Phillips' Edge

Metrics 101: What They Mean, How to Collect Them and How to Use Them

Jack and Patti  Phillips
Posted: 07/08/2008

Metrics are essential to successful organization management. Peter Drucker, credited with coining the phrase, "if you can’t measure it, you can’t manage it," emphasized the role of metrics long before their use became fashionable. Basic metric development requires knowing criteria of a good metric, how to collect data that evolve into the metrics we track and how to use metrics to the betterment of our organizations. This column will examine these basics.

What Metrics Mean

When you think of metrics, a question you have may be: How do you define effective metrics? A metric is a standard measure that in and of itself gives meaning to a condition. It represents a measurement taken of a certain issue, topic, process or initiative. Certain criteria must be met to make metrics meaningful.


To be effective, a metric is:

1. Important and significant, perhaps connected to major organizational goals or the strategy of the organization.

2. Descriptive of entire processes or at least a significant part. In some cases it shows the complete issue. For example, an average top-box score on customer satisfaction represents a composite of all of the customer satisfaction issues.

3. Controllable. This is obvious. If the metric is not under our control or at least our influence, then it is meaningless to report.

4. Efficient. Essentially, a good metric should cost little to develop, particularly when it comes to investment in time. If development of a metric is too expensive, it may not be worth it.

5. Understandable. Those who see it know what it means, and they can relate to it.

6. Precise. There is no ambiguity in the measure itself. Although it may be an opinion, such as employee engagement, it is still as precise and clear as we can make it.

7. Timely. A metric should not have a long lag time. Ideally, instantaneous data are the best. This allows for quick action to make changes and improvements.

8. Accessible. The metric should be easy to find, easy to identify and visible. It is not kept in some secret location.

9. Credible from various perspectives, particularly from those who find the projects or processes that we are measuring.

Along with these basic criteria, metrics must be as factual as possible. This reflects the design process.

Design Basics

For most of us, the metrics are already in place. It is a matter of fine tuning, changing, deleting and adding to the current metrics. Recently, there has been focus on having evidence-based or fact-based measures. These can be placed into four categories:

1. No Facts. Common sense tells us that employees are more satisfied if we pay them more.

2. Unreliable Facts. Employees suggest that if they are more satisfied, they will be more productive.

3. Irrelevant Facts. We have benchmarked three world-class organizations unrelated to our business and have analyzed their compensation practices.

4. Fact Based. Excessive absenteeism in the call center disrupts the organization.

It is important that we strive to have metrics that are based on fact. We need conclusions that have clear evidence of their relationship. This leads to a final element of meaningful metrics—the linkage between the various metrics employed in an organization.

Linkage between Metrics

Linkage or connection between metrics is particularly important in managing projects where there are a variety of metrics that define the success of the project.

Figure 1 shows the chain of impact that must exist as a project unfolds; it involves six types of outcome measures. This demonstrates the connection between metrics.

The first is reaction. For every project implemented there should be some measure of reaction focusing on the relevance, the importance and usefulness of the project. Next is the measure of learning to determine if the stakeholders who are involved are learning what must they know or do to make the project successful. Next, there is application, which is the implementation and use of the project. This speaks to the steps that are being taken to make the project work in terms of technology, process implementation and/or organizational support. Next is the business consequence of the project. These are impact measures such as productivity, quality, cycle time, costs, customer satisfaction, job satisfaction and so forth. Many of these measures are converted to money and then compared to costs, which results in the actual ROI, a metric from the finance and accounting area and one that attracts the attention of senior management. Finally, there are the intangible measures, or those impact measures that cannot be converted to money credibly with minimum resources. Intangible measures are only reported if they are connected to a project. This gives a profile of six types of metrics defining the success of a project from a balanced perspective using qualitative and quantitative, as well as financial and non-finanial, data.

How to Collect Metrics

Collecting data that result in the metrics we report is fairly straight forward. Many of the metrics are located in systems, records or databases and it is a matter of monitoring those metrics to determine and compare them to expectations or trends. When metrics are not available in a system, sometimes data are collected using surveys, particularly perception data, such as customer satisfaction or employee engagement. A more detailed analysis can be obtained by collecting data in questionnaires, which are more versatile than a survey. Here, specific raw numbers can be captured from those who are involved in a particular process, activity or project. In some cases, actual tests or demonstrations are administered to collect data about what people know or know how to do. Still other data collection techniques include one-on-one interviews where individuals explain the success or lack thereof in a particular area. This is expanded using a focus group to be more efficient and take advantage of the synergy of the group discussions. Finally, observation is sometimes an important method of collecting data. This is particularly critical when the actual skills being developed are used in a job setting. A classic example is a mystery shopper examining the quality of customer service skills. These data collection techniques provide a full array of possibilities to capture the data used to develop metrics.

How to Use Metrics

To be meaningful, metrics must be put to use. If no action is taken or the data are not utilized in any manner then perhaps the entire process is a waste. There are several distinct uses that are critical in a good metrics program.

1. Problem analysis. When a metric is not where it should be, that is there is a gap between the expected and actual result, the focus is on what is causing the actual gap. Analysis is conducted to identify the cause resulting in remedial action, specific projects or new processes to close the gap.

2. Process improvement. Almost every system, process, project or program will need adjustments, and metrics tell us what is working and not working and provide us information to make adjustments. Sometimes the adjustments are minor, sometimes they are major, but process improvement should be the fundamental reason for using the metric.

3. Recognition. Metrics can be used to recognize and reward those who are actually influencing or driving the metric. Here great performance is clearly identified and appropriate rewards are given.

4. Goal setting. Metrics are often used in the goal setting process, particularly to see if goals are met. The specific goal setting processes, key performance indicators and milestones are often verified or validated through the metrics process.

5. Trend development. Another use of metrics is to develop trends that evolve over time. Trending data is critical to understanding the dynamics of organizational processes.

6. Budgeting. Metrics are used for budgeting, particularly if the metrics are showing that improvements have been made and contributions have been gained. They can justify continuing funding or even increasing funding.

Collectively, these are the basic reasons for having a good metrics process. Metric are an important part of determining and ensuring organizational success. Understanding the fundamentals is an important first step. Future columns will describe other elements of developing metrics and supporting data that drive performance in processes, programs and initiatives throughout the organization.

Jack and Patti  Phillips
Posted: 07/08/2008