HRMN 495-Mini Case Study 4
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Metrics.pdf
Learning Topic
Metrics For managers to effectively carry out their management functions, they
need to set and monitor objectives. Well‐defined objectives tell the
organization's people what they should achieve, and by measuring the
achievement of objectives, managers can determine whether changes are
needed.
To be useful, objectives must be measurable. A contracted manufacturer,
for example, can know whether it is meeting the objective of no more
than one defect per 10,000 parts made. In contrast, "maintain high
quality" is vague; it can't be measured objectively. A measurable
performance objective is often called a metric (Cheng, 2014; Dykes,
2010; Magalhães, 2014). When describing a metric, we refer to the units
of measure, such as defects per 10,000 parts, profit margin, or percent of
customers who would recommend the company to a friend.
Other terms for metrics are performance metrics and performance
indicators. When managers use metrics to evaluate how well someone is
performing a job, they may call the metrics accountability measures
because that person is accountable for achieving the specified results.
Measurability alone does not ensure that a metric is related to the
organization's success. For example, a manager could perfectly measure
the number of hours each salesperson spends on the telephone yet learn
nothing about what contributes to revenue growth. Recognizing this,
many organizations establish and monitor key performance indicators
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(KPIs)—performance metrics that contribute to achievement of an
organization's overall strategic objectives (Magalhães, 2014; Kestrel
Management, 2016). For a business, KPIs support profitability and long‐
term value creation. For a nonprofit organization or government agency,
KPIs support success in carrying out its mission.
Metrics and Organizational Success
If an organization's managers have chosen metrics that drive strategic
success, measuring activity in terms of those metrics will give the
managers objective information about whether the organization is
accomplishing what matters (Balanced Scorecard Institute, 2016).
Likewise, when managers focus on the KPIs when leading and evaluating
employees, they make it likely that everyone will be directing the most
energy and attention to the activities that contribute to success.
According to management experts Kaplan and Norton (1992, p. 71–79),
"What you measure is what you get."
Indeed, there is evidence that in organizations using KPIs, performance is
stronger. A telecommunications company improved its growth by getting
objectives and managers' incentive pay aligned on KPIs that drive
customer experiences (Bhattacharjee, Müller, & Roggenhofer, 2016).
Mintz and Currim (2013) found an association between the use of
financial metrics and successful performance of marketing mixes.
Any given manager and team should have only a few KPIs to focus on. A
reasonable number would be four to ten KPIs (Yarwood, 2015). Each team
should know its KPIs and how each is linked to achieving broader
objectives. If a team has too many metrics, they probably are not all key
performance indicators, and it may be hard for the manager to unify the
team in an understanding of what they are trying to achieve.
References
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Balanced Scorecard Institute. (n.d.). What is a key performance indicator
(KPI)? Retrieved from http://balancedscorecard.org/Resources
/PerformanceMeasuresKPIs
Bhattacharjee, D., Müller, L. H., & Roggenhofer, S. (2016, March). Leading
and governing the customercentric organization. Retrieved
fromhttp://www.mckinsey.com/businessfunctions/operations/our‐
insights/leadingandgoverningthecustomercentricorganization
Cheng, J. (2014, April 8). Five tips for defining key performance
indicators. Online Marketing Institute. [Blog post]. Retrieved from
https://www.onlinemarketinginstitute.org/blog/2014/04/5tipsfor‐
definingkeyperformanceindicators/
Dykes, B. (2010, June 17). Metrics and dimensions and reports—oh my!
[Blog post]. Retrieved from https://blogs.adobe.com
/digitalmarketing/analytics/metricsandreportsohmy/
EY. (2014, May). Key performance indicators: Winning tips and common
challenges. Retrieved from http://performance.ey.com/wpcontent
/uploads/downloads/2014/05/EYPerformanceKeyperformance‐
indicators.pdf
General Motors Company. (2015). 2015 annual report. Retrieved from
https://www.gm.com/content/dam/gm/en_us/english/Group4
/InvestorsPDFDocuments/2015AnnualReport.pdf
Kaplan, R. S., & Norton, D. P. (1992, January–February). The balanced
scorecard: Measures that drive performance. Harvard Business
Review, 70(1), 71–79.
Kestrel Management & dynaQ. (2016, April 22). Pull vs. push reporting:
Leading KPI development. [Blog post]. Retrieved from
http://kestrelmanagement.com/pullpushreporting/
Magalhães, I. L. (2014, December 31). Metrics versus key performance
Metrics https://leocontent.umgc.edu/content/scor/uncurated/acm/2208-acm610/l...
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indicators. [Blog post]. Retrieved from https://www.linkedin.com
/pulse/metricsversuskeyperformanceindicators
Minghini, J. (2015, January). Measuring what matters. Material Handling
& Logistics, 70, 18–20.
Mintz, O., & Currim, I. S. (2013). What drives managerial use of marketing
and financial metrics and does metric use affect performance of
marketing mix activities? Journal of Marketing 77, 17–40.
Strategies for KPI success in patient access. (2015, July). Healthcare
Registration, 24, 6–10.
Yarwood, P. (2015, November). KPIs that really perform. Accounting
Today, 29, 26–27.
Yuan, J., Wang, C., Skibniewski, M., & Li, Q. (2012). Developing key
performance indicators for publicprivate partnership projects:
Questionnaire survey and analysis. Journal of Management in
Engineering, 28(3), 252–264.
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