Without clear metrics for informed decision-making, you end up making critical decisions based on gut feelings, opinions, or untested hypotheses - not the most strategic or defensible approach.
As a leader in your organization, you have a responsibility to:
- Understand which decision-making measures matter, and then
- Implement the data collection systems and processes to inform those decision-making tools.
Here are the top five most important metrics that should be informing your data-driven decision making process:
Regardless of industry, every organization operates internal processes (like how long it takes to bring a new employee on board, from the time their application is submitted through their first day of work) and external-facing processes (like how long it takes customer service reps to respond to a troubleshooting request). Measuring the timeline to complete any operational process from start to finish is essential to establishing solid baseline data that can be used to make decisions about things like allocation of resources and human capital. Once you've collected that baseline data, it will be possible to identify prime areas for cycle time reduction and set data-driven goals for improved efficiency in the future.
Do you have a good sense of how often recurring mistakes happen in a particular process within your organization? Unless you operate a manufacturing line, it's unlikely that you have been thinking of your operational processes in this way. Measuring the repetition of errors or rework can actually be a straightforward decision-making metric - although in order to capture this data accurately, your organization must have a culture that encourages identifying key risk indicators and then talking about red flags so they can be addressed immediately. Instead of sweeping mistakes under the rug or falling prey to the fallacy that every error was caused by a unique and unrepeatable circumstance, start tracking these occurances.
Once you understand what shape the errors take, and when and where the errors are happening, you will start to see patterns that should lead to questions of why they are happening (make sure to dig down into the root causes!). Solving problems at the root cause level is the most effective way to reduce or eliminate error altogether.
3. Cost (All Of It)
Every organization measures cost, but they usually only talk about costs in terms of the budgeting process. To set yourself up to make the best decisions, you should keep tabs on all cost information. Particularly for administrative and knowledge-based functions such as intelligence gathering and analysis, you need to measure where costs are actually occurring in each process, broken down by categories such as manpower, time, resources and errors. Your decision-making metrics should also signal when costs are rising or falling. Getting a comprehensive view of costs will help with decisions about project selection, resource allocation, and even suggest priorities for process improvements.
4. Soft Value
Soft value metrics are those critical elements of business operations that are often deemed unmeasureable: employee morale, customer satisfaction, leadership alignment, etc. Many executives have a self-limiting belief that soft values simply can’t be measured, so they don’t bother to try. The reality is that soft values can be measured – and should.
Usually, the decision-making metrics for these soft values require a proxy measurement (such as retention rate or survey scores). You can be both strategic and creative about how this data is captured and analyzed; as long as your preferred method provides you with some sort of indicator of how your organization, department, or team is performing in these soft value areas, you will be able to take action accordingly. If you simply ignore soft values because you think they can’t be tracked, you have no basis for improving these values.
5. Return On Investment
Particularly in the federal and nonprofit sectors, leaders tend to believe that ROI is a decision-making metric only for private companies with a profit motive. This is simply not true. Any leader in any industry who plans to launch a new program, initiative or process improvement effort must know how much time and money is going to be spent on that project. The benefits and payoff of your new project can only be calculated once you have a threshold of success against which to compare your initial costs.
While it may be acceptable for some agency efforts to simply not lose money, most projects (even in the minds of agency leaders) require a return on investment several times over and above the project costs. Remember: When you calculate the ROI of your projects, you’re able to more robustly defend your budget and secure future funding for your agency’s programs.
Identifying and tracking these decision-making metrics doesn’t have to be a source of distress for your team, especially if you’re willing to put in some effort upfront. With a clear vision of your present performance, you’re empowered to make well-informed decisions for your organization's future.
Need to improve processes with a limited schedule and budget? Click below to download this e-book from Big Sky Associates and discover how to make process improvement efforts more cost-effective.