Do Your Metrics Lead to Action?

Do Your Metrics Lead to Action?

 Effective operating systems have a daily process for measuring business performance and engaging people in solving problems.  The content of the meetings includes visual controls that represent a 24-hour view of Safety, Quality, Delivery, and Cost metrics with clear signals of ahead or behind target.  The metrics in those meetings either lead to frustration or action.

Metrics that Lead to Frustration 

During a daily meeting, a production manager shares, “We shipped 23 units yesterday versus a target of 53. We are now a total of 230 units behind plan for the month.”  Knowing he has to explain, he begins a recurring story about how he received 25% of his orders on the last three days of the month and he would never be able to meet the target under those circumstances.  Many in the room roll their eyes and several think to themselves, “not again.” All hope the meeting ends soon.  It ends with the leader saying; “We have to solve this.”  But no real action is taken.

Metrics that Lead to Action 

One way to look at metrics is to think of them as lagging or leading.  A unit shipped is a lagging look at the problem. Nothing can be done to affect a unit already shipped.  The ability to measure the actions that lead up to the result makes for valuable leading indicators.

In the example above, the number of total orders for the month received in the last three days is an indication of the final shipping performance.  If we take a step further back we may be able to ask, “What percent of orders are completed for the month compared to the percent of days completed in the month?” For example, “We have completed 45% of the orders for the month and we are 50% or halfway through the month.”  This is a leading indicator of a shipping problem. Actions can be assigned to find out the cause of the 5% of orders behind schedule.

Leading to lagging indicators form a hypothesis that can be tested every day by looking at the right metrics.  For example, “If we collect 10 safety cards from employees every day and we eliminate one hazard based on those observations, then we will not have injuries.”

This changes the conversation to one of science and action instead of stories and frustration.

Help your organization become like scientists by forming hypotheses with the metrics they review daily.  Encourage employees to take actions on metrics that will impact the final results.

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