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NEWSLETTER

C-Level Insights: Driving Value, Part 1

Stay on Course: Three Tips for Using Operational Metrics to Improve Performance & Predict Results

Are you using operational metrics effectively to manage your company? According to a Deloitte survey of leading companies, only 34% are good at using operational metrics to drive performance, even though 86% are effective at tracking financial metrics. To drive significant bottom line results, operational metrics provide leading indicators in time to impact results, take out the guesswork for smarter decisions, and align teams to hit key objectives. Try these 3 tips to incorporate operational metrics into your business strategy and to enhance your bottom line.

Tip 1: Connect Goals to Operational Metrics

Connect your key goals to a few operational metrics, not just financial. Relying solely on financial metrics to measure performance may fail to:

  • Tell you why there is a problem
  • Explain how to fix or prevent the problem
  • Predict what will happen next
  • Focus on your top 1 to 3 customer, talent, sales, marketing, or product priorities.
Tip 2: Make Metrics Understandable & Focused

Ensure that your metrics are easily understood and focused on what needs to be improved. The operational metrics you select should be:

  • Simple, straightforward and meaningful
  • Easy for your diverse team to understand
  • Based on what needs improving vs. what fits the current measurement system
Tip 3: Clearly Communicate Metrics

It is essential to communicate the importance of your operational metrics to employees. To build momentum and buy-in with employees explain:

  • Why the goal is important
  • How you will measure it
  • What result they can expect when the goal is achieved

By Jody A. Ruth, CEO, Redstones LLC

Calls to Action

Related Article

Coming Up Short on Nonfinancial Performance Measurement, C.D. Ittner and D.F. Larcker, Harvard Business Review (2003).

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Jody A. Ruth, CPA, NACD.DC | © Copyright - Redstones LLC - Design by ValiantLane - Enfold WordPress Theme by Kriesi
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