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#543: Be Sure You Are Measuring Your Client Correctly

Posted By Mark Haas CMC FIMC, Wednesday, April 13, 2011
Updated: Wednesday, April 13, 2011
Are there a set of best practice performance measures or do these vary by industry, region, type of organization, etc.? It seems that there is no agreement as to the "right" metrics (or do people just pick the ones for which they compare favorably)?

It does seem sometimes like performance measurement is a combination of art, science and public relations. Good practice suggests a consultant select a formal measurement and management model, develop a portfolio of metrics that can be used to compare progress over the long term (and with competitors or benchmarks), and compile and validate performance data. The dirty part of this exercise is the selection of metrics that are valid and actionable.

There has been some effort lately to rethink the traditional performance metrics. Financial metrics have a lot of history and may stay the same but measures like public trust, raw material sustainability, employee loyalty, innovation, knowledge asset growth, organizational agility, and process efficiency are being debated. The key is to find a set of metrics that are valid (measure what they say they do), reliable (measure consistently over time) and actionable (support fact-based decisions). Creativity may be necessary to develop a suite of metrics that support emerging strategic or tactical direction of the organization. They may not look like those of your client's competitors or that it used in the past but you owe it to your client to measure effectively.

Tip: If you are interested in this issue at a national scale, check out Mismeasuring Our Lives: Why GDP Doesn't Add Up. Joseph Stiglitz addresses the longstanding problem of making national policy on GDP, a fundamentally flawed metric that excludes some desirable value added activities (e.g., unpaid work, sustainability) and includes destructive activities as "productivity" (e.g., weapons production, pollution, and clear cutting old growth forests). This serves as a counterpoint of how you might discuss a new set of metrics with your client.

© 2011 Institute of Management Consultants USA

Tags:  consulting process  consulting tools  customer understanding  decision making  evaluation  innovation  methodology  performance improvement 

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