Five Pitfalls of Organizational Process Metrics

Traditional metrics have historically focused on financial and operating factors. What is newer is organizational process metrics or metrics that measure how a process works from the company point of view and the customer point of view.  How is the company doing at meeting a customer needs (such as accuracy, responsiveness, service, speed, completeness) and how is the process doing being efficient and effective so the company can be competitive in the marketplace at a good price?
This article lists five key pitfalls that organizations face as they start an Organizational Process Metrics initiative and implement it across the company.

Pitfall #1 – Where’s the Decision and Action?

Some companies begin process metrics by identifying and gathering metrics for each process. They find cost, volume, time, customer, and quality metrics for process at every level.  They gather too many metrics which appear on voluminous possibly unread reports. Instead what’s important is to ask the question – Which decisions do we need to make from this process, how would we measure that, and then what action will we take after looking at the data/metric?  If leaders or employees are not going to make decisions after looking at the metric, don’t measure it.  Just skip the whole exercise.  Find the few critical measures that will enable you to make a decision and take action.  If the measure says the process is running fine, then the action is don’t do anything.  If the Measure says there is a problem, take an action to understand it and improve the process.

Pitfall #2 -Not Linked from Strategy to Process to Operations to Employee

The second pitfall is that organizations choose measures that don’t link together.  First, processes measures need to relate to the overall strategy.  Some companies Key Performance Indicators (KPI’s) that relate to strategy, but are these KPIs then linked to the processes that will make them operational in the business?  Do leaders and managers know how their units can impact those processes through specific sub-processes in their area of responsibility? And do employees know how their work impacts a measure and process?  So, it is important to have metrics that link across the functions in an organization and link across the hierarchy of roles.  Kaplan and Norton’s strategy maps not only do that, but they make the linkages transparent for employees. They are often display the real data in electronic dashboards.

Pitfall #3 – Irregular Management

Now once the company has defined the data attributes for metrics and linked them, it’s not a onetime quarterly activity.  Leaders, middle managers, supervisors, and employees need to know who is responsible for collecting metric data, how often, and who makes the decision and takes action.  When are issues escalated and to whom? There needs to be a calendared discipline of process metric management, for current measures, leading indicators, and historical trends.  Leading indicators are measures that are found toward the beginning of the process and provide signals about how the process is working which enable the organization to make adjustments.  Historical trends can be derived from lagging indicators which measure outcomes of the process showing the health of the process at any time; trends are derived by looking at outcome measures over a period of time.

Pitfall #4 Too Many Metrics  

We know that there is detailed data for financial reporting, and hopefully this data enables different levels of management to see the impact their group is making.  I find that when companies start gathering quantitative process data, they get excited about what they learn, and they want to gather more types of data with greater frequency.  I encourage them to start small.  First define the improvement goals for a process and then identify and gather one to two pieces of baseline data that will demonstrate the current quantitative value of the measure. Then target where the leader wants that measure to be after implementation of process improvements.  Measure that (when you get there).  These give you the ROI on your project. Now there are other data elements you will want to gather to understand a process better while doing a process improvement project.  These are diagnostic measures, but the company doesn’t have to go on tracking all of those. Having too many metrics is common and some think the biggest pitfall.  Starting with just the before and after ROI measures is a good way to simplify.

Pitfall #5 Housed only with Department Boundaries 

This pitfall is a reality of organizational metrics, because financial and operational metrics are probably only currently kept within the departments.  The departments measure themselves with these metrics.  But end-to-end processes extend across departments.  If the company has cross-functional processes but no cross functional metrics, departments will not know how their work impacts steps later in the process (and ultimately the customer) nor will they know how work upstream is flowing and might impact them.  Cross-functional measures are guides all along the process for each department.

How to Get Started on the Right Foot

I recommend starting with some experiments for the Organizational Process Metrics. Pick one to two critical end-to-end processes with executives (preferably named Process Owners) who are excited about being early adopters and determine what decisions and actions are necessary for this process to align with strategic goals. Then select your ROI measures and measure the baseline.  Set up roles and responsibilities and determine how to communicate to the managers and employees who will be involved.  Do these early trials or experiments; see what works with your culture; see what you learn and make revisions.