Insight

7.2 The Importance of Objective Key Metrics

7.2 The Importance of Objective Key Metrics
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The number one motivator of humankind is to live a life of meaning. The number one indicator that my life has meaning is an objective metric that shows I am moving the dial on the meaning of life.

Anonymous

Clients have told us that connecting Key Metrics to their Purpose and Vision is the greatest challenge in executing the Foundation of Greatness. Establishing Objective Key Metrics as a part of our Reinforcing Systems requires a deep understanding of how team members interpret goal-setting. Setting goals based on a percent increase over last year’s numbers without connecting to the meaningfulness of the achievement breaks the link to what truly motivates us—that of living a life of meaning—and inhibits the passion for goal achievement.

Deep meaningfulness comes from finding fulfillment through contributing to the benefit of others (Stage III Fulfillment) or a vision of the future (Stage IV Fulfillment), even if one cannot see it come to fruition. Our challenge is that metric achievement is a Stage II fulfillment (comparing one’s accomplishments to those of others), which is not as deeply meaningful. A deeper understanding that serving the lower levels of fulfillment strategically, in service of the higher levels, makes meaningful, enduring, and sustainable fulfillment possible.

Metrics that Reinforce Organizational Fit

Team members want to know the score of the game they are playing. They want to see how the team is doing, how their department is doing, and most importantly, how they are doing. We find that while leaders may have a deep understanding of how the organization is faring, there may be a disconnect regarding how each department and individual is doing. Today’s technology enables dynamic means to share the status of Objective Key Metrics for each of these three assessments in real time.

While touring Springfield Remanufacturing Company’s offices with CEO Jack Stack and his team, we saw Key Metrics, with graphs showing today’s trends in color against the goal for each individual, on the screensaver for each computer. Progress on their goal was clear to each team member. Consider a similar tool for your organization with these questions addressed:

  • What are the team member’s Objectives that serve alignment with these elements of our organization?
    • Purpose
    • Vision
    • Guiding Principles
  • For each of those Objectives, what Key Metrics would tell us we are on target?
  • For each of those Key Metrics, what goals could we set to stretch us to accomplish?

The Organizational Dashboard

As you analyze your organization’s Purpose, Vision, and Guiding Principles, what metrics could tell you how you are doing in honoring your Core Identity when at your best? Ask your team to make suggestions. Here are some examples from our clients:

  • Gross Sales
  • Customer Satisfaction Surveys
  • Employee Satisfaction Surveys
  • Number of Clients, Customers, or Patients
  • Net Revenue

The Department Scoreboard

Data on how each department’s performance supports the organization feeds into the Organizational Dashboard and keeps all departments in the game, in service of something bigger than themselves.

  • Capacity Utilization
  • Scrap
  • Returns/Rework
  • Inventory Carrying Costs

The Individual Scorecard

Monitoring how the individual is strategically impacting the Department Scoreboard, the Individual Scorecard was discussed in blog post 7.1 Connecting Individual Performance to Organizational Success.

Goal Setting —Tapping into Intrinsic Energy

The Individual Scorecard is one of the more powerful concepts leaders can capitalize upon to get the team invested in being successful beyond expectations. Those closest to the action have the best knowledge and feel for their capacity to achieve and will set more realistic, achievable stretch goals than leadership. Humankind does not want to be average, especially when part of a team. We want to be exceptional, to stand for something, to make a difference. Great leaders help teams through asking strategic questions from the 30,000-foot perspective, respecting those who are closest to the interactions.

The Great Game of Business—Getting the Team in the Game

As Jack Stack lays out so well in The Great Game of Business, associating goal setting by team members with games enhances goal achievement. The game keeps the goal top of mind, more so than it would be otherwise. An added team benefit, goal achievement makes the responsibility for something more significant than the individual profoundly motivating. Making the game fun increases its attraction. Using color, cartoons, and graphics intrinsically keeps all the participants looking forward to seeing their progress. The game engages our reticular activating system and spurs opportunities for improvement because our mindset has prioritized achieving the goals and is seeking means to make that possible. With this energy focused on the goal, we find new and different ways to be successful.

For much more on Jack Stack and the principles of the Great Game of Business, see http://www.greatgame.com/.

Leadership Questions

  • Do you have a shared objective for the organization that will lead to success?
    • Do you have a key metric that will tell you how you are doing on progress to that success?
  • Do you have a shared objective for your department that will lead to organizational success?
    • Do you have a key metric that will tell you how you are doing on progress to that success?
  • Does each team player have a personal objective that will contribute to the department’s success?
    • Do you have a key metric that will tell you how you are doing on progress to that success?

This post is part of series drawn from Fritz Seyferth’s upcoming book on the Foundation of Greatness.