational vision and KPIs.
- The measure should have the ability to inspire performance and motivate the right behavior.
- The measure should be clear, clean and easily understood and shared. Trust is important in data.
- The measure should be visible and easy to track and access for all involved.
- The cost of getting the data/information must be less than the benefit of having the data/information.
For more on developing meaningful metrics at all levels of your organization, contact us. We would be happy to help you work through some examples and develop a system of metrics that are easy to track and valuable in aligning and assessing your organization.