December 20, 2022

Define Positive Performance Metrics for the New Year

Based on both informal and formal surveys that I’ve conducted over the years, I found that less than 40% of organizations define any effective performance metrics.

And even more surprising, less than 30% of those organizations go back and track the metrics.

Organizations need performance metrics, especially to support business transformation so they can track their efforts and make sure they are executing correctly.

They are also essential for garnering and retaining executive support for transformation investments.

The problem is that metrics are often foisted onto people and don’t even match the business strategy or goals. As a result, performance metrics are either ignored or placated.

As we get to this new year, business and technology leaders have an opportunity to define a new set of impactful and positive metrics.

How do we do that? There are a few basic principles that organizations should employ when defining performance metrics.

Metrics Must Be Linked To Business Strategy

First and foremost, metrics must be linked to the business strategy, goals, and outcomes.

Metrics must measure execution that must be completed to support business transformation.

Further, performance metrics must cascade down from that strategy throughout the organization.

Anyone within the organization must understand how they are contributing to the business strategy and business outcomes.

Metrics Must be Achievable

Performance metrics must be achievable by whomever is responsible for delivering on a given metric.

Too often organizations define performance metrics that are aspirational but don’t link to execution.

People must feel that they can achieve the metrics being given to them, and as mentioned above understand how those metrics contribute to the business outcomes.

Metrics Must Be an Incentive

Too often metrics are put in place to measure what actions people do rather than their value.

Metrics must be defined and presented as a positive incentive not a negative punitive measure.

Employees and managers should view metrics as something that highlights their accomplishments and their contribution.

Metrics Must Be Agreed To

Positive metrics must be agreed to by both senior executives and the leaders/employees responsible for executing those metrics.

Metrics should not be forced onto employees in a way that they don’t understand the value of the metric.

Metrics Must Not Be A Surprise

Metrics must be something that highlights the value of what people are doing and creating on a regular basis.

Metrics must not be a surprise to either employees or managers.

The last thing an organization should do is give metrics and then not discuss them or update them until the end of the year during a review.

In this case, metrics are ineffective because they are not driving behavior, and in fact the metrics have become a disincentive.

Metrics must drive positive behavior to achieving business outcomes, not create frustration.

Metrics Must Be Updated

Achievable metrics must also be updated. The reality is the context of our business, an employee’s life, and our team dynamics change.

That is the reality of today’s dynamic business. But oftentimes organizations define metrics and then don’t update them based on the context that is changing.

Metrics must be updated to reflect achievable outcomes for the employee, their team, and the business based on the current context.

Bottom Line

Employees and leaders, for the most part, want to do the right thing for the business. Making metrics well known and achievable is the way to define positive metrics.

Positive metrics are much more likely to be achieved because they are seen as an incentive to deliver business outcomes rather than a stick.

They are also significantly more effective because positive performance metrics are a way for the employee to show off their value, not just what they do.

This leads to a more positive engagement between executives, leaders, and employees.

Take the opportunity of the New Year to create positive, business-outcome driven performance metrics.

This blog is a part of the Business Transformation blog series by Aragon Research’s VP of Research, Betsy Burton.

Missed the previous installments? Catch up here:

Define Positive Performance Metrics for the New Year