Many organizations settle with focusing on the financial goals and objectives to indicate success, but what about how our customers perceive you? Are you improving upon your internal operations to make them more efficient? and how are you improving your infrastructure (as relates to people, culture and technology) within the organization to drive these desired improvements? Is this successfully measuring your future?
It is commonly agreed among business owners and leadership teams that measuring success through performance measures is important, but without the correct facilitation most struggle to create meaningful measures that align with their strategic objectives and secondly effectively implement them throughout the organization to drive improvements.
As mentioned in our previous blog, the balanced scorecard (BSC) process that Aliniti takes business owners through, is driven by their vision and the future ambitions of the organization. This takes the organization away from measuring and controlling behaviors to creating high levels of personal accountability that support achievement of company goals and objectives as a whole.
Due to the cause and effect nature of the BSC, when considering how to measure the specific strategic objectives created through this process it is important to consider the “cause and effect” nature in the subsequent measurements through the develop of leading and lagging indicators. For example :
Strategic Objective |
Lagging Indicator |
Leading indicator |
|
Create Great Customer Service Experience |
Customer satisfaction levels |
Employee Engagement |
|
Establish sustainable work processes |
Cost efficiency |
High performing processes |
By adopting this process with all your strategic objectives you are able to measure both outcomes (lagging indicators) and the driving forces (leading indicators) that are predictors of success. An additional reason business owners see value in developing performance measures in this way is to make it easier to cascade these measures throughout the organization. This ensures alignment of specific departments, business units and individuals to certain objectives, therefore improving accountability and developing an ownership mentality across the organization.
Furthermore, these measures can then be combined to create dashboards to focus leadership team discussions, giving direction for improvements in a timely manner to minimize risk, and used in individual performance agreements to further align employees with a company’s vision. These things will align to help you in measuring your future.
Next time, we shall discuss the role an organization's structure plays in managing the measurement of these success indicators and how this enhances accountability throughout an organization.
Sources
[1] Kaplan, Robert S. and Norton, David P. Translating Strategy Into Action. 1st ed. Boston, Mass.: Harvard College, 1996. Print.
[2] ISC Lead and Lag Indicators: What are they and what are they not? Online http://fr.slideshare.net. 2010