The best ways to effectively measure business performance

On the 5th July Rubica ran its first PuMP performance measurement Community Day – a day devoted to building performance measurement excellence in organisations through the application of the PuMP methodology.

In the afternoon of the Community Day, we ran two round table discussions so delegates could discuss their experiences and challenges with performance measurement excellence and gain insight on alternative ways of doing things. The two topics discussed were:

• The power of a measurability test: How do you turn a goal into something measurable?
• The beauty of measure design: How do you encourage teams and individuals to focus on a goal and recognise evidence of success when it is being fulfilled?

These two topics address some of the fundamentals in good performance measurement and in this post we share key outputs and insights from the round tables.

PuMP – a methodology developed by world-renowned performance specialist, Stacey Barr, and is a deliberate process to design meaningful KPI’s that give us the right feedback on our progress towards achieving our strategic goals. The methodology is broken up into steps that address the most detrimental bad practices when designing KPI’s, so we have measures that we can use to improve our organisations.

Round Table 1: The power of a measurability test: How do you turn a goal into something measurable?

We asked participants what challenges they had faced in making their strategic goals measurable, which highlighted two key points:

1. How do you prioritise the most important results?
2. How do you clarify the outcome that you are trying to achieve?

Challenge 1: Prioritising the most important results

This challenge is one we hear frequently from leaders – their most common response being “but everything is important”.

The Covey Institute’s research on strategy execution found that teams who took on 1–3 goals usually achieved those 1–3 goals. Teams that took on 4 – 10 goals usually only achieved 1 of those goals, and a team that took on 10+ goals didn’t achieve any of them.

Instead of trying to take on everything at once, decide which goals will have the biggest impact on performance and do these first.  It isn’t a case of not taking on all the improvements, but deciding which order to achieve them – giving you the best chance of moving performance to where it needs to be.

Challenge 2: Being clear on the outcome that you are trying to achieve

This challenge is the most common when defining a strategy.

Only 8% of organisations have real measures for their strategic goals.

– StTACEY BARR, FOUNDER OF THE PUMP PERFORMANCE MEASUREMENT BLUEPRINT WORKSHOP

When strategic goals use language such as ‘efficient’, ‘optimise’, ‘world class’, the intent of a goal becomes lost. Question: Do you recognise some of these weasel words in your own strategy?

When speaking to clients, what we find most striking is how many times goals are accepted rather than asking the most obvious question: “what does that mean?”. The impact of not understanding a strategic goal is that it can’t be measured meaningfully. To overcome this, seek to understand 3 things:

1. The intent of the goal
2. The problem it solves
3. The benefit it will deliver

By understanding these 3 things it provides a context for us when we look to make the goal measurable, but it also helps us understand how to achieve that goal too.

Round Table 2: Measure design: building buy-in and focus for a goal and its evidence of success.

There were 3 common challenges that arose from this discussion:

1. Most organisations do not have a measure design approach. Instead, teams design measures based on their own method – invariably developed in silo.
2. How do you recognise and define evidence of success to support measures?
3. Business leaders are attached to the measures they have always used – how do you overcome this?

In the PuMP performance measurement blueprint workshop we use a measure design template that captures the evidence that would be seen – supporting our belief that the goal is being achieved.

Some round table participants, however, were struggling to get colleagues to clearly state the evidence they might see if they were achieving the results. To overcome this, we advise our clients to start with the following perspectives:

1. Process: would you notice any change or improvement in processes?
2. Customers: would the interaction between organisation and customer change?
3. Financial: would there be any financial benefit that you’d see if that goal is being achieved?
4. Morale: would you observe some improvement in morale if that goal was being achieved?
5. Collaboration: would team/cross-functional collaboration increase?

Determining the evidence we would see and believe if we are achieving our results is a critical way of assessing the appropriateness of our existing measures. If our existing measures don’t align with the evidence we would observe when we’re achieving our result then they have little meaning or feedback for our strategic focus. It could be that the existing measures provide the right feedback, but lets test that logic before committing to it.

Summary

Measuring business performance effectively is difficult, but the outputs from these two round tables offer some of the foundations for building measures that will support the fulfilment of your strategy and goals:

1. Prioritise the most important results.
2. Be clear on the outcome you are trying to achieve.
3. Capture and clearly state the evidence of success that you will see/experience when your goals are being achieved.