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Independent analyst and systems architect specializing in business process management and Enterprise 2.0. Previously founded two successful product and service companies focusing on content management, BPM and e-commerce. Featured conference speaker on BPM and its impact on business, and writes the Column 2 blog on BPM and Enterprise 2.0. All posts are © Sandy Kemsley.

3 responses to “Goals and metrics”

  1. Tom Short

    Nice topic – one of my faves, as the associated challenges and possible solutions never really go out of date.

    Two points.
    Firstly, your comments about employees gaming the metrics they’re being measured against reminded me of Goodhart’s Law: “When a measure becomes a target, it ceases to be a good measure.” Very common.

    Which brings me to my second point, which has to do with how to bring some rigor to KPI identification to ensure there is a direct relationship to company goals. I had a telecomms client whose CFO wanted KPIs that could be rolled up from across the various departments into a top-level summary. I recommended that they start by using The DuPont Model to educate BU and functional leaders about how ROI is calculated, and then building KPIs that link to one or more of its components. A nice graphic of the model is in the Wikipedia entry for it, here:

    In essence, everything and everyone in a business drives one of three parts of the model: revenue, cost or capital investment. Depending on what your department or BU does, you might drive any one or even all three. The trick is for each leader to determine which DuPont Model components his or her area drives or affects, and then work backwards from there to identify relevant KPIs that accurately reflect their activity and change as a result of things under their control.

    By using a framework like the DuPont Model, I helped my client develop a set of metrics and KPIs that would stand up to shareholder and board scrutiny for validity while helping employees at any level of the organization see the connection between what they did on a daily basis and how it ultimately would affect their company’s performance.

    And as for gaming *these* KPIs, the response to that is simple: “Go ahead. Make my day.” 🙂

  2. Tom

    Hi Sandy- yes, you did refer to Goodhart’s Law, but I thought I was worth adding the actual quote. It’s not just saying employees will try to game metrics. It’s saying that you can tell when a metric is being gamed because now people are focused on maxing the metric, rather than performing the tasks well that give rise to it.

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