Creating effective metrics
Lately, I've had a few clients ask me about selecting the best metrics and KPIs for their organization. My recommendation was to review the chapter on “how to create effective metrics” from Wayne Eckerson's book, Performance Dashboards. There he lists the twelve characteristics of effective metrics/KPIs:
- Aligned - to corporate strategy
- Owned – by an individual or group
- Predictive – measure drivers of business value
- Actionable – populated with timely data so users can improve performance
- Few in Number – focus users on high value tasks, not scatter attention on too many things
- Easy to Understand – straight forward, not based on complex formulas that users can’t influence
- Balanced and Linked – should reinforce each other, optimize processes
- Trigger Change – should cause a chain reaction of positive changes in the organization
- Standardized – based on standard set of rules, definitions, calculations
- Context Driven – put performance into context by applying targets, thresholds, trends
- Reinforced – attach compensation or incentives to each metric (do this with caution!)
- Relevant – must be periodically reviewed and refreshed, and matter for the issues at hand
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