- April 26, 2021
- Posted by: Philip Struble
- Category: Uncategorized
When asked, “How is your business doing.” how do you answer?
Most of us answer “Fine,” “Great,” or “Couldn’t be better.”
But do we really know how we are doing? And, can we quantify it in one sentence?
A business metric is a quantifiable measure used to track and assess the status of a specific business process.
All business leaders and entrepreneurs need to know their metrics.
Why Do We Need Metrics?
Metrics are used to drive improvement and help businesses focus their people and resources on what’s important. The range of metrics that companies employ vary from those that are mandatory – for legal, safety, or contractual purposes – to those that track increases in efficiency, reductions in complaints, higher profits, and more significant savings.
Overall, metrics should reflect and support the various business strategies for all aspects of the organization. This would include finance, marketing, competition, standards, and customer requirements and expectations.
Metrics indicate the priorities of the company and provide a window on performance, ethos, and ambition.
Ultimately, metrics will help tell the business leader and entrepreneur:
- Where it has been.
- Where it is heading.
- Whether something is going wrong.
- When the organization reaches its targets.
Benefits of Metrics
To derive the most benefit from metrics, it is vital to keep them simple. Defining a metric is like telling a joke – if you have to spend too much time explaining it, then it will not work.
Employees need to understand the metric, how they can influence them, and what is expected of them.
Good metrics will:
- Drive the strategy and direction of the organization
- Provide a focus for an organization, department or employee
- Help make decisions
- Compel better performance
- Change and evolve with the organization
- Produce good internal and external public relations
- How to Implement Effective Metrics
Here are five steps for setting up organizational or process metrics:
- Define the metrics.
All metrics should be clearly defined so that an organization can benchmark its success. One way to keep metrics understandable is to use the SMART (specific, measurable, achievable, relevant, time-based) model. There’s no point setting targets that cannot be achieved— people will feel defeated before they begin.
- Secure buy-in from senior management and employees.
The successful implementation of any new metric requires the approval and interest of senior managers.
- Understand what data is needed and how to collect it.
It’s not unusual for companies to set a metric, only to discover that either their processes or tools (or both) cannot generate the needed data. Metrics must be reliable and give out the same answer no matter who calculates it.
- Measure and share the results.
It may seem a little obvious, but many companies calculate metrics and then do nothing with the results. So, keep it manageable – it is better to have five meaningful metrics that the organization will use than 50 that it won’t.
- Look for continual improvement.
Most organizations will need to revise their metrics from time to time. Make sure the metrics still measure what they intended to measure.
The aim of setting metrics is to improve the business, so set targets that challenge the company.
We all need metrics to follow just like our businesses. In business, we want to measure what is essential to the goals of the company.
In our personal lives, we also want to measure what is important.
There are many examples of metrics (or measures) being used in the Bible. For example, King David’s counted his fighting forces in 2 Samuel 24. And, there is a whole book (Numbers) written at God’s explicit command enumerating the strength and weakness of Israel.
We also find stories of godly men such as Nehemiah, who technically measured Israel’s situation upon returning to the decimated Jerusalem – and then planned accordingly.
In other words, we find people using metrics throughout the Bible to help them adjust the way they fulfill God’s commands.
Jesus himself calls us to “count the cost” before starting the venture of following him (Luke 14:25-34). If we are to do that regarding our spiritual salvation, how much more are we to do it in the way we walk out our practical lives with Him?
Metrics are important. In business, they increase your level of success. In your personal life, they enrich your walk with the Lord, which also increases your level of heavenly success.