Some tips on getting the most out of your Metrics, KPIs, and OKRs
Ease
The harder it is to measure, the less frequently it will be measured. The less likely it will be effective as a metric. People respond to Incentives.
Clarity (Relevance)
A metric should be obviously relevant to the thing (area or project) they are intended to measure. If it’s possible to avoid using Proxy Measures, do so.
Clarity (Objectivity)
Where possible, hard quantifiable, indisputable measures should be used over subjective, or “soft” metrics.
Pairing Leading Measures with Lagging Measures
Leading measures are a good way to see if something is going off the rails before it happens… lagging measures are a good way to see if the thing you did about it was effective. Leading indicators measure strategy adherence and lagging indicators measure strategy effectiveness.
Standardize
Having a dashboard (something like a Work, Health, Love, Play Dashboard) or a common personal operating system (something like Periodic Reviews) will give you the needed structure to actually rely on your system of metrics.
Think about what Behaviors are being Incentivized
People respond to incentives. If it is possible to Gaming KPIs and Rule Beating.
Pair Quantity with Quality
A KPI based solely on quantity incentives pushing products out the door fast, no matter what quality they are in. It creates a culture of go, go, go, which can be reckless to your bottom line.
A KPI based solely on quality incentives not producing anything at all. You have zero defects if you make zero shipments.
A good KPI pairs quantity with quality. This prevents (or dissuades) gamifying metrics.
Consider Gaming Manipulations
If you are designing a measure and a metric, consider not only what incentives you’re driving, but also how those who are being measured could subvert the results.
Measure the real definition of success
It is not always possible to measure success directly. When using Proxy Measures , try to align them as closely as possible with what “success” would really mean. Throughput is one aspect of a process, but if what’s being throughput is garbage, than you have an assembly line whose very successful at making garbage.
The best KPIs are those that, when green, positively ensure that all is actually well - and not that someone is playing games. These aren’t always easy to come up with.