Measurement and Feedback

Feedback is central to learning. Faulty feedback is one of the biggest contributors to organization, team, and personal learning disabilities. If you don't know how you're doing, you can't improve.

But in most organizations — if it's given at all — feedback is a distorted jumble of mixed messages and past results. It's almost impossible to draw connections between today's results and yesterday's behavior, or today's behavior and tomorrow's results.

The right measurements establish vital feedback loops that show whether the approaches being used are moving the organization toward its goals. Effective measurements are the platform for effective performance feedback. They help separate the useful from the useless work. They help managers see through the dust storms raised by so many furious flurries of "busywork" that can create the illusion of progress.

Lagging Indicators: Financial

Describes the financial history and status of the organization. Shows the accumulated financial scores/outcomes of past decisions.

Examples:

• Revenues/Expenses/Profits
• Operating Margins/Ratios
• Receivables/Payables/Cash Flow
• Cost of/Return on Capital
• Year-to-Date Actual to Budgets/Plans

Leading Indicators: Operational

Describes rates of productivity and efficiency. Primarily internally measured trends providing early signals of future financial performance.

Examples:

• Waste/Rework/Non-Value-Added Activities
• Accuracy/Error Rates
• Cycle Times
• Process Effectiveness
• Reliability/Downtime
• Units/Sales per Person/Dollar

Leading Indicators: Quality

Describes mainly customer-focused rates of product and/or service satisfaction and performance. Intertwined with operational indicators to provide early signals of future financial performance.

Examples:

• Customer Expectations versus Perceived Performance
• Perceived Service such as Empathy, Care, and Helpfulness
• Response/Delivery/Turnaround times
• Internal/External Partner Morale/Climate/Commitment
• Internal Partner Capability Indices
• Reliability/Dependability
• Appearance/Features
• Health, Safety, and Wellness

Keys to Measurement and Feedback:

1. Develop a simple core of balanced measures to focus improvement on strategic imperatives.
   
2. Ensure all measurements are used within a rigorous goal deployment system. (See "Goals and Priorities" section).
   
3. Identify and monitor key organizational/process vital signs.
   
4. Build transparent and highly visible measurement systems.
   
5. Measure from the outside in.
   
6. Don't let the more measurable drive out the most important.

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