What can you measure?
Whatever you choose to measure there are essentially two main categories of measurement. You can measure activity and you can measure results:
- Activity measures indicate progress: “this is what we have done so far”.
- Result measures assess outcomes: “this is what we have achieved so far”.
Usually you should measure both. There is a logical order from activity to results: you do something and then you see the outcome. A change initiative may start with a series of activities preparing for change implementation. Examples include developing vision statements and other communications, modifying IT systems, enhancing HR policies and practices, training staff and so on. Such activity may form part of a project and typical project progress metrics can be used. For instance, progress against baseline plan, or actual budget spend versus planned etc. Tracking such metrics enables management to understand if sufficient activity is underway, if progress is quick enough, and if the right level of resource is being used. Once the activities are complete and a change is implemented, the metrics shift to results based measures. Results measures will show what the change initiative has achieved. These could be financial, customer, employee or any other outcome metric.
The problems of activity measures
Starting with activity measures and then moving to results measures seems logical. But often in the desire to control, managers place too much focus on activity led measurements and too little on results. In the end, executives are not rewarded for activity. Rewards are for results. If your initiative is to drive an improvement in customer engagement – why focus on this at the end of the initiative? Start measuring it now. The management focus on this metric will drive improvement even without the change initiative itself.
There are many examples of activity based measures being put in place without gaining any tangible results. One of the common complaints about the old quality movement, e.g. quality circles and total quality management, was a lack of results. Those involved could recount all sorts of activity measures - how many quality meetings were held, how many ideas were generated, how many people were trained - but this never linked through to tangible results. It all felt as if something worthwhile was happening, but expected outcomes were never achieved. Focussing on activity and forgetting results is a mistake.
Results based measures
Measurement drives behaviour. Measure activity and that’s what you will get – activity. If you want results, then you should measure results. Measuring results, when visible to all staff, provides rapid feedback. The right measures can be motivational. Everyone responds well to seeing a target being achieved, especially a demanding one. The best outcomes happen when there is a direct link between metrics, targets and the performance and reward system. In a nutshell, paying for results usually gets results. But not everything is about money. Often it is sufficient to align performance review assessments with change measures. Desired behaviour can be frequently achieved simply by positive feedback related to results achieved. In some situations money is the wrong driver for change results.
Results based measures support empowerment and delegated authority on change initiatives. Some businesses like to design change centrally and push it out to the rest of the organisation. This can work, but it often is fraught with all the difficulties of resistance, “not invented here” syndrome, and relies on the insight of a few central managers. An alternative is for central management to decide what the core outcome metrics will be and to set targets against them. Cut costs by 10%, increase quality by 20%, reduce customer churn by 16% etc. Finding ways of hitting the targets is then left up to the operating departments and divisions in the business. Change is delegated. This can avoid much resistance, as changes are not imposed but designed locally. The freedom to make choices about what actions to take can be motivational for many staff. Additionally, rather than a small pool of central managers thinking about change, the entire organisation can be engaged.
But not all changes can be delegated out to the whole organisation, even a highly skilled and empowered one. Some changes are driven by significant investments which need to be authorised and controlled. Some activities need rare specialist skills and access to these skills must be prioritised centrally. Some changes must be designed considering the whole “architecture” of the business. Ad-hoc tinkering at a departmental level can lead to chaos. Simply setting some targets and motivating everyone to do their best to hit those will not deliver all types of change.
Combining activity and results measures
There is much to be said for results led change. Many organisations have wasted huge amounts of time and resource planning and executing projects that have led to no sustainable change. But generally, it is best to use a mixture of activity and results based measures. This is reflected into a combination of centrally controlled change projects with measured outcomes and distributed change across the organisation. The critical factor is how the measurements are interpreted, and what behaviour is encouraged. The risks of using one set of measures exclusively are:
- Only activity measures: busy staff and a lack of results.
- Only results measures: uncoordinated activity, and limited understanding of why results are or are not being achieved.
Whichever approach is chosen it is important to remember that whilst measurement is useful, it is not all the whole answer. Measurement is not the goal in itself, results are. Measurement just provides the basis for assessment and action.