Eric Savitz, Forbes Staff
TECH | 7/09/2012 @ 3:49PM
Guest post written by Justin Moore
Measuring and managing with metrics is essential to keeping your business on target. It’s critical to choose the right parameters – and then to know how to use them. Measuring with the wrong metrics can do more damage than good. Getting too obsessed about the numbers can lead to bad decisions and make you forget about the human element, that you’re managing people, not robots. And not measuring on at least a weekly basis can leave problems undiscovered until it’s too late to course-correct. But, when you leverage metrics properly, they can be one of the most powerful ways to propel your business to success. I’ve found an effective metrics-based management strategy that strikes the proper balance.
1. Measure before you manage
Accountability is fundamental to effective management, but it’s impossible to achieve it without tracking each department and individual progress against very specific, measurable goals and objectives. Every element of your business should be measured – marketing, support, operations, sales, finance, engineering, employee performance, and so on. You first need to determine the right metrics and then make sure you have all the tools you need for measurement.
2. Choose the right metrics
Using metrics is a bit of a double-edged sword, because it can just as easily send you off track as it can bring you greater focus. The key to effective measurement is knowing what to measure. First, you have to really know your business, starting with your core values, vision, and company mission. Ask questions like:
- What five things will most impact the business in the next 12 months?
- What are specific revenue objectives, both for the year and for each quarter?
- What are the “subjective” criteria for success in the next 12 months?
Then pick your metrics based on what matters the most to your business. Set yearly and quarterly company and departmental goals, from which individual objectives are created.
3. Avoid common metrics pitfalls
I’ve learned from past mistakes that metrics must be extremely clear. A broad goal like “provide better customer support this quarter” can leave everyone, at the end of the quarter, with very different ideas on whether or not that goal was met since there were so specific metrics tied to it. Other common pitfalls avoid include:
- Metrics with inaccurate or incomplete data
- Metrics that are complex and difficult to explain
- Metrics that complicate operations and create excessive overhead
- Metrics that cause employees to not act in the best interest of the company
In brief, metrics should be so clear that an outside person could come in at the end of the quarter and check whether the objectives have been met.
4. Invest in tools that deliver real-time feedback
To make metrics really effective, you need real-time feedback. Whenever possible, invest in measurement tools that put your metrics at your fingertips. Today’s Software-as-a-Service (SaaS) applications make it easier than ever to quickly and frequently pull data that provides measurement against objectives. You might use Salesforce reports to track sales activities and leads. Or HubSpot for Website rankings and inbound site links. QuickBooks, Excel and other office applications you’re already using can be set up to collect and analyze current data.
Whatever measurement tools you use, be sure to connect and automate them as much as possible so you don’t spend all your time on number-gathering. At Axcient, some programming from our engineers and in-house Salesforce experts allows us to feed numbers and charts from more than a dozen measurement tools into “Departmental Dashboards.” Using the dashboards, management is able to quickly view the status of every group in the organizational weekly meetings.
5. Share metrics with employees
One of the most important and often missed reasons to track metrics is cultural. At Axcient, we share metrics and results not only with management, but with every employee. At all-hands meetings, we go through slides that Axcient shares with the board of directors. A large screen in the common area shows weekly highlights – and challenges. Maintaining transparency and celebrating big wins leads to a culture of success, where everyone is on the same page and motivated toward unified goals.
6. Remember that accountability starts at the top
Business leaders don’t always recognize how closely employees will follow their example. But if you want your workers to take goal-setting seriously, you should be prepared to share your own goals – as well as how you came out on delivering on them at the end of the quarter. Such transparency shows your team that you are in the trenches with them, making every effort to achieve what you set out to do – even if your targets were off.
7. Continually question, reevaluate, and refine
Keep in mind that you will need to reevaluate and adjust your metrics as your business priorities change. Every week, month, and quarter is a new opportunity to test and refine your ability to set and track metrics that will drive growth. When you invest time and thought into setting, monitoring, sharing, and refining your metrics, you’ll be amazed at how much more in tune you are to the state of your business, and how much more easily you can make the critical decisions that can catapult your business’ success.