Many organizations measure success by results: assets gained, revenue earned, customers satisfied. However, such performance metrics neglect to consider how you achieved these results and who these results affect.<\/strong><\/p>\n Imagine a delivery company that distributes packages to customers across the country. While the company certainly generates revenue from its deliveries, its package tracking system is glitchy and unreliable, leading to many lost packages and dissatisfied customers. Additionally, the company doesn\u2019t have a standard organization method for packages at its distribution center, which creates longer processing times and increases the number of packages it loses.<\/p>\n If the delivery company\u2019s executives measured their business\u2019s success<\/a> by generated revenue alone, they would consider it successful.<\/strong> But if they zoomed out to consider their entire operation, the executives would discover that their business\u2019 flawed processes prevent it from reaching its full potential.<\/p>\n Results don\u2019t appear out of thin air. They derive from processes and the people who implement them. Therefore, inefficient processes, ineffective communication or low motivation can compromise your business\u2019s success, despite result-driven metrics that indicate otherwise.<\/p>\n By contrast, operational excellence uses a holistic approach to measure success in business. Driven by continuous improvement, the mindset that an organization can always improve its workplace experience, business processes and outcomes, operational excellence always considers two “P\u201ds: people and processes.<\/p>\n The foundation of operational excellence is process excellence<\/a> \u2013 routinely inspecting core processes to ensure they are efficient, effective and align with the organization\u2019s goals. Within a process excellence framework, organizational leaders understand what you consider success and how you measure it affects employee decision making.<\/p>\n Business performance metrics, then, should build an alliance across many teams in your organization, from sales to marketing to finance, and empower individuals on every team to make decisions that improve their colleague\u2019s work environment and optimize their processes<\/a>.<\/p>\n Many organizations struggle to see the value of performance metrics because it takes more effort to examine every facet of an organization than to assess what it produces. Additionally, measuring success in business with performance metrics requires an organization\u2019s leadership to reflect on difficult topics:<\/strong><\/p>\n However, reflecting on these questions to identify areas for improvement can push your organization to the next level. Often, improving your processes requires linking your performance metrics to your overall corporate strategy. Aligning processes to organizational goals instills high-level understanding that empowers your business and drives performance.<\/p>\n Once you make changes to your processes and performance metrics, it is critical to nurture them with consistent feedback and analysis. It simplifies processes, improves quality, streamlines decision making, and motivates your employees to do the right thing for your customers and each other. The results of process excellence speak for themselves.<\/p>\n Before you adapt your processes and redesign your performance metrics, you must assess your current situation. Ask yourself these questions, which are all rooted in process excellence:<\/strong><\/p>\n By evaluating your responses to this checklist, you have established a nuanced understanding of the current state of your business.<\/strong> Perhaps you\u2019ve already identified areas for growth. Now, you can plan to improve.<\/p>\n Establishing a performance metrics framework that stands the test of time is critical, and it\u2019s one of the most poorly executed aspects of business today. The right framework for performance measurement is one that aligns with your organization\u2019s mission. But how can you create performance metrics that not only reflect your organization\u2019s goals<\/a> but also are mindful of fast-changing economies and ever-evolving culture?<\/strong><\/p>\n H&M\u2019s mission is to provide \u201cfashion and quality at the best price<\/a>.\u201d Their vision statement centers around their target consumer base, individuals who are mindful of how much they spend on clothing but don\u2018t want to skimp on style. Promising affordable, on-trend clothing for men and women, H&M prioritizes customer satisfaction as a performance metric.<\/p>\n However, customer satisfaction, along with other more traditional metrics like shareholder return, are influenced by current social issues. Today\u2019s consumers have a growing concern for the environment, including the impact of fast fashion, meaning the quality of the item on the rack is not always as important as the quality of the process that created it.<\/p>\n Responding to both drops in revenue and customer concern, H&M has pledged<\/a> to lower its greenhouse gas emissions and use 100 percent recycled or sustainable materials by 2030. H&M retained its mission to produce economical, high-quality fashion, but it has expanded its performance metrics to reflect its new holistic approach to quality.<\/p>\n Your company\u2019s mission, core values and culture should not change. How you interpret the needs of your customers, how you respond to market demands, and how you execute strategies, however, should continue to evolve.<\/p>\n Once you establish the mission, vision and strategy of your company, you can then translate these into business performance metrics. These metrics must consider all facets of your organization and prioritize balance to accurately define its overall health.<\/p>\n According to Robert Kaplan and David Norton<\/a>, a balanced scorecard considers four quadrants:<\/p>\n Often neglected or even forgotten, employees are essential. Without them, there is no company. Metrics that assess employee experience and performance include:<\/p>\n Customer loyalty is indispensable to your company\u2019s success. To measure customer satisfaction, consider these metrics:<\/p>\n Establish key performance indicators (KPIs) for your processes. Do not consider averages alone. Look beyond the mean to the range and variation of the employee experience of working with these processes and the customer experience of receiving the results of these processes:<\/p>\n Every company considers financials, but few do fully. It is crucial not only to collect financial metrics, but also to use them to understand previous decisions and feedback and to make improvement-driven decisions:<\/p>\n \u201cScorecarding\u201d is not a one-time event. Your performance metrics must continuously assess your company\u2019s strengths, weakness, opportunities and threats, so you can embody operational excellence<\/a>.<\/p>\n As Kaplan says, \u201cIf you can measure it, you can manage it.\u201d Your business performance metrics should tell the whole story of your organization, from its people to its processes to its mission. With adaptable performance metrics, your organization is better equipped to pursue operational excellence and achieve its goals.<\/p>\n\n Business Performance Metrics That Tell the Whole Story<\/h2>\n
How Operational Excellence Helps<\/h3>\n
Generating Buy-In to Holistic Performance Metrics<\/h2>\n
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Applying a Process Excellence Framework to Business Performance Metrics<\/h2>\n
Assess Your Current Situation with a Performance Measurement Checklist<\/h3>\n
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Identify Your Organization\u2019s Mission<\/h3>\n
Applying Mission-Oriented Metrics to Today\u2019s Environment: H&M<\/h2>\n
Takeaways<\/h2>\n
Measure All Aspects of Your Organization<\/h3>\n
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<\/a><\/p>\n1. Internal (Employees)<\/h4>\n
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2. External (Customers)<\/h4>\n
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3. Forward (Process)<\/h4>\n
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4. Rearward (Financials)<\/h4>\n
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Mastering Business Performance Metrics<\/h3>\n