You Can’t Manage What You Don’t Measure

You’ll recall in our last blog we discussed strategic plans and ended by looking at a simple table that had just three headings – strategic goals, objectives and measures. We touched on the first two and concluded by saying the third was so important that it warranted a dedicated blog.

Well, here it is…and we’re talking measures.

There’s an old adage in business that you can’t manage what you don’t measure; that unless you’re able to measure something, you’re flying in the dark, not knowing where you’re going, whether you’re getting better or worse.

I certainly subscribe to the adage and recall talking to the MD of a large trustee company that invests the funds from bequests. Each year, the millions of dollars in investment returns are awarded to successful charities applying for grants. And with so much money available, it’s understandable that there are just about as many applicants.

I remember saying how difficult it must be to decide who gets and who doesn’t, to which he said it’s very easy when you base it on three deciding factors – one, the calibre of the people on the board and in management; two, the organisation’s clarity of purpose; and three, their proof of outcomes.

That’s where measuring comes in…and very good boards have very good mechanisms to measure performance. What’s more, they do so in a quantitative rather than qualitative fashion, the latter being too open to subjectivity.

It’s easy when you’re dealing in numbers as there are no grey areas. What you see is what you get…and if an organisation goes from 50% to 60%, you can say it’s on track, it’s doing well.

It’s more challenging – but by no means impossible – when the goal has nothing to do with finance.

Let’s assume your goal is to create a positive corporate culture. You can start by conducting a staff attitudinal survey that carries questions asking employees to score the existing culture on a scale of 1 to 10, 1 being dreadful and 10 excellent.

Let’s further assume your findings suggest the culture languishes at 5.8. This gives you your baseline measure. You know from research that the world’s best organisations have a score of 8.5 and you can then set a target of, say, 7.5 being reached in five years. You know how much you need to improve to achieve your goal and, best of all, you can now quantitatively measure how successful or otherwise you’ve been in this regard.

As my MD friend said, it’s all about proving outcomes…

Unfortunately, too many boards and management have tended to measure outputs and activities rather than outcomes.

Busyness suddenly becomes the be-all and end-all, when in fact it means not much.

When you measure outcomes, however, you have a fabulous story to tell.

But remember, you can’t measure these big strategic things on a monthly basis. They’re by definition long-term and are better left for attention when you sit down to prepare the annual company scorecard.

Kate Costello

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